As the content indicating that first-generation (before August 2009) and early second-generation (before April 2013) subscribers of the private health insurance can be forcibly transferred to the fifth generation is included in the private health insurance reform plan, consumer dissatisfaction is escalating.
First and second generations have higher premiums compared to the third and fourth generations, but they have no or low cost-sharing, leading to broader coverage. Subscribers have maintained their contracts by consistently paying high premiums because they believed that the first and second generations would serve as a blessing when they started to become seriously ill in their 50s and 60s. However, with the government hinting at forced transfers, the possibility of lawsuits has already been raised.
A majority of first and second-generation subscribers are showing a willingness to maintain their contracts, rejecting the compensation they could receive upon transferring to the fifth generation. However, experts analyze that the government is pressuring the transfer to the fifth generation, making it inevitable, only a matter of timing.
On the 9th, the government announced a new private health insurance plan (fifth generation) that differentiates compensation limits and cost-sharing between severe and non-severe conditions. While the severe conditions will maintain the same limits as the fourth generation, the limits for non-severe conditions will be reduced from 50 million won to 10 million won, and the cost-sharing rate will be increased from 30% to 50%. This means that after a hospital visit, the benefits of private health insurance will decrease, leading to increased hospital expenses.
The problem is that the reform plan cannot be applied to the first and early second generation products, which account for 44% (15.82 million people) of private health insurance subscribers. The first and second generations do not have a re-enrollment cycle in their terms. If subscribed with a 100-year maturity, they can maintain the first and second generations for life. To complete the reform plan, the first and second generations, which do not have a re-enrollment cycle, must be transferred to the fifth generation. Conversely, the late second generation (after April 2023) and the third and fourth generation terms include a re-enrollment cycle, requiring subscribers to re-enroll in the currently sold private health insurance (fifth generation) after five or fifteen years.
The government has decided to implement a repurchase system that compensates subscribers when transferring to the fifth generation, but the general consensus is that if the amount is not significant, the effect will be minimal. The government included the contentious phrase, 'Through legislative amendments as needed, minimizing harm to subscribers while considering the application of contract change (re-enrollment) clauses to early private health insurance,' in the reform announcement materials. This indicates a strong resolve to forcibly transfer to the fifth generation even if it requires legal amendments.
Experts believe it will be difficult to maintain the first and second generations for a long time. Once a mass migration from first and second generations begins, subscribers who find the high premiums burdensome or do not require much medical care will receive compensation and exit to the fifth generation, leaving behind those in the first and second generations who claim significant amounts. As the loss ratio skyrockets and the age of subscribers increases, premiums will inevitably soar. If those unable to endure the premium hikes leave again, repeating this cycle will lead to a point where maintaining the first and second generations becomes unfeasible.
Whether or not to transfer to private health insurance should be judged differently based on the subscriber's economic situation and medical usage, so a clear answer cannot be provided. However, for subscribers considering a transfer, they currently have two options: switching to the fourth generation or receiving compensation and transitioning to the fifth generation set to launch next June. If they switch to the fourth generation, they may not receive compensation, but can enjoy the relatively broader and cheaper benefits of the fourth generation for five years before moving to the fifth generation. If switching to the fifth generation, benefits will substantially decrease, but receiving compensation is an advantage. The size of the compensation will be crucial at that time.
An industry insider noted, 'As quality subscribers of the first and second generations (those who receive little compensation compared to the premiums paid) gradually exit, the proportion of high-claim subscribers will increase. Ultimately, only those who receive more in compensation than the premiums they paid will remain, making it impossible to sustain the system.'