Seoul: South Korea's national health insurance system is grappling with financial difficulties as it recorded a current account deficit of 3.9 trillion won ($2.8 billion) in the first quarter, marking an end to five consecutive years of annual surpluses. The accumulated reserves of the system decreased from 30.22 trillion won at the end of 2025 to 26.32 trillion won just three months later, as the government anticipated a move into deficit this year.

According to Yonhap News Agency, the rapid deterioration of the system's finances is concerning, compounded by demographic pressures that are driving up costs. In 2023, individuals aged 65 and older accounted for 44.1 percent of medical spending, with projections indicating this figure will rise to 53.1 percent by 2030 and 70.2 percent by 2050. Simultaneously, the number of people paying premiums through employment is declining, increasing the demand for medical services while the financial base supporting it contracts.

While raising premiums seems an obvious solution, the effectiveness of such a measure is questionable given the government's failure to meet its legal funding obligations. As stipulated by the National Health Insurance Act and the National Health Promotion Act, the government is required to contribute an amount equivalent to 20 percent of estimated annual premium revenue. However, from 2007 through 2024, the government's actual contribution remained around 13 to 14 percent, creating a funding gap of approximately 22 trillion won.

The Lee Jae Myung administration has recognized the issue, yet its first budget allocated support equivalent to only 14.2 percent of expected premium revenue, a slight decline from the previous year's 14.4 percent. This situation raises concerns about asking households to bear more financial burden while the state contributes less than legally required.

Moreover, health insurance reserves have been tapped for other government policies, with over 8.6 trillion won drawn for initiatives like emergency medical support and hospital restructuring. While such measures may be justified in emergencies, their repeated use blurs the distinction between social insurance and general taxation.

Relying solely on increased government funding will not eliminate the need for higher premiums, as Korea's per capita health spending remains below the OECD average. An aging society will inevitably require more resources, making premium hikes likely. However, any additional revenue should be accompanied by a more disciplined healthcare system, including stronger primary care, better management of chronic diseases, and more cost-effective use of expensive tertiary hospitals.

Addressing wasteful practices such as redundant testing and improper claims is also crucial. With an aging population necessitating more frequent and complex care, cost control becomes increasingly challenging under the current fee-for-service system.

Alternative revenue sources, such as raising cigarette prices as proposed by the Center for Market Education, might provide temporary relief but are not a sustainable long-term solution. The government must ensure its 20 percent funding obligation is enforceable based on settled revenue figures rather than estimates, and require legislative approval for major transfers from National Health Insurance Service reserves to broader government programs.

Ultimately, South Korea's health insurance challenges are both demographic and institutional. Before citizens are asked to pay higher premiums, the government must fulfill its legal funding commitments to maintain a sustainable safety net and an honest fiscal ledger.