This article is an edited version of a paper that was submitted to the International Society for Third-Sector Research (ISTR) for the ISTR Award for Civil Society Policy Impact Research in January 2020. Though it was not a finalist for the award, it had the honor of featuring as an article in ISTR’s August 2020 newsletter. The article summarizes a project conducted by The Beautiful Foundation between 2016 and 2018 that contributed to significant changes in the relevant policies of Korea.

Supporting Unintentional Defaulters of the National Health Insurance Service: with a Focus on Policy Enhancement

• Project Name: Supporting Unintentional defaulters of the NHIS
• Period: 2016-2018 (3 years)
• Expenditure: Approximately KRW 384,381,000 (USD $330,000)

 1. The Issue

The South Korean health insurance system is renowned throughout the world as exemplary, but social blind spots nevertheless exist.

In 2015, 1.4 million households were local subscribers to the National Health Insurance (NHI), and the amount of arrears totaled KRW 2.45 trillion. People with arrears due to no fault but having little or no income are referred to as ‘unintentional defaulters.’ Without a formal definition, this project defined them as “low-income households with monthly health insurance premiums of KRW 50,000 or less.” Among the NHI subscribers in 2015, 940,000 households were unintentional defaulters.

The NHI Service (NHIS) has a support mechanism for defaulters, but the defaulter must first make an application. In reality, however, most defaulters have no knowledge of this support. Moreover, as the government’s given stance is to emphasize sanctions, defaulters of more than six months have limited access to health services and are levied taxes and payments for services during the overdue period. Penalties such as seizure of property and joint liabilities further hinder them from economic independence and employment, resulting in a vicious cycle.

This project tried to bring changes to the related policies, with the view that health insurance is a social insurance that must be guaranteed to everyone as part of universal health coverage.

2. Key Stakeholders

The main stakeholders were the unintentional defaulters, who were the beneficiaries, and two organizations that specially partnered for this project: The Beautiful Foundation that raised and analyzed the issue and provided the grant, and Health Right Network, a network of civil society organizations promoting health rights.

3. The Action

The project began with an in-depth study of the conditions and policies related to the arrears. Findings showed the arrears size to be larger than the known figure of 1.4 million households, reaching 2.16 million households, and that 57% of them were unintentional defaulters. The study also revealed that 4,000 minors and 42,000 young people had joint liability with their parents, and that the more chronic the arrears were, the harder it was to end and clear them. The following actions were guided by these outcomes.

The project held two National Assembly (NA) discussions on improving the law and system, and distributed questions to NA members to raise their awareness. Witnesses were made at the NA for cases of damages caused by arrears, and amendments were proposed for the NHI contribution system. During the presidential election period in 2017, policy requests were distributed to each camp, and after the president’s inauguration, measures for policy improvement were submitted to the relevant committee at Cheongwadae. The project also monitored NHIS sanctions and deficit-handling, requested the NHIS’s disclosure of information, and submitted a statement to the UN CESCR.

In 2018, the project requested the Ministry of Health and Welfare to abolish wage restrictions, held a joint civil society press conference, and made a collective civil petition to the National Human Rights Commission of Korea. Moreover, press releases calling for an improvement of the NHI Act and system were sent to the media. Lastly, a guidebook was published for nationwide training of social workers in assisting defaulters.

4. Achievements

In December 2016, the NHIS standards for deferment of bank account seizure expanded from local subscribers with monthly premiums of KRW 30,000 or less to KRW 50,000 or less. That same month, relevant forms were edited to include the information that small assets can be lifted under the National Tax Collection Act. In March 2018, Article 81 of the NHI Act was revised to strengthen this ‘duty to inform.’

A central achievement was the policy changes related to minors. In September 2016, the government decided to suspend notices to minors with joint liability who had no ability to pay. In April 2017, Article 77(2) of the NHI Act was revised to exempt minors with no income or property from joint liability, and retro-active exemptions were made for arrears imposed when the child was under-aged.

Another achievement was the disposal of deficits. In February 2017, the government announced it would dispose of deficits for defaulters of more than 10 years. Carried out in phases, the plan will eventually dispose 870,000 households of approximately KRW 120 billion. In October 2017, the disposal was expanded to those with ‘no property and annual income of less than KRW 1 million.’

5. Project’s Approach and Contribution

This project was carried out through participatory project planning that included all parties concerned. The accounts of more than 1,700 defaulters were received and reflected at every stage, and some defaulters were involved from beginning to end. The stakeholders’ sense of ownership enabled delving into the heart of the issue, ultimately leading to the project’s success. As a long-term project, the logical framework strategy was used to stay true to the end-goal. The project was monitored and evaluated through a proper index setting, and data collection and analysis for measuring indicators were planned for efficiency.

This project’s impact is definable in its creation of social value. It highlighted a blind spot in the Korean social security system, and rather than addressing temporary concerns, identified the underlying problems. Striving for sustainable support, it has left lasting social implications.