The policy stream

One way to solve the problems of high out-of-pocket expenses and health insurance fund deficit was raising contributions (Hwang 2006: 102). However, this was obviously an unpopular solution because of the poor economic condition after the 1997 Asian financial crisis. Raising contributions would only increase both the financial and psychological burdens of the insured because many of them faced salary freezes while some faced the risk of becoming unemployed (Hwang 2006: 103). In 1998, nominal wages and real wages, respectively, dropped by 8.1 percent and by 14.2 percent in the ROK (Ahn 2009: 236). There was a hollowing out of the middle class due to wage cuts, job losses, and asset deflation (Yang 2017: 128). There was also the problem of growing poverty, with the headcount urban poverty index rising drastically from 9.6 in 1996 to 19.2 in 1998 (Yang 2017: 128). Raising contributions only increased the economic hardship of the general public.

Another suggested solution that became central to policy debates was to integrate the decentralized, multiple health societies into a single publicly administered insurance carrier (Wong 2004: 89-90). But the integration debate was nothing new in the nation. The first integration debate began in September 1980 when Minister for Health and Social Affairs Chun Myung-Kee publicly announced the intention of the MHSA to integrate the entire medical insurance system after the MHSA had merged several small insurance societies to increase the risk-pooling and redistributive effects of health insurance (Wong 2004: 90-1). However, opposition from business organizations, the National Association of Medical Insurance Societies, the Federation of Korean Industries and the Office of the President made it politically costly for President Chun Doo-hwan to endorse such a radical change (Wong 2004: 92; Chun et al. 2009: 141-2). Consequently, President Chun rejected the MHSA’s reform proposal in 1982 (Wong 2004: 92) and dismissed the minister and several high-ranking bureaucrats in the MHSA in 1983 (Hwang 2006: 105; Yang 2017: 102). The MHSA ‘was restaffed with bureaucrats who were cither opposed to or neutral about the integration reform’ (Wong 2004: 92).

The second integration debate began in 1988 when there were nationwide farmers’ protests against high-premium contributions (Yang 2017: 104). In June 1988, a broader alliance known as the National Committee for Medical Insurance Integration (NCMII) was formed to call for the integration of all health insurance societies (Wong 2004; Yang 2017). The NCMII consisted of 48 social movement groups, including farmers’ associations, urban poor organizations, religious groups, social security professionals, the Association of Physicians for Humanism, and the Korean Pharmacists for Democratic Society (Nam 2015: 141; Wong 2004: 93; Yang 2017: 104). It drafted an integration reform bill and pressured legislators in the opposition parties to support the bill (Nam 2015: 141).

In 1989, three main opposition parties - the Reunification and Democracy Party (RDP), the Party for Peace and Democracy (PPD), and the New Democratic Republican Party (NDRP) - lined up to support the bill (Nam 2015: 141-2). In March 1989, the National Assembly, where opposition parties held the majority, passed the integration reform bill (Wong 2004: 93; Yang 2017: 104). Nevertheless, President Roh Tae-woo vetoed the new law by claiming that the new law violated private property laws (Wong 2004: 93). The idea was that the government had no legal claims to health insurance funds, which were considered as the private property of health insurance societies held in trust for enrollees (Wong 2004: 93; Yang 2017: 104-5). The presidential veto brought to a decisive close the integration debate (Nam 2015: 143).

In the early 1990s, the cross-class coalition among workers, farmers, and civic activists proposed integration reform (Kim 2017: 116-17), but it failed to have any impact. ‘President Kim Young-sam, who took office in 1993, was the ROK first civilian president in three decades (Alm 2001: 457-8). His ruling Democratic Liberal Party (DLP), which merged the DJP, RDP, and NDRP, ‘controlled three-quarters of the National Assembly’s seats’ (Wong 2004: 94), so that gave the ‘coalition little room to motivate opposition legislators into challenging the ruling party’s position’ (Nam 2015: 149). But the disintegration of the DLP in late 1995, the corruption scandals surrounding Kim’s immediate family, and the economic downturn weakened Kim’s presidential power and legitimacy (Nam 2015: 149). In November 1996, two opposition parties - Kim Dae-jung’s National Congress for New Politics (NCNP) and Kim Jong-pil’s United Liberal Democratic Party (ULD) - joined forces to propose an insurance integration bill that largely replicated the one drafted by the NCMII in 1989 (Nam 2015: 152). ‘Their proreform stance compelled ruling party legislators, particularly those dependent upon rural constituents, to respond’ (Nam 2015: 152).

When approaching the 1997 presidential election, ruling party legislator Hwang Seong-gun, representing a rural electoral district (Wong 2004: 97), proposed a partial integration reform bill which called for the administrative consolidation of 227 regional self-employed health insurance societies with the KMIC, the unit that managed insurance funds for government employees and private school teachers (Nam 2015: 152). The partial integration reform faced little opposition because it mainly dealt with the operating inefficiencies of the self-employed insurers without touching upon contentious issues such as the financial consolidation of all of the insurance societies (Nam 2015: 152). Most of the ruling party legislators from rural constituencies supported Hwang’s proposal (Kim 2017:

• 132) . Business organizations were not opposed to the bill because the bill did not affect the enterprise-based health insurance societies (Wong 2004: 97; Kim 2017:
• 133) . With votes from ruling party legislators and opposition party legislators, the Medical Insurance Act was passed in November 1997, just one month before the presidential election (Nam 2015: 152). In October 1998, 227 regional self-employed health insurance societies and the KMIC were integrated into a new authority known as the National Health Insurance Corporation (NHIC) (Hwang 2006: 104; Yang 2017: 143). The partial integration reform paved the way for

The Republic of Korea 123 the complete administrative and financial integration of all health insurance societies into a single, state-managed health insurer during the Kim Dae-jung era.