Why South Korea froze health insurance premiums: reserves and a semiconductor boom, but fiscal stability remains a challenge

South Korea will keep its national health insurance contribution rate at 7.19% next year, with the government arguing that accumulated reserves and stronger revenue make a freeze possible without raising premiums.

The Health Insurance Policy Deliberation Committee approved the 2027 rate on Aug. 8. The rate rose by 0.1 percentage points this year after remaining at 7.09% in 2024 and 2025. It had climbed from 6.67% in 2020, generally by 1% to 2% each year.

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The consensus was that freezing premiums would be possible to help stabilize people's livelihoods, and the committee reached a final agreement.

The government said the insurance system had about 30.2 trillion won in accumulated reserves at the end of last year. It expects an additional 3.8 trillion won in premium revenue next year, helped by the semiconductor industry's strong performance. State support is also expected to increase by about 1.1 trillion won, while changes to drug pricing and fees for laboratory and imaging services are projected to reduce spending.

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Government support at 14.4% does not meet the statutory standard of 20%.

Vice Health Minister Lee Hyung-hoon said the committee reached a final agreement because a freeze appeared possible while protecting household finances. But the fund has shown signs of turning into deficit. National Health Insurance Service data showed a 3.8989 trillion won operating deficit in the first quarter, consistent with an earlier government forecast that the fund would begin running annual operating deficits this year.

Public-sector, health insurance and review-service unions said government support covered 14.4% of costs, below the statutory 20% standard. The Korean Medical Association also warned that repeated freezes threaten the system's sustainability. Health insurance chief Kang Chung-hee said the government would seek a more precise income-based assessment system, although plans to include interest and dividend income have been delayed over concerns about higher burdens on low-income households.

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Repeated freezes of health insurance premiums threaten the sustainability of health insurance finances.

The committee separately approved expanded coverage worth an estimated 600 billion to 800 billion won annually for about 1.97 million people. Copayments for severe and rare disease patients will fall from 10% to 7% in December and 5% in 2028. Support for continuous glucose monitors and automated insulin pumps will extend to patients with severe type 2 diabetes from December. From January, adults aged 65 or older without teeth will qualify for two dental implants, benefiting about 70,000 people with an estimated 2.28 million won in medical savings per person.

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We plan to improve the contribution system so that income can be identified more precisely and premiums can be assessed properly.