Private Health Insurance Losses Near 3 Trillion Won as Clinic Claims Surge While Major Hospital Claims Decline

The financial sector attributes the surge in computed tomography (CT) scan claims to excessive testing by some clinics and small hospitals, as claims from major hospitals have either declined or barely increased while those from primary and secondary care facilities have risen sharply.

Last year, CT scan claims through private health insurance from clinics and hospitals—classified as primary and secondary care facilities—jumped 17.3% and 12.1% respectively, both in double digits. In contrast, tertiary hospitals saw claims drop 18.8%, while general hospitals recorded only a 4.9% increase.

"Claims for expensive treatments like CT scans are also surging, centered on clinics and small hospitals," an insurance industry official said on January 17. "Looking at the structure, one can't help but suspect that unnecessary tests are being conducted excessively."

Korea's CT utilization rate stands at 333.5 scans per 1,000 people, nearly double the Organisation for Economic Co-operation and Development (OECD) average of 177.9.

The problem extends beyond CT scans. According to the five major non-life insurers—Samsung Fire & Marine Insurance, DB Insurance, Hyundai Marine & Fire Insurance, KB Insurance, and Meritz Fire & Marine Insurance—payouts for the three major non-covered items, including physical therapy with manual therapy, non-covered injections, and spinal procedures, totaled 2.08 trillion won ($1.5 billion) in the first nine months of this year, up nearly 10% year-on-year.

These three categories accounted for 25.3% of total private health insurance payouts. Physical therapy, including manual therapy and extracorporeal shockwave therapy—frequently cited in overtreatment controversies—exceeded 1.4 trillion won in payouts.

Non-covered injections, commonly known as IV drip therapy, saw payouts surge more than 24% this year. For these injections, payouts at clinics and hospitals rose 26.8% and 19.4% respectively, while general hospitals saw a 2% decline—indicating indiscriminate use of non-covered injections for fatigue recovery or cosmetic purposes at neighborhood clinics.

With unnecessary excessive claims continuing, the loss ratio for private health insurance exceeded 120% as of the end of September, and this year's losses are projected to approach 3 trillion won.

Experts say the government must take a more active role in managing medical fees to curb excessive treatment by some unregulated hospitals. "Since non-covered items have no separate treatment standards, doctors freely set prices and treatment volumes, increasing patients' medical cost burden," said Kim Jin-hyun, a professor at Seoul National University's College of Nursing. "The government needs to standardize names and codes for non-covered items and establish price ceilings."

Calls are also growing to strengthen coordination between public and private insurance to prevent fraudulent claims and double payments. Currently, there is no information exchange between public insurance such as National Health Insurance and private insurers, allowing duplicate claims and fraudulent billing to continue. Between 2019 and 2022, double payments between National Health Insurance's out-of-pocket cap refunds and private health insurance exceeded 850 billion won.