The increasing number of individuals experiencing mental health issues, such as anxiety and depression, is putting pressure on insurance firms to create policies targeted at mental health care.
Insurance firms, however, drew attention to the restrictions and mentioned a serious structural problem. They pointed out that moral hazard and the difficulty in validating insurance claims are caused by the subjectivity of mental health diagnosis.
Korea is facing a number of challenges, according to a report released on Monday by the Korea Insurance Research Institute (KIRI). These include a highly competitive environment brought on by the country’s rapid economic growth, tremendous pressure to pursue higher education, and a rise in social isolation as a result of more people living alone and taking longer to prepare for jobs.
As a result, one in four persons will at some point in their lives face mental health issues due to their increased prevalence.
Specifically, from 691,164 in 2017 to 933,481 in 2021, there were 35 percent more patients with depression, and during the same time, the average medical cost per patient for this illness climbed from 439,501 won ($336) to 564,712 won.
The government has stressed the importance of giving coverage for young people top priority, given that persons in their 20s and 30s are the most susceptible to mental health disorders and that many issues associated with declining mental health primarily affect people in these age ranges.
In response, commercial insurance firms also increased their coverage through policy changes in 2016, and public insurance, including the National Health Insurance Service, has progressively increased coverage for mental diseases.
Relevant items are still scarce, though, because coverage is confined to extended hospital stays. Furthermore, most non-reimbursable treatments—which account for a sizable amount of the costs associated with mental health care—are not covered.
Industry authorities claim that the societal stigma attached to mental disorders, which causes underreporting, is one of the main obstacles to the development of coverage for mental illnesses. This creates obstacles for the design of insurance products by making it harder to collect enough actuarial data.
In order to increase coverage for mental health issues and improve people’s mental health, the KIRI recommended in its study that the government, insurers, and businesses work closely together.
According to KIRI researcher Kim Kyeong-seon, “insurance companies could consider developing tailored insurance products specifically designed for certain occupational groups.”
“Insurers should carefully modify benefits for new products based on findings from both domestic and international research on mental diseases. They also need to put policies in place to stop moral hazard brought on by particular symptoms.
