The purpose of this paper is how to build an efficient health i nsurance system, aswell as a competitive health and medical industry in Korea. The present nationalhealth insurance system (NHI) has serious moral hazard problems over all of thebehaviors of NHI, covered, and benefit providers. The main reas on is that thesystem ignores the incentive mechanism and heavily relied on th ecommandsystem. Moreover, the monopolizes health insurance industry by NHI led to theunbalanced supply of medical resources and made tremendous soci al costs.
Supplementary private health insyrance can be a solution for ma ny problems ofthe NHI. First, it will monitor the provider more efficiently t han NHI does. Second,it will participate in overall activities of decision making pr ocess on health insuranceactively so that the bargaining power of insurers including NHI will bereimbursement cost. Third, it will provide various packages of insurance servicewhich individuals want based on quality-premium relations.
The increase in the health cost can be worried. However, the pr ivate sector willchange the health industry to be more efficient and reduce the health care cost with the higher satisfaction of the covered. The basic change of health insurance system suggested by this paper are as follows; first, the health insurance system should be changed to a diversified and multi-pillar system, second, the private health insurance should cover the co-insurance fee as a supplementary to NHI, third, the Australian type lifetime health insurance coverage is recommended.