MOHW Policies on Health Industry and National Pension Fund
- Submits amendment of the act on the fund for parliamentary approval

Health and Welfare Minister Kim Geun-tae brings a special aura to the ministry due to his status as a possible Presidential candidate to succeed President Roh Moo-hyun. He recently made a splash in media with his statement opposing the use of the National Pension Fund to buy stocks, among others, going against the cabinet decision. The outspoken minister insisted that the Ministry of Health and Welfare should be the ultimate custodian of the fund responsible for the livelihood of millions of pensioners in the country.
In this special written interview Minister Kim with NewsWorld, he shared the view that the fund, now being invested mainly in bonds, needs to be made available for such diverse investment portfolio as stocks and social overhead capital projects to turn around the sagging national economy.
Minister Kim made it clear that the operation of the fund should be based on stability, however. "Only thing is that the scale of investment would have to be decided by a fund management committee, with the participation of civil and consumer representatives. But again, any decision on the operation would have to be based on stability, a major operational guideline of the fund," he said.
The minister added that the ministry has been operating a mid- to long-term master plan team for setting the direction of long-term investments, and economic and financial experts have been contemplating the establishment of a plan for the management of the fund in the next five and 10 years, including investment policies and diversification.
With regard to the issue of establishing foreign hospitals in free economic zones, Minister Kim said that the ministry believes that the establishment of foreign hospitals in the Incheon Free Economic Zone (IFEZ) is essential in creating a hospital hub in Northeast Asia and facilitating the successful establishment of the IFEZ. But in an effort to solve such problems as inequality and the polarization of the projected foreign hospitals, he said the government will extend the coverage of the national health insurance system, raise the level of Medical Assistance, and upgrade the quality of public health care services.
Asked to comment on steps to cope with a low birth rate, Minister Kim acknowledged that the rapidly declining birth rate in an aging society is an urgent issue the government will have to grapple with under the socioeconomic perspective. To this end, the ministry has been seeking to enact the Basic Law on Aging and Population, stipulating the establishment of comprehensive steps for marriages, pregnancy, childbirth, childcare and educational conditions, he said. Following are excerpts from the interview:

Q:Can you introduce to our readers some of the key projects for your ministry among the 50 largest tasks the ministry selected including the reduction of time it takes to allow the sale of a bio high-tech drug announced recently?
A: Our ministry selected 50 large projects in connection with nurturing five strategic health industry projects as a core national task. The selection was made following the consultation with people in the industry, and academia. They break down to 23 in the area of softening regulations and rationalization, 13 in the area of infrastructure build-up, 11 in the areas of providing research and development support and 3 in the sector of joint subjects in the health industry.
Key items to be pushed hard in the area of deregulation and rationalization are as follows:
In the sector of pharmaceutical goods, 75 evaluation and screening standards have been adopted to expedite the approval process of drugs.
In the area of medical equipment, regulations would be improved to the extent of allowing making approval requests for certain medical equipment regardless of permission on manufacturing. In the sector of food, quality regulations on protein and fat contents will be either eased or eliminated from the Food Code. Instead, the Food Code will be revised to focus on the hygiene standard, with regulations on heavy metals and germs. In the area of cosmetics, the number of cosmetic goods will be increased with the expressions used in describing quality and effect to be more diversified.
The ministry will also set up mid-to-long-term strategy for the development of BT industry in the health and medical sectors this month for concentrated development of the industry.

Q: Major pharmaceutical firms have been busy developing new drugs and do you have a special plan to support the development of new drugs?
A: The government provided 99.4 billion won for the support of developing new drugs between 1995 and 2003 with 26.9 billion won set aside for this year and 29.9 billion won for next year. The government has allocated 6 billion won for the development of new bio drugs in six sectors and will increase the support fund for next year to 9 billion won for these sectors.
The government will also support the regional clinical experiment center with 60 billion won in funds in the next 10 years, the facility needed for international clinical experiment of new drugs.

Q: Can you tell us your ministry's plan to beef up large hospitals to be competitive and what is the government's position to allow the establishment of foreign hospitals in the three largest free economic zones and on Jeju Island?
A: The government plans to ease irrational regulations and systems in line with its policy to develop the medical service industry. The ministry is in the process of reviewing various ideas to make hospitals and medical services more competitive. We believe that the establishment of a foreign hospital in the Incheon Free Economic Zone is essential in creating a hospital hub in Northeast Asia and facilitating success of the free economic zone. Incheon will be the only free economic zone to have a foreign medical clinic and other FEZs including Jeju Island will not be entitled to have one. To resolve the issue of equality in relation to the use of the foreign hospital, the government will extend the coverage of the national health insurance system, increase the level of Medical Assistance, a government benefit scheme for the underprivileged, and improve the quality of public health care services. Approximately four trillion won will be invested in the public health sector between 2005 and 2009, as the relevant government ministries agreed to gradually increase the benefit level of Medical Assistance to that of the National Health Insurance.

Q: What is the current status of the National Pension Fund and mid-to long-term plans to improve it?
A: As of Oct. 31, the fund has 130 trillion won of which 121 trillion won have been invested in the financial sector and 9 trillion won in the public and welfare sectors. About 110 trillion won have been invested in bonds, 9 trillion won in stocks and 2 trillion won in short-term funds. The need for measures to effectively cope with the changes in the financial environment has been rising with the fund expected to increase to 330 trillion won in 2010. The ministry submitted to the National Assembly in June this year a draft of amendment of the National Pension Law to provide for a professional management of the fund by financial experts. The ministry has been operating a mid-to long-term master plan team for formulation of a long-term investment plan. Economic and financial experts have been looking into the establishment of a plan for the management of the fund from five to 10 years ahead including investment policies and diversification.

Q: Many people support the ministry's position with regard to the operation of the fund and what are your future measures?
A: Given the public nature of the National Pension Fund as a reserve fund for contributors, the government will focus on a low-risk investment strategy seeking substantial returns and serving the public interest.
The fund has been invested mainly in bonds and therefore it needs to be invested in stocks and social overhead capital projects to help turn around the national economy.
Only thing is that the scale of investment would have to be decided by a fund management committee, with the participation of civil and consumer groups representatives. But again, any decision on the operation of the fund would have to be based on stability, a major operational guideline of the fund.

Q: What is the status of the National Health Insurance and its financial operation plan for next year?
A: The finance of the National Health Insurance will end in the black this year the same as last year, ending annual deficits that continued for three years from 2001. It will end in balanced note. The surplus is expected to amount to 1.6 trillion won this year, and net surplus would be around 100 billion won, offsetting the accumulated deficit of 1.5 trillion won. It is the result of the steady payment of the insurance premium by the subscribers and reductions in medical charges with the help of the medical community.
From now on, the ministry plans to keep balance in the operation of National Health Insurance and expand its coverage based on the balanced operation.
Particularly, next year, the insurance premium rate will be hiked 2.38 percent and the medical charge reimbursement rate raised 2.99 percent as agreed between subscribers and suppliers. The operation of the health insurance will be stabilized based on a proper burden and proper payment system.

Q: What can you say about reforming the operation of the National Health Insurance Corporation?
A: Public perception about this Corporation is that it is unkind and has too many employees. The ministry plans to reform its organization based on these perceptions. The Corporation's operational budget has been reduced this year compared to the previous year. It was the first cut made since July 2000 when its organization was integrated to spur reform from inside. About 5,000 employees were let go in the process of integration, but the Corporation still has surplus manpower. The Corporation revised its personnel regulations to normalize its manpower flow; The early retirement age was lowered to 15 years from 20 years and employees from third-grade and up can be hired from outside to liberalize its personnel policy. Currently, in-house audit on the Corporation's organization is being conducted to see its framework from the side of the public during its 6 month inspection period. Next year, the establishment of the call center will be promoted to take charge of various claims made through telephone calls by the people.

Q:What are government policies to cope with low birth rate, potentially a serious problem? How is the government preparing for a rapidly aging society, which would hamper continued economic growth pursued by the government?
A: The rapidly declining birth rate would lead to a drastic reduction in the number of population in the long run, with cuts in the number of productive population, inviting an aging society. The aging society would cause workforce shortages, lowering economic growth, a source of growing concern across all levels of society. We need policies to cope with the low birth rate to maintain a workforce big enough to spur continued economic growth. The low birth rate has been caused by various social and economic changes, along with changes in values and it needs comprehensive and long-term measures on a steady basis. Our approach has been based on a premise that the birth of children belongs to individuals and homes, but raising them should be shared with the government and society.
Therefore, the ministry has conducted consultations with concerned ministries and the Presidential Committee on Aging and Future Society to set up comprehensive measures for such matters as marriage, pregnancy, birth, nurturing and education, among others.
The ministry has also been promoting to legislate the Basic Law on Aging and Population to secure a base for stable and steady policies. The draft law includes such matters as policies for a stable population, pregnancy, childbirth, care for children, nurturing education environment and health for mothers and children, among others. nw