Health insurance is essential to protect people’s lives and health, but every country has a different system. Countries have their own health insurance systems that have developed based on different environments and histories. While many countries, including the U.S. and some European countries, allow public and private insurers to coexist, others like Korea and the U.K. operate a single state-run health insurance program.

A single health insurance system has many advantages. As the government guarantees it, it is more stable than private insurance. It guarantees minimal healthcare service for all citizens equally.

However, a state-run health system has disadvantages, too. Since there is only one health insurance, it is highly unlikely that subscribers will get non-reimbursable new drugs, medical devices, and technologies. As taxpayers’ money runs the national health insurance, the government tends to be conservative in introducing new technologies. Then, technological innovation cannot reach patients at the right time. Especially when healthcare technologies are advancing at light speed, these concerns are all the more aggravating.

To address those concerns, state insurers of many countries improve reimbursement structures radically to embrace innovative healthcare technologies. In August 2020, the U.S. Centers for Medicare & Medicaid Services (CMS) proposed the so-called “Medicare Coverage of Innovative Technology (MCIT),” a new insurance coverage pathway for innovative medical devices. It is a bold plan to apply Medicare coverage to the entire U.S. for four years for FDA-designated breakthrough medical devices.

The U.S. government designates some technologies treating or diagnosing serious diseases as breakthrough medical devices and simplifies the licensing process for them. Going further, the U.S. government also provides insurance coverage benefits, crucial for innovative technologies to enter the market. The policy seems to have derived from the perception that it was unreasonable to request too much evidence for completely new technologies when reviewing breakthrough medical devices.

As of the middle of last year, the U.S. designated over 300 breakthrough medical devices, including AI-using devices, digital therapeutics, and electronic pills. Before conducting the MCIT policy fully, the U.S. government is collecting opinions. Of course, the health industry welcomes the move. The full implementation of this policy will allow over 300 innovative medical devices to enter the American market.

Germany has taken a bolder action. Since the country’s parliament passed the Digital Health Care Act in 2019, it has been operating DiGA (Digitale Gesundheitsanwendungen, or “apps on prescription”). As long as a digital healthcare app wins approval as a medical device, it can be temporarily reimbursable for at least 12 months and 24 months at maximum. The health authorities then collect evidence based on temporary reimbursement and recalculate the reimbursement after the one-year or two-year period. The implementation of this policy signals that the German government felt a sense of crisis, worrying it might not lead the digital transformation.

With the new DiGA policy, 10 digital healthcare apps have started to get reimbursement already. Most of them are digital therapeutics, and indications vary from diabetes to depression, insomnia, migraine, and tinnitus. The system allows device developers to set the reimbursement rate between 116 euros ($139) and 743 euros.

What is the situation like in Korea? The Korean government released various support and deregulation measures to help advance the healthcare sector. However, it has failed to discuss improving the reimbursement structure. Under the single health insurance program, all the other policies without any reimbursement improvement are just stop-gap tactics. Like the U.S., Korea designates innovative medical devices and technologies, but they have nothing to do with insurance benefits. This is why the government’s measures fail to encourage the industry to move forward or develop new technologies.

Over 60 AI-using medical devices, including those designated as innovative medical technologies, do not receive any insurance coverage even though they won the permit from the Ministry of Food and Drug Safety. Digital therapeutics, being actively developed now, are likely to face a similar situation if the government fails to improve the reimbursement structure.

The key is innovating reimbursement, but the discussion has been in stalemate for years in Korea. There is no solution other than innovation in reimbursement structures like those of the U.S. and Germany to introduce innovative technologies and promote the healthcare industry. If the government keeps avoiding this fundamental problem, the impasse will continue in the future. The authorities have made excuses saying there have been no such cases abroad.

But now, there are precedents, and there will be more in the future. Now, the reasons, justifications, and precedents are sufficient for change. If the government wants to change, now is the right time.