Korea operates a national health insurance program. All Korean nationals are obligated to subscribe to it and pay insurance premiums set by the government.

Under this system, insured people pay premiums differentially according to their incomes and assets, and the nation provides them with equal medical services.

Lee Bo-hyoung, CEO of Macoll Consulting Group
Lee Bo-hyoung, CEO of Macoll Consulting Group

Medical institutions cannot reject insured patients, so people can visit any hospital as long as they have national health insurance.

Korean people can receive treatment without discrimination because most essential medical practices are covered by health insurance.

Such an advanced national health insurance system resulted from unifying all health insurance into single national health insurance since the introduction of social health insurance in 1977.

Experts say that the speed of health insurance’s growth and development has been unprecedented in the history of social health insurance.

In 2020, the total revenue of the national health insurance was about 77 trillion won ($65.16 billion).

The design of the national health insurance gave a mighty negotiating power to the National Health Insurance Service, the operator of the program when it purchases medical services and drugs.

The NHIS sets reimbursement rates for medical services, and drugs substantially affect medical institutions and the pharmaceutical industry.

This health insurance market consists of many suppliers and a sole purchaser.

The universal health insurance system received good evaluations from the public in terms of equal provision of medical services and broad access to health insurance.

The system proved its efficiency during the recent Covid-19 quarantine and control.

However, despite the positive assessments, Korea’s health insurance system has contradictory aspects.

First, the proportion of state-run hospitals is significantly low in Korea, and most medical institutions providing insured medical services are privately run.

Second, most of the financial resources of the national health insurance come from health insurance premiums paid by the public, and the proportion of public funds is very low.

Third, the scope of health insurance coverage is not broad, except for essential treatments. Because of this reason, medical cost burdens on households are still large, although the national health insurance has grown rapidly.

Fourth, as the NHIS regulates reimbursement rates uniformly, the pharmaceutical and medical industries frequently clash with the government and the NHIS.

Moreover, recent social changes aggravated the difficulty in operating the national health insurance program.

In proportion to GDP, Korea’s medical cost is low at 8 percent, compared to the OECD average of 8.8 percent, but the number is rising rapidly among OECD countries. For example, Korea’s figure increased 1.5 percent in the past five years, whereas the OECD average grew 0.1 percent.

With the low birth rate and the population aging, the demand for medical services will continue to rise. Still, the NHIS’ income of insurance premiums will shrink due to a decrease in the economically active population.

To ensure that Korea’s national health insurance continues to function as social insurance effectively, the government must broaden the insurance coverage and resolve the issue of increasing medical expenses swiftly.

The government should re-establish the priorities of health insurance coverage according to the low-birth, population-aging social structure. Also, it should quickly improve the cost efficiency of the health insurance program.

 

 

Lee Bo-hyoung designs effective communication models for policymakers and stakeholders moving in a non-market and provides all services necessary for social conflict management, including risk diagnosis and response strategy development in the public sector, crisis management consulting, and public affairs. He received a Bachelor of Geography from Seoul National University, a master’s degree in Art, Communication, and Media Studies from Yonsei University Graduate School of Journalism & Mass Communication, and a Ph.D. in Economics from Hansung University for his research on the effects of Covid-19 on the labor market.— Ed.

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