Comparative Health Policy Library

SOUTH KOREA | Summary

OVERVIEW

GDP: 1.642 Trillion USD1
Health Expenditure (% of GDP): 7.60%2
 
  • Population: 51.3 million
  • Housing: 81.8 % Urban, 18.2% Rural​4

HISTORY

After the Korean War in 1953, the Republic of Korea’s medical infrastructure and healthcare system needed government attention. The first health insurance legislation in Korea was passed in 1977 and was named the Medical Insurance Act as the foundation of health insurance in the country.5 Before 1977, healthcare services were paid for out-of-pocket by patients except for care covered by a fund specifically for workers affected by industrial accidents. During this time, there were no uniform fee schedules for services; therefore, providers in different locations could charge patients different amounts for the same care. Rapid economic growth in the 1970s and a strong political will to invest in social protection led to the country’s first compulsory health insurance program.6
 
The Health Affairs journal states, starting in July 1977, all companies with more than 500 employees were required to provide a health insurance program, and the companies established separate health insurance societies. Insurance coverage was expanded to companies with more than 300 employees, public servants, and private school employees in 1979. In 1988, coverage was expanded to self-employed individuals in rural areas. The year 1989 marks the year that the Republic of Korea reached universal healthcare by expanding coverage to the self-employed in urban areas.6 Korea achieved universal health coverage in just 12 years from the first national health insurance program. In 2000, the National Health Insurance program underwent major changes resulting in the integration of all health insurance societies into a single insurer. Before this merger, there were three types of social health insurance schemes. A scheme for government employees and teachers as well as their dependents, managed by one insurance society. The second one was for industrial workers and their dependents, administered by about 140 insurance societies. The final one was for the self-employed and workers in firms with less than five employees and had about 230 insurance societies.7
 
The Medical Aid Program was established in 1979 for low-income households after the establishment of the Medical Aid Act in 1977. This created a safety net by the government for patients who are unable to pay for their medical expenses. In 2004, the Medical Aid program was expanded to cover patients with rare, chronic diseases, and children under 18. Life expectancy in has increased sharply, rising more than 8 years over the past 20 years. Traditionally, taking care of elderly people had been a major family burden.To assist with taking care of those afflicted with age-related illness such as Alzheimer’s disease, Parkinson’s disease, or paralysis due to stroke, the Government established a Long-term Care Insurance in 2008 as a pilot with intentions of expanding it.5

HEALTH & HEALTH SYSTEM

The Republic of Korea’s public healthcare system is referred to as the National Health Insurance. It is provided to all citizens through the National Health Insurance Corporation which is housed under the Ministry of Health and Wellness.8 Public health care is funded through a combination of payroll taxes, government subsidies, outside contributions, and tobacco surcharges.9 An average of 5% of payroll is deducted out of an employee’s monthly income, split between the employee and the employer.Contributions from individuals who are self-employed are taxes determined based on income and families. Low-income families are exempted from monthly contributions to the health system.8 Tobacco surcharges provide approximately 6% of funding and the national government around 14% of funding.5
 
Korea reports the highest percentage of out-of-pocket payments for medical care out of all the OECD countries. In 2013, the share of out-of-pocket health expenditures was 1.7 times higher than the OECD average.10 Self-pay accounts for approximately 35% of total health expenditures, however, medical is relatively inexpensive in Korea. Out-of-pocket payment for Inpatient care ranges between 10-20% of the total cost of treatment. Outpatient care ranges between 40-50% of the total cost of treatment plus a consultation fee for each visit, except with care at clinics which are 30% of the treatment of cost with no consultation fees.5 Koreans are also free to choose their physicians and hospitals except for specialized general hospitals where referrals are needed. Most doctors are in private practices and most hospitals are privately owned.8 Private health insurance is focused primarily on providing lump-sum payments when a person is diagnosed with a specific disease and aims to reduce out-of-pocket payments. It is not very common to have private health insurance, especially since it only accounts for 4% of health expenditures.11
 
According to a report by the World Health Organization, The Ministry of Health and Wellness is in charge of policy decisions as well as supervision of the health system and the operation of the National Health Insurance Program. The National Health Insurance Corporation (NHIC) is in charge of managing the National Health Insurance Program and manages enrollment, collection of contributions, and sets of medical fee schedules. The Health Insurance Review Agency (HIRA) reviews medical fees and evaluates health care. The Ministry of Health also directs and supervises medicare institutions who are in charge of providing healthcare services.11
 
The Medical Aid Program was a part of the 1977 Medical Aid Act to bridge health gaps affecting lower-income Koreans. The program is a supplement for high need Koreans that are beneficiaries of the Korean livelihood program and are unable to contribute to the National Health Insurance. A person or family must be registered and recognized by the livelihood program to receive benefits from the Medical Aid Program. The program is jointly funded by the central and local governments. The Ministry of Health sets and annually modifies the criteria for beneficiaries while local governments select the beneficiaries based on that criteria.11
 
The Republic of Korea still experiences challenges in health and in the healthcare system. A major problem concerns health disparities in medical services for rural areas. Most private medical facilities are located in urban areas. About 90% of physicians are concentrated in urban areas while only 80% of the population lives there.5 Korea, like other developed countries, is experiencing a shift in age structure. It is becoming an aging society and the significant reduction in birth rates presents a challenge and a financial burden for the Korean government and the working population that helps finance it.5 Korea also has the highest suicide rate in the OECD and these rates have more than doubled since 2000. It is particularly high for older men and it is the number one cause of death among teenagers.10

HEALTH INDICATORS & DEMOGRAPHICS

Korea has reached favorable health indicators such as a dramatic increase in life expectancy and significant decreases in mortality rates overall. This is due to a national focus on health efforts backed by a rapidly growing economy. However, health disparities still exist between Koreans living in urban and rural areas.5 
 
  • Fertility Rate: 1.1 live births per woman  
  • Life Expectancy (Female, Male): 86, 81 
  • Infant Mortality Rate: 1.8 deaths per 1,000 live births  
  • Child Mortality Rate: 2.2 per 1,000 live births
  • Maternal Mortality Rate: 11 deaths per 100,000 live births  
  • Prevalence of Obesity: 4%
  • Korean: 96%
  • Other: 4%
    Note: The Republic of Korea has strict and conservative policies when it comes to immigration which contributes to homogeneity. 
  • 0-14 years: 13%  
  • 15-24 years: 12.2%
  • 25-54 years: 45.1%
  • 55-64 years: 15.1%
  • 65 years and over: 14.6%

References

1 The World Bank. (2020). Korea, Rep. . Data. https://data.worldbank.org/country/KR. 

2 The World Bank. (2017). Current health expenditure (% of GDP). Data. https://data.worldbank.org/indicator/SH.XPD.CHEX.GD.ZS. 

3 South Korea Population (LIVE). Worldometer. (2020). https://www.worldometers.info/world-population/south-korea-population/. 

4 Song, Y. J. (2009). The South Korean Health Care System. International Medical Community, 52(3). https://www.med.or.jp/english/journal/pdf/2009_03/206_209.pdf 

5 Song, Y. J. (2009). The South Korean Health Care System. International Medical Community, 52(3). https://www.med.or.jp/english/journal/pdf. 

6 Jeong, H.-S. (2011). Korea’s National Health Insurance—Lessons From The Past Three Decades. Health Affairs, 30(1), 136–144. https://doi.org/10.1377/hlthaff.2008.0816 

7 Kwon, S. (2008). Thirty years of national health insurance in South Korea: lessons for achieving universal health care coverage. Health Policy and Planning, 24(1), 63–71. https://doi.org/10.1093/heapol/czn037 

8 Goldrick, S. (2020, May 6). We should follow South Korea’s example of how to provide a nation with healthcare. CT Viewpoints. https://ctmirror.org/category/ct-viewpoints/we-should-follow-south-korea.... 

9 InterNations GO! (2020). Healthcare in South Korea. https://www.internations.org/go/moving-to-south-korea/healthcare. 

10 Health policy in Korea. https://www.oecd.org/korea/Health-Policy-in-Korea-April-2016.pdf. 

11 World Health Organization. (2009). (rep.). An analysis of the health financing system of the Republic of Korea and options to strengthen health financing performance. Retrieved from https://www.who.int/health_financing/documents/hsfr_e_09-korea.pdf?ua=1 

12 South Korea Population (LIVE). Worldometer. (2020). https://www.worldometers.info/world-population/south-korea-population/. 

13 Geography Now! South Korea (Rok). (2017). YouTube. https://www.youtube.com/watch?v=zTK119W8MBA. 

14 South Korea Age structure. South Korea Age structure - Demographics. (2020). https://www.indexmundi.com/south_korea/age_structure.html. 

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