Healthcare in South Korea

Social health insurance was introduced with the 1977 National Health Insurance Act, which provided industrial workers in large corporations with health insurance.[13] The program was expanded in 1979 to include other workers, such as government employees and private teachers. This program was thereafter progressively rolled out to the general public, finally achieving universal coverage in 1989.[14] Despite being able to achieve universal health care, this program resulted in more equity issues within society as it grouped people into different categories based on demographic factors like geographical location and employment type.[15] These different groups ultimately received different coverage from their respective healthcare providers.

The healthcare system was initially reliant on not-for-profit insurance societies to manage and provide health insurance coverage. As the program expanded from 1977 to 1989, the government decided to allow different insurance societies to provide coverage for different sections of the population in order to minimize government intervention in the health insurance system. This eventually produced a very inefficient system, which resulted in more than 350 different health insurance societies.[16] A major healthcare financing reform in 2000 merged all medical societies into the National Health Insurance Service (NHIS).[17] This new service became a single-payer healthcare system in 2004. The four-year delay occurred because of disagreements in the legislature on how to properly assess self-employed individuals in order to determine their contribution.[13]

The insurance system is funded by contributions, government subsidies, and tobacco surcharges and the National Health Insurance Corporation is the main supervising institution. As of 1 January 2021, the applicable premium rate, including long-term care insurance, is approximately 7.65% of the monthly wages (currently capped at a monthly contribution of KRW 7,047,900 in total, subject to change in 2022); split equally between employers and employees at approximately 3.825% each. The employee contributions to the NHI program are deductible in calculating taxable income.[18] The national government provides 14% of the total amount of funding and the tobacco surcharges account for 6% of the funding.[19] The total expenditure on health insurance as a percentage of gross domestic product has increased from 4.0% in 2000 to 7.1% in 2014.[20]

The National Health Insurance Corporation, which is overseen by the Ministry of Health and Welfare, is responsible for providing healthcare through the National Health Insurance Service. South Koreans are required to contribute to the NHIS through payroll taxes to insure themselves and their dependants. An average of 5% of payroll is deducted out of employees' monthly incomes, divided between the employee and the employer. The self-employed are required to pay contributions through taxes based on their income level. Low-income households unable to pay National Health Insurance contributions receive health insurance through the Medical Aid Program. It is funded jointly by the central government and local governments, and local governments select the beneficiaries.[21][22]

In 2014, total health expenditure per capita was $2,531, compared to a global average of $1058, and government expenditure on health per capita was $1368.[23]

According to an NHIS survey, 77% of the population have private insurance. This is due to the fact that the national health plan covers at most 60% of each medical bill.[24]

The introduction of health insurance resulted in a significant surge in the utilization of healthcare services among individuals. Between 1977 and 2009, there was a substantial growth in the duration of hospital admissions per insured person, rising from a maximum of 0.1 days to 1.91 days. Additionally, the number of days spent receiving outpatient care increased from 0.7 to 16.07. There was an expansion in medical facilities and an increase in the number of hospital beds, particularly in higher-tier medical institutions. However, when compared to the average figures for healthcare providers in Japan and OECD countries, there remains a gap in terms of the healthcare workforce available to the population. Additionally, there was a rapid increase in the availability of advanced medical devices, including a notable growth in the number of CT and MRI machines, which are considered state-of-the-art equipment. While the rise in advanced equipment signifies improvements in the Korean healthcare system, it also contributes to the soaring healthcare costs that cannot be overlooked. The implementation of a health insurance system has played a role in enhancing the overall health of the population, as indicated by various health indicators.[25]

South Korea's health insurance system allows insured individuals to freely select medical facilities without restrictions on location or type. This policy has led to an imbalance where patients tend to favor larger hospitals, particularly those well-known hospitals in Seoul. As a result, there is a significant concentration of patients seeking care at these renowned hospitals, creating a noticeable imbalance in healthcare utilization. The South Korean government has failed to adequately address health disparities between urban and rural areas. Rural dwellers have a disproportionately greater burden of frailty and aging-related health conditions than those in urban communities. This is due to a number of factors, including the lack of access to private medical facilities in rural areas. The South Korean government has failed to provide adequate working conditions to physicians to address health disparities. Another important aspect that cannot be overlooked is the confusion arising from the introduction of health insurance regarding the roles of healthcare providers. There is a prevalent perception among the public that the government or the insurance companies have replaced the traditional role of healthcare providers. This has led to a sense among physicians themselves that they have become mere instruments serving the interests of the government or insurance groups rather than focusing on the well-being of their patients.[26][27][28]

Every year, the government engages in negotiations with medical professional organizations to determine the extent of the increase in medical treatment fees. Healthcare practitioners argue that South Korea's medical fees are insufficient when compared to other OECD countries, and the fees reimbursed by the government do not cover the cost of services. This debate concerning medical fees and reimbursement has persisted for several years. Virtually, medical fees have been controlled strictly by the government and remain at a fraction of the prices in the United States, and cheaper than those in China and Singapore.[29][30]

South Korea has an insurance system with low reimbursement rates which encourages high turnover by hospitals and does little to dissuade patients from seeking second opinions.[31][32] Health finance system in South Korea is characterized as "low premiums, low medical consultation fees, low pay".[33] The medical policy not to give adequate payment and working condition to medical workers caused shortage of medical workers in some specialties, such as pediatrics, because these specialties involve underpaid treatments which is due to involvement with National Health Insurance. National Health Insurance, setting low medical fees and taking advantage of medical workers, made medical workers in these specialties overworked but underpaid.[34][35][36] When the government broadens the range of health insurance benefits, healthcare facilities tend to offer uninsured services, due to low insurance benefit payment. The cost of healthcare services covered by insurance only amounts to 87% of the original cost. Consequently, healthcare institutions suffer financial losses when providing services covered by insurance.[37] Among OECD countries, South Korea has a notably low proportion of active nurses. Despite a steady increase in the overall number of nurses, the expected growth in the number of active nurses has not been realized due to persistent turnover issues.[38] The failure of the government have sparked opposition from medical workers, leading to strikes and public debate. South Korea is recognized as a nation that offers excellent medical services despite the relatively low burden of public health insurance premiums. Nonetheless, patients bear the responsibility of paying for medical services that are not covered by health insurance, which places a financial strain on them. Healthcare providers encounter challenges due to the significantly low prices set by the health insurance system for the medical services they offer. Healthcare providers face challenges in terms of satisfaction and burnout as they struggle to obtain sufficient treatment time due to inadequate reimbursement.[39][40][41]

In South Korea, the Health Insurance Review and Assessment Service (HIRA) lacks an objective standard for determining appropriate medical fees. HIRA is responsible for collecting and managing healthcare claims data, which is used for analyzing healthcare utilization trends and disease prevalence. The reimbursement coverage and pricing rules for medical devices in South Korea have undergone gradual changes, including the introduction of the 'Value Appraisal Standard (VAS)' system in March 2006. However, the VAS system has faced criticism for its lack of objectivity, transparency, and inadequate recognition of the value of innovative medical devices. In theory, innovative medical devices could potentially receive a premium price of 10 to 50% higher than existing listed medical devices through the VAS application. The prioritization of reimbursement has become a significant concern within South Korea's national health insurance system. Decisions regarding the medical appropriateness of technologies and their reimbursement for daily practice are made by healthcare policymakers. However, these decisions have often been based on subjective opinions or opinion-based information, raising questions about the process of healthcare decision-making.[42][43]

Pediatric care relies especially on volume to compensate for its low fees. Decades of declining birth rates have discouraged South Korean doctors from entering what they fear to be a field without a future. The number of pediatric facilities in Seoul fell by 12.5 percent between 2018 and 2022, compared to an increase of 76.8 percent for psychiatry clinics and a 41.2 percent rise for anesthesiology centers. Conditions such as overcrowded waiting rooms and a shortage of hospital beds have led to the death of at least one child. The difficulty in obtaining pediatric care is causing many South Korean couples to reconsider having babies.[44]