High-income countries South-East Asia

GNHE launches its 15th UHC country assessment: South Korea

Tae-Jin Lee, of the School of Public Health at Seoul National University in South Korea, has just published an assessment of the country’s progress towards universal health coverage for GNHE.

You can read the full assessment here.

 

The author’s main conclusions are:

  • South Korea achieved universal health coverage rapidly.
  • To do so, the government chose a ‘low contribution–limited benefit coverage’ strategy, combined with high co-payments at the time of service utilisation.
  • This inevitably resulted in high out-of-pocket payments, which had implications for financial protection and access to health services.
  • Currently, mandatory National Health Insurance contributions, the largest source of health financing, are regressive, mainly because of a contribution ceiling.
  • This means that low-income households bear a higher financial burden compared to their ability to pay.
  • Consequently, almost 2% of households experienced catastrophic payments at a threshold of 40% of non-food household expenditure in 2000.
  • The impoverishing impact of high out-of-pocket payments was a two-percentage point increase in poverty, affecting around 800,000 Koreans.
  • In addition, many expensive services are not covered under National Health Insurance.
  • Low-income households have to pay for uncovered services on an out-of-pocket basis, or forgo those services.
  • Considering that out-of-pocket payments are progressive, and that high-income households experienced catastrophic payment more frequently than low-income households, it is likely that low-income households have limited access to uncovered services, whether needed or not, compared to their high-income counterparts.
  • Currently, there is much debate on how to expand benefit coverage in South Korea, which is crucial to improving the level of financial protection, increasing the size of the single risk pool, promoting cross-subsidisation and strengthening the purchasing power of government.
  • This requires enhanced revenue collection and an increase in the share of total health expenditure made up by mandatory prepayment, while reducing the share of out-of-pocket payments.
  • For the expansion of benefit coverage, especially to low-income households, it is also necessary to exert purchasing power more actively so as to include additional services that are effective in meeting the health care needs of the population.
  • The National Health Insurance Service needs to pay attention not only to the effectiveness of services but also the cost-effectiveness.
  • Primary care is a good example of a cost-effective set of services. Because the primary care level does not have a gate-keeping function in South Korea, many patients access higher levels unnecessarily and a significant amount of health resources are utilized inefficiently, with no extra health benefit. By re-vitalising the functions of primary care, efficiency in health service utilisation could be improved.
  • Lastly, under the fee-for-service payment system in South Korea, providers have incentives to induce demand for more services than are necessary. Supplier-induced demand threatens the financial sustainability of the single risk pool and could result in reduced financial protection and access in the long run.
  • In order for National Health Insurance to be sustainable, provider reimbursement reform – such as the introduction of an expenditure cap for providers through a global contract – is urgently required in South Korea.

 

Lee T-J. 2015. Universal health coverage assessment: South Korea. Global Network for Health Equity (GNHE). Available at: http://gnhe.org.