A quick view of South Korea’s economic growth and healthcare spending
South Korea’s healthcare (HC) expenditures were €58.14 bn from 2016-2017, or 4.6% of the GDP. As a percentage of GDP this expenditure is forecasted to decrease slightly over the next 2 years, though overall expenditure will increase steadily, due to positive GDP growth forecasts.
South Korea is the 4th largest economy in Asia, expected to grow in the coming years at a rate of 2.8% in 2018 and 3.1% in 2019.
About 56.2% of healthcare funding is provided by national and state governments, i.e. public sources. The rest comes from private sources and patient contributions.
Public health insurance
The single-payer system used in South Korea, named the National Healthcare Insurance (NHI), accounts for around half of the entire healthcare costs.
Healthcare coverage in South Korea has been continually expanding since 1988, resulting in a universal health insurance with 99.9% of the population covered. 96.5% are covered by the National Health Insurance Program (NHIP), and the remainder – the most vulnerable and poor population- are covered by the Medical Aid Program. In the NHIP, practically all non-elective procedures are covered, with varying deductibles being contributed by the patient.
The insurance benefits package in South Korea is the same for the entire population. Patients under this system currently contribute a fee-for-service (FFS) which is the dominant method of payment for physicians, clinical services, and pharmacists.
A core function of the NHI is setting the costs of every (non-elective and reimbursed) procedure and pharmaceutical used.
Funding for the NHI
A nationally levied tax and a mandatory (and automatic) enrollment scheme with premium payments, are the principle funding mechanisms of the NHI. Premiums are income based, i.e. higher earners pay more. Only the poorest and other vulnerable groups are exempt and receive care free of charge.
The NHIP manages the coverage and enrollment of all Koreans, collecting the contributions, and setting the medical fee schedule. Government subsidies and taxation on cigarettes are also used to finance the program.
HC insurance programs
The National Health Insurance Program (NHIP) is the culmination of a reform that took place in 2000 that unifies all existing health insurance societies under one roof. The change was made with the aim of reducing the burden of medical care expenses and improving the access to medical care services for the general population.
The Medical Aid Program covers lower incomes citizens and is comparable to Medicaid in the USA.
Long-Term Care Insurance has been a mandatory public insurance scheme for 10 years. Payers of the regular national insurance premium automatically contribute to the LTC Insurance fund. Stringent eligibility criteria render over 90% of elderly citizens as not entitled to LTC Insurance benefits. Benefits for those who do qualify include home-based care, institutional care and in certain rare cases cash payments. Only recently have the criteria widened (from its formerly physical-disability based approach) to include dementia as well.
In recent years, the growing economy and increased consumer demand for higher quality healthcare has created a significant amount of financial pressures on the system resulting in a cumulative deficit in the system since 2001.
Efforts have been made and reforms put in place in an attempt to reduce the deficit and reach financial stability.
Some such measures include:
- Government contributions from general tax revenues
- Higher premiums
- Cigarette taxes
- Fee increases
- Stricter monitoring of medical fraud in claims processing
Private health insurance
Private health insurance serves to cover treatments that are not listed for reimbursement in the NHIP. Around 80% of the population has private insurance; private insurance covers 6% of the total healthcare costs.
Though the national insurance is considered of high quality and has wide coverage, there are still steep costs for certain conditions, e.g. cancer, since many treatment options fall under elective-care classification and are accordingly not reimbursed. Furthermore, costs can quickly accumulate for chronic conditions, since deductible payments are still charged along each step of the care path, and these are usually a percentage of the total cost without a patient expenditure capping.
For further quantitative and qualitative information on the South Korea healthcare system and the macroeconomic climate, please look into our Business intelligence platform or order the South Korea Healthcare Scan incl. Surgical Procedures Volumes (all specialisms) – product license containing volumes of 984 surgical procedures in 13 specialisms.
Other licenses to our business intelligence platform depending on your needs are also available.
About Laura Weynants
Performs primary and secondary market research to create country reports at TforG. Interviews KOLs and medical sector professionals to build on TforG’s healthcare market expertise and competence networks. Complementing five years of sustainability policy and CSR communication, she now focuses on grasping key medical market trends, structures and opportunities in medical sectors worldwide. Coming from an international background of living in Germany, Spain, USA, UK and Belgium, she has gained a keen insight in international organizations and language skills to perform first hand investigations. She graduated from Sussex University Brighton, UK with a BA English Literature and Sociology and achieved a Master Degree in Sustainability and Corporate Social Responsibility in EOI Business School in Madrid, Spain.