Transcript The Korean Health Insurance System: Opportunities and

The Korean Health Insurance System:
Opportunities
and Challenges
Minah Kang Kim, Ph.D.
Ewha Womans University
Republic of Korea
Overview of the
Korean health system
and the NHI scheme
Recent reforms
and new problems
Major issues
and challenges
Remaining Issues
and conclusion
Key Characteristics of
Korean Health Care System

GDP share of health care expenditure: 5.6% in 2003

4 main sources of funding
Private sector dominance of medical care delivery


Payment/reimbursement methods
– fee-for-service
– DRG-based payment system on a voluntary basis

Almost free choice of providers
Health Status and Demographic Changes

Dramatic improvements in health outcomes
 Life
expectancy at birth: 76.9 years
 Infant mortality rate: 6.2 in 1999

Socio-demographic changes
 Ageing
society
 Mortality and morbidity patterns have changed
from communicable diseases to chronic and
lifestyle-related diseases
Population Coverage
Whole Population
Employee Insured
Employees
in
Private
Sector
Government
/Private
School
Employees
Self-Employed Insured
The Selfemployed
In Urban
Areas
The Selfemployed
In Rural
Areas
Brief History of NHI
Jul 1977
Compulsory Medical Insurance program was introduced for companies with
more than 500 employees
Jan 1981
Companies with more than 100 employees was included in the NHI program.
The 1st pilot program for self-employed medical insurance started in three rural
areas.
The persons who were self-employed in rural area came to be covered. The
employees from companies with 5 workers or more came to be covered
compulsorily
Jan 1988
Jul 1989
The persons who were self-employed in urban area came to be covered.
Medical Security for the whole population was accomplished.
Oct 1998
All self-employed insurance societies and KMIC were merged into the National
Medical Insurance Corporation.
Jul 2000
All insurers were integrated into a single insurer, National Health Insurance
Corporation.
Jan 2002
Special Act for Financial Stability of National Health Insurance was enacted.
Jul 2003
Separated health insurance funds between employee and self-employed
insurance program was fully integrated in July 2003.
Population Coverage
(Unit : 1,000 persons, 2004.12.31)
Insurer
The Insured
No. of
Persons
Total population
National
Health
Insurance
Program
Medical Aid
Program
Proportion
48,901
Sub-total
47,371
96.9%
National Health
Insurance
Corporation
(NHIC)
Employee Insured
Self-employed
Insured
25,978
21,392
53.1%
43.7%
Local
Government
Low Income
Households
1,529
3.1%
Health Insurance Benefits
Health Insurance Benefits
Benefits in kind
Benefits in cash
Recipients
Health Care Benefits
The Insured, Dependents
Health Check up
The Insured, Dependents
Refunding Allowance for
Health Care
The Insured, Dependents
Funeral Expenses
Person who held a funeral ceremony
Compensation for
Excessive Co-Payment
The Insured, Dependents
Appliance Expenses for
the Disabled
The Insured and Dependents as the
disabled registered in accordance
with the Welfare Act for the Disabled
Overview of the
Korean health system
and the NHI scheme
Recent reforms
and new problems
Major issues
and challenges
Remaining Issues
and conclusion
Major Challenges and Issues

Strengthening health insurance protection

Addressing the increasing costs of the
scheme

Ensuring the quality of health care services

Strengthening responsiveness of the
system and ensuring the public trust
Strengthening Health Insurance Protection

Low contributions, low benefits, and high copayments to ensure universal coverage at a
low cost

With high user charges, protection of
vulnerable populations, which is the primary
reason for having mandatory SHI programs,
can hardly be achieved
High Out-of-pocket Payment
High coinsurance rates for NHI services
 Limited coverage of services

 Most
outpatient services and high probability
inpatient services covered
 Some low-probability high-cost services not
covered by NHI
 For some uncovered services, fees not
controlled and patients pay totally OOP

Informal treatment charges
Co-payments on Services
Covered by the NHI
Health care
service facility
Co-payment
Inpatient
20% of total treatment cost
Outpatient
Tertiary care hospital
General hospital
Hospital
Per-visit consultation fee + 50% of treatment cost
50% of (treatment cost + Per-visit consultation fee)
40% of (treatment cost + Per-visit consultation fee)
Clinic
Pharmacy
30% of treatment cost
(3,000 won if total cost <15,000 won)
Prescription: >15,000 won: 3,500 won
<15,000 won: 3,000 won
w/o prescription: >4,000 won: 40%
<4,000 won: 1,400 ~ 2,000 won
Third-party
and Out-of-pocket Payment, 2002
(Unit : %)
Third-party
payment
Out-of-pocket
Total
Co-payment
Non-benefit
In-patient
54.9
45.1
16.4
28.8
Out-patient
56.9
43.1
26.0
17.1
Pharmacy
73.0
27.0
25.0
2.0
Source: NHIC, 2004
National Health Expenditure
as Percentage of GDP (1985 – 2001)
7.0
6.5
6.4
6.0
5.5
5.4
5.0
4.8 4.8
4.5
4.7 4.7
4.5
4.0
3.5
4.3
4.1
5.6
4.9 4.9 5.0
4.6 4.6
4.2
4.0
3.0
1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001
Source: Korea Institute of Health and Social Affairs, 2003
Factors for Cost Increase

Common reasons

Unique reasons
 Minimum
regulation of supply-side provision
 Fee-for-service payment methods
 Low contribution rate
 High utilization rates,
both in- and out-patient sectors
Number of CT and MRI in Six Countries
(Unit:
Number/1
million)
Korea
Canada Germany
USA
Japan
France
(2002)
(2004)
(2002)
(2002)
(2002)
(2003)
CT
31.9
10.6
14.2
13.1
92.6
8.4
MRI
9.0
4.7
6.0
8.6
35.3
2.7
Source: OECD Health Data 2005
Rate of Caesarean Sections
Country
Rate
Korea
Australia
Belgium
Denmark
43.0
21.2
15.3
5.0
Finland
Hungary
Italy
15.6
21.4
31.9
Portugal
Sweden
21.3
1.9
Source: OECD Reviews of Health Care Systems: Korea, 2003.
Contribution Rates
country
Germany
(2002)
Japan
(2002)
France
(2003)
Belgium
(2002)
Taiwan
(2002)
Korea
(2005)
Contribution
rate
14.0%
(6.75)
8.5%
(4.25)
13.6%
(0.75)
7.4%
(3.55)
9.1%
(4.55)
4.3%
(2.16)
Ensuring the Quality
of Health Care Services

Health Insurance Review Agency (HIRA) was
established in 2000
reviews claims,
 evaluates the clinical appropriateness of health
care services provided to patients,
 conducts health care assessments to protect
and improve patients' health and satisfaction

Minimal attention to patient safety issues
 Nationwide Hospital Service Evaluation
Program was launched in 2004

Strengthening Responsiveness of the
System and Recovering Public Trust
NHI is a useful system for the nation's
health improvement
81
NHI is a useful system for me
63.5
My contribution spent appropriately
19.8
Too many items are not covered by
insurance
70.7
0
20
40
60
80
% saying strong agree, agree
100
Overview of the
Korean health system
and the NHI scheme
Recent reforms
and new problems
Major issues
and challenges
Remaining Issues
and conclusion
Recent Reforms

Integration reform for equity and efficiency

The Separation Reform for specialization
and quality care

Expansion of insurance coverage

Efforts to strengthen the longer-term
financial stability of the NHI

Preparation for a long-term
care insurance scheme
Integration Reform
for Equity and Efficiency

In July 2000, Korea merged all existing
multiple autonomous insurance societies
(employees and self-employed) into a single
insurer

Goals
 To
increase equity in health financing
 To improve the efficiency of the NHI
administrative system
 To expand risk pooling
The Separation Reform
for Specialization and Quality Care

The functions of prescribing and dispensing
drugs between doctors and pharmacists
separated and specialized, (July 2000)

Goals
 Appropriate
use of drugs
 Enhancement of patient rights for information
and cross-checking system
Expansion of Benefit Coverage



Expansion of service coverage: CT Scan (1996), Csection, basic health screening, stent (2002), MRI
(2005) , Meals (2006), private rooms (2007)
Expansion of covered days: 180 days to 365 days
(2000)
Expansion plan for major illnesses (Sep, 2005)




Cancer, heart disease, cerebrovascular diseases
Patient co-payment 10%
Increased coverage of non-benefits
The number of diseases will reach 10 in 2008
Protection from High Co-payment

Purpose: To alleviate financial burden of
people who pay high co-payments

Compensation for Excessive Co-Payment
Program: Coverage of 50% of the copayment for bills exceeding 1.2 million won
(US$1,200) for a month period

Co-payment ceiling system as a safety-net
 If
an individual pays 3 million won (US$3,000)
within 6 months, the insurer pays the rest
 Effective from 2004.7.1
Efforts to Strengthen the LongerTerm Financial Stability of the NHI

a series of measures
 Increase
in government subsidy and copayment,
 more thorough detection mechanisms for
providers’ frauds,
 improvements in income assessment for the
self-employed,
 an annual increase in the current contribution
rate until 2006
NHI Financial Status: 1990-2003
NHI Financial Status
20000
(Unit: 1 Million $)
15000
Revenue
Expenditure
10000
5000
0
1990
1995
2000
2001
2002
2003
Source: National Health Insurance Corporation, 2005
DRG-based System

providers are paid a fixed amount based on the diagnosis
regardless of the actual cost of treatment

Government launched a pilot program in 1997

Covers seven diagnostic groups, currently implemented on
a voluntary basis

effective in lowering medical expenses per patient

a concern for perverse incentives to engage in substitution
of care (transfer services from inpatient to outpatient
sector), under-provision of necessary services, or DRG
creeping
Preparation for
a Long-term Care Insurance Scheme

long-term care facilities with adequate and affordable care
services are not yet sufficiently available

Government decided to introduce a new social insurance
scheme for long-term care by 2008 and a pilot study is
being implemented in several regions throughout the
country

Issues




the adequacy and type of benefits
the establishment of a finance scheme
the relationship to the current NHI scheme
narrowing the gap between the future need for long-term
care and the required personnel and facility capacity
Overview of the
Korean health system
and the NHI scheme
Recent reforms
and new problems
Major issues
and challenges
Remaining Issues
and conclusion
Remaining Issues




Attaining the public’s trust
Strengthen the mechanism of quality control
Lower the institutional and geographical barriers
Channel sufficient resources for outcomes
research and health promotion.