National Health Insurance Program

Coverage Level: 50 million
Types of Benefits:
Primary Source of Funding:
Provider Payment Mechanisms:
Program Summary: 
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In 2000 the Unified Health Insurance Act integrated all existing health insurance societies under the National Health Insurance Program (NHIP). NHIP requires compulsory health insurance for all Korean citizens, either in the “employed” category or the “self-employed” category. Funding for the Program comes from government subsidies, a tax on cigarettes, and contributions from the insured and employers. The insured pay monthly premiums that are proportional to their income. Contributions are generally shared equally between the employee and employer, with the employer paying 50% of the contribution and the employee paying the other 50%. Contributions are reduced for individuals living in remote areas or islands, and those in the military are exempt from the monthly contributions. Benefits are the same for all insured individuals, and include curative and preventative services. Co-payments are required for out-patient and in-patient services. About 90% of all medical care services are provided by the private sector.

In 2000 the Unified Health Insurance Act integrated all existing health insurance societies under the National Health Insurance Program (NHIP). NHIP requires compulsory health insurance for all Korean citizens, either in the “employed” category or the “self-employed” category. Funding for the Program comes from government subsidies, a tax on cigarettes, and contributions from the insured and employers. The insured pay monthly premiums that are proportional to their income. Contributions are generally shared equally between the employee and employer, with the employer paying 50% of the contribution and the employee paying the other 50%. Contributions are reduced for individuals living in remote areas or islands, and those in the military are exempt from the monthly contributions. Benefits are the same for all insured individuals, and include curative and preventative services. Co-payments are required for out-patient and in-patient services. About 90% of all medical care services are provided by the private sector.

The Ministry of Health and Welfare (MoHW) oversees the NHIP, and is in charge of centralized policy formation. MoHW delegates a majority of the daily management of NHIP to 2 not-for-profit organizations: the National Health Insurance Corporation (NHIC) and the Health Insurance Review Agency (HIRA). NHIC is the single insurer for NHIP and is in charge of managing and monitoring the Program. The Health Insurance Review Agency (HIRA) reviews medical claims and evaluates health care performance.

The Long Term Care Insurance Program was introduced in 2008 intending to act as a social insurance system to cover about 3.8% of elderly Koreans who have serious limitations in performing daily activities. This program is funded by contributions from the insured, government subsidies, and co-payments from beneficiaries. The government finances 20% of total long-term care insurance and users pay 15% co-payments for in-home services and 20% co-payment for institution services.

Funding: 
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The National Health Insurance Program (NHIP) has 3 sources of funding: monthly premium contributions from the insured and employers; government subsidies; and tobacco surcharges.The National Health Insurance Program (NHIP) has 3 sources of funding: monthly premium contributions from the insured and employers; government subsidies; and tobacco surcharges. Premium contributions are proportional to income and are shared equally between the insured individual and the employer. For the self-employed, premiums are calculated based on their income level in conjunction with the person’s property, motor vehicles, age and gender. There is a reduced contribution requirement for those who live on islands and remote areas and those serving in the military are exempt from paying premiums.

The National Health Insurance Program (NHIP) has 3 sources of funding: monthly premium contributions from the insured and employers; government subsidies; and tobacco surcharges.The National Health Insurance Program (NHIP) has 3 sources of funding: monthly premium contributions from the insured and employers; government subsidies; and tobacco surcharges. Premium contributions are proportional to income and are shared equally between the insured individual and the employer. For the self-employed, premiums are calculated based on their income level in conjunction with the person’s property, motor vehicles, age and gender. There is a reduced contribution requirement for those who live on islands and remote areas and those serving in the military are exempt from paying premiums.

The National Government provides 14% of the total annual projected revenue of the NHIP. In addition, the government has a tobacco surcharge that contributes about 6% of the total annual projected revenue to the health insurance program.

Population covered: 
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All South Koreans are eligible and required to have health coverage under the National Health Insurance Program (NHIP). NHIP is managed by the National Health Insurance Corporation, which is responsible for enrollment and communication. NHIC uses local branches to enroll individuals and to collect premiums. The insured are divided into two groups: employee insured and self-employed insured. The employee insured category composes about 59% of the total number of insured.

All South Koreans are eligible and required to have health coverage under the National Health Insurance Program (NHIP). NHIP is managed by the National Health Insurance Corporation, which is responsible for enrollment and communication. NHIC uses local branches to enroll individuals and to collect premiums. The insured are divided into two groups: employee insured and self-employed insured. The employee insured category composes about 59% of the total number of insured. Those in the self-employed insured category include about 41% of the total insured population.

Population coverage of health insurance

Benefits package: 
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The benefit package for the National Health Insurance Program began small and was extended incrementally, because extension of population coverage was prioritized over expansion of benefits. Currently, benefits are the same for all insured individuals, regardless of whether they are self-employed or not. Both preventative and curative services are included in the benefits package. Preventative services include biannual check-ups and vaccination. For curative services, the insured are entitled to in-patient and outpatient care, dental services, traditional oriental medicines, and prescription medication. Procedures excluded from coverage include treatment for simple fatigue, superficial dermatology problems, cosmetic surgery, urogenic and gynecological diseases which cause no problems in everyday life, treatment of addiction to narcotics, and orthodontics.

The benefit package for the National Health Insurance Program began small and was extended incrementally, because extension of population coverage was prioritized over expansion of benefits. Currently, benefits are the same for all insured individuals, regardless of whether they are self-employed or not. Both preventative and curative services are included in the benefits package. Preventative services include biannual check-ups and vaccination. For curative services, the insured are entitled to in-patient and outpatient care, dental services, traditional oriental medicines, and prescription medication. Procedures excluded from coverage include treatment for simple fatigue, superficial dermatology problems, cosmetic surgery, urogenic and gynecological diseases which cause no problems in everyday life, treatment of addiction to narcotics, and orthodontics.

Services are provided without a referral in all non-specialized health centers. To visit a specialized general hospital the patient must have a referral. Co-payments are required for all medical procedures. The amount of co-payment depends on the level of medical care received and whether the procedure was in-patient or out-patient. When an insured individual pays more than the co-payment ceiling—about 3 million Won or $2,400 USD—within 6 consecutive months, he or she is exempted from further co-payments. The co-payments are higher for hospitals than for physician clinics in order to encourage people to visit physician clinics before hospitals.

Table 1: Co-payment system

ClassificationPortion of health care costs
Inpatient10-20% of total treatment cost
Outpatient
- Tertiary care hospitalPer visit consultation fee + 50% of treatment cost
- General hospital50% of (treatment cost + per visit consultation fee)
- Hospital40% of (treatment cost + per visit consultation fee)
- Clinic30% of treatment cost
- Pharmacy30% of total cost

Source: Song, Young Joo. “The South Korean Health Care System” JMAJ, Vol. 52, No. 3: 207. 2009.

Out of pocket (OOP) expenditures have been reduced drastically since the expansion of health insurance coverage, from 63% of total health expenditure in 1983 to 38% of total health expenditure in 2008. However, despite this improvement, the share of OOP payments is still greater than the OECD average, and some scholars suggest that this is still a substantial barrier to medical care utilization across different socio-economic groups.

Service delivery system: 
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Health care delivery relies heavily on the private sector. Only about 10% of hospitals are public, while 90% of total health care resources are provided for-profit by the private sectorKorean patients with health insurance are able to go to any doctor or medical institution that they choose without being denied, except specialized general hospitals. If a patient wants to go to a secondary or tertiary care hospital, they must present a referral slip issued by the original medical practitioner. The exceptions to this include: childbirth, emergency medical care, dental care, rehabilitation, family medicine, and hemophiliac disease. Higher co-payments are requested for those patients without a referral letter.

Health care delivery relies heavily on the private sector. Only about 10% of hospitals are public, while 90% of total health care resources are provided for-profit by the private sectorKorean patients with health insurance are able to go to any doctor or medical institution that they choose without being denied, except specialized general hospitals. If a patient wants to go to a secondary or tertiary care hospital, they must present a referral slip issued by the original medical practitioner. The exceptions to this include: childbirth, emergency medical care, dental care, rehabilitation, family medicine, and hemophiliac disease. Higher co-payments are requested for those patients without a referral letter.

The Medical Law stipulates that only authorized and licensed healthcare professionals can provide health services. The Ministry of Health and Welfare (MoHW) licenses only doctors, dentists, nurses, oriental medical doctors, and midwives, while nurse’s aides, acupuncturists, and massage therapists are licensed as quasi-medical professionals. As of 2007, there were 91,400 physicians, 23,114 dentists, 16,663 oriental medical doctors, 57,176 pharmacists, 8,587 midwives, and 235,687 nurses. However, wide disparities exist between urban and rural areas; about 90% of physicians are concentrated in urban areas.

Health care delivery relies heavily on the private sector. Only about 10% of hospitals are public, while 90% of total health care resources are provided (de facto for-profit) by the private sector. The 10% of the public service system are composed of community public health centers known as Bogeunso, the National Medical Center, and provincial hospitals. There has been less of a push from the public sector to formulate policy alternatives to the private sector–dominated delivery system.

Institutional structures: 
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The Ministry of Health and Welfare (MoHW) supervises the overall matters relating to health insurance and health sector. MoHW is in charge of the centralized policy formation and implementation, regulating the health insurance system, and approving the annual plans and budgets set by the National Health Insurance Corporation (NHIC) and the Health Insurance Review Agency (HIRA), both of which are discrete non-profit organizations that are supervised and regulated by the MoHW.

The Ministry of Health and Welfare (MoHW) supervises the overall matters relating to health insurance and health sector. MoHW is in charge of the centralized policy formation and implementation, regulating the health insurance system, and approving the annual plans and budgets set by the National Health Insurance Corporation (NHIC) and the Health Insurance Review Agency (HIRA), both of which are discrete non-profit organizations that are supervised and regulated by the MoHW.

The National Health Insurance Program (NHIP) is managed directly by the National Health Insurance Corporation (NHIC), the single purchaser in Korea. NHIC is in charge of managing the enrollment of insured people and their dependents, collecting contributions, and setting the medical fee schedule.

The Health Insurance Review Agency (HIRA) reviews medical fees and health care evaluation. The HIRA also receives and reimburses claims from health care providers. The HIRA committee consists of 10 full-time and 630 part-time medical specialists divided into a central committee and local committees. The committee reviews the appropriateness of medical care claims based on health benefits standards and fees that are determined by the MoHW.

National Health Insurance Program

Provider payment mechanisms: 
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Providers have historically been reimbursed by the regulated fee-for-service system since the beginning of the national health insurance program (NHIP). There is no difference between public and private providers from the health insurer side regarding fee schedules or reimbursement rates. The fee-for-service system has led to an increase in volume and intensity of services in the long run. However, because fee regulation is applied to all providers, both public and private, it has contributed to overall cost containment and a rapid extension of population coverage. South Korea has single pooled purchasing, and claim reviews and payments are centralized and monitored by the Ministry of Health and Welfare (MoHW).

Providers have historically been reimbursed by the regulated fee-for-service system since the beginning of the national health insurance program (NHIP). There is no difference between public and private providers from the health insurer side regarding fee schedules or reimbursement rates. The fee-for-service system has led to an increase in volume and intensity of services in the long run. However, because fee regulation is applied to all providers, both public and private, it has contributed to overall cost containment and a rapid extension of population coverage. South Korea has single pooled purchasing, and claim reviews and payments are centralized and monitored by the Ministry of Health and Welfare (MoHW).

In 1997 the government launched a Diagnosis Related Group Pilot program for voluntary participating health facilities. The pilot program showed positive impacts on the behavior of health providers, such as the reduction in the length of stay, medical expenses, the average number of tests and a decreased use of antibiotics. However, there is strong opposition from providers, which has blocked the extension of DRG as a provider payment mechanism throughout the country.

The pharmaceutical dispensing was separated from prescribing in 2000. This bars pharmacists from selling antibiotics to customers without a prescription. As such, physicians are not allowed to dispense medicines.

Regulation: 
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The central government Ministry of Health and Welfare (MoHW) is the primary regulator of the health insurance and health care system. MoHW is in charge of policy creation, implementation, supervising and regulating the overall system and fee schedule. The National Health Insurance Corporation (NHIC) manages these changes and provides input for regulation of fee schedules and budgets. Information is collected annually by the Health Insurance Review Agency, which informs the regulatory process.

The central government Ministry of Health and Welfare (MoHW) is the primary regulator of the health insurance and health care system. MoHW is in charge of policy creation, implementation, supervising and regulating the overall system and fee schedule. The National Health Insurance Corporation (NHIC) manages these changes and provides input for regulation of fee schedules and budgets. Information is collected annually by the Health Insurance Review Agency, which informs the regulatory process.

Monitoring and evaluation: 
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The Health Insurance Review Agency (HIRA) is the primary organization in charge of monitoring and evaluating the medical process. HIRA is responsible for reviewing medical fees, evaluating health care performance and economy of health care service provided to health insurance beneficiaries.

The Health Insurance Review Agency (HIRA) is the primary organization in charge of monitoring and evaluating the medical process. HIRA is responsible for reviewing medical fees, evaluating health care performance and economy of health care service provided to health insurance beneficiaries. HIRA is an independent entity that was created as a way to conduct fair and objective evaluations of the insurance system and to ensure that the appropriate health care is delivered in the partnership with the National Health Insurance Corporation (NHIC). HIRA is established as an independent single agency, separated from insurers, providers, and other interested parties to provide objective review of health care with NHIC.

Results of the reform: 
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The National Health Insurance Program (NHIP) has contributed greatly to the promotion of health by reducing the burden of medical care expenses and improving the access to medical care services for the general population. The average life expectancy for males increased from 51.1 in the 1960s to 75.7 in 2006, for females the age changed from 53.7 in the 1960s to 82.4 in 2006. In 2007, the crude birth rate was 10.1 and the crude death rate 5.0.

The National Health Insurance Program (NHIP) has contributed greatly to the promotion of health by reducing the burden of medical care expenses and improving the access to medical care services for the general population. The average life expectancy for males increased from 51.1 in the 1960s to 75.7 in 2006, for females the age changed from 53.7 in the 1960s to 82.4 in 2006. In 2007, the crude birth rate was 10.1 and the crude death rate 5.0. Infant mortality is also decreasing, from 61.0 per 1,000 live births in the 1960s to 5.3 per 1,000 in 2005. The total fertility rate is sharply decreasing, from 1.67 in 1985 to 1.13 in 2006.

Table 2: Key Economic and Health Indicators in Korea 1977, 1989 and 2005

197719892005
GDP per capita (US$)1042543016,306
Life expectancy64.87177.4 (2003)
Mortality (per 100,000 persons)690542.3504.3
Infant mortality (per 1,000 births)38 (average for 1970-1975)123.8 (average for 2000-2005
No. of physicians per 10,000 persons5 (1981)816 (2004)
No. of beds per 10,000 persons17 (1981)3073
No. of physician visits per capita3.76.210.6 (2002)
No. of admissions per capita-0.06 (1990)0.12
No. of hospital days per admission121413.5 (2003

Source: Kwon, Soonman. "Thirty Years of National Health Insurance in South Korea: Lessons for Achieving Universal Care Coverage.” Health Policy and Planning, Vol. 24: 65. 2009.

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