Disclaimer: The views expressed in this paper/presentation are the views

of the author and do not necessarily reflect the views or policies of the
Asian Development Bank (ADB), or its Board of Governors, or the
governments they represent. ADB does not guarantee the accuracy of
the data included in this paper and accepts no responsibility for any
consequence of their use. Terminology used may not necessarily be
consistent with ADB official terms.

NHI as an Instrument for

Achieving UHC in Non-DMCs:
Korea
Tae-Jin Lee, PhD
Seoul National University
tjlee@snu.ac.kr

Population coverage
Health Insurance Law enacted in 1963
No clause on mandatory health insurance

Health insurance for employees established in 1977

Initially, mandatory for firms with 500+ employees
Extended to firms with 300+ (1979), 100+ (1981), 16+ (1982), 5+
(1988)

Health insurance for government employees and

teachers established in 1979
Medical Aid Program for the poor established in 1979
Financed from general tax

Population coverage
Health insurance for the self-employed
Significant inequalities in access to health services between the
insured (employees) and the uninsured (self-employed)
To obtain political support and legitimacy before the 1987
presidential election (Kwon, 2009)
Started with pilots (3 rural in 1981, 1 urban & 2 rural in 1982)
All rural areas covered in 1988, all urban areas in 1989
Contributions based on scores on gender, age, income, property,
car, etc.
With government subsidy towards contribution

Universal population coverage achieved in 1989

Incremental approach
Family-based membership
Political will
* Kwon, S. (2009) Health Policy and Planning 24:63-71

Benefit coverage
Started with a low contribution-low benefit coverage
design
Diagnosis, tests, drugs, medical materials, treatments,
surgery, rehabilitation, etc.
Health check-up

Statutory benefit package was identical regardless of

insurance plans
A priority given to achieving universal population
coverage over expanding benefit coverage
The share of NHI out of total health expenditure was 30.1%
while that of OOP was 55.7% in 1990

Expanding benefit coverage was not an important

policy priority before the consolidation of health
insurance plans

Benefit coverage
The publics demand for better service coverage
increased during the last decade
The current governments initiative to expand coverage
for 4 severe diseases (2013.12)
Cancer, cardiovascular, cerebrovascular, and rare diseases
Mainly expensive drugs included

Importance of HTA given the rapid expansion of new

interventions
Drug reimbursement evaluation committee recommends
whether or not to list a new drug in the NHI formulary based
on cost-effectiveness and other criteria

Cost coverage
Copayment
To prevent moral hazard and lessen the financial burden
Outpatient: 30%/40%/50%/60%
Inpatient: 20%

Reduced copayment
For the elderly: $1.25 if health care cost less than $12.5
For severe conditions including cancer: 5%~10%

Copayment ceiling introduced in 2004

Uniform ceiling regardless of ability to pay (ATP)
Differential ceiling based on ATP: 3 ceilings (2009) -> 7 (2014)

About 75% of health care costs for NHI-covered services

paid by NHIS
Overall NHI cost coverage has not improved mainly because of
non-covered services

NHI cost coverage

NHI cost coverage 1 = A / (A+B), 2 = A / (A+B+C)

where A: Health care cost paid by NHI,
B: Copayment for covered services, and
C: Cost for non-covered services

Mix of public financing and private provision

NHI brought enormous increase in demand for health services
through enhanced financial accessibility
However, some rural areas lacked health care providers, implying
limited physical accessibility
Not only inconvenient but also increasing time cost

Compulsory designation of health care facilities

The governments support for the private sectors capital investment
In 1978~1985, 67 private hospitals built through international loans to improve
the access to health services (Kwon, Lee & Kim, 2015)
In 1991~1993, 20,000 new hospital beds built by providing loans up to 50% of
the capital investment
In 1994~2012, special public fund of about USD 700 million financed from a
special tax to subsidize construction and refurbishment of health facilities
* Kwon, S et al (2015) Republic of Korea Health System Review

Challenges
Long-term sustainability of NHI
Low fertility and rapid aging
Providers mostly in the private sector paid under FFS
system
Incentives for increasing quantity and non-covered services

Need to improve financial risk protection

Coverage expansion to non-covered services
Enhanced role of HTA to select quality, cost-effective
services

Inequity in financing between employed (formal) and

self-employed (informal)
A unified contribution mechanism based on income

Lessons from Korean NHI

Mixed financing with incremental approach helpful in
achieving UHC in a very short period
General tax for the poor and government subsidy for the selfemployed
Incremental in terms of population coverage and benefit coverage

Not only financial accessibility but also physical accessibility

matters
Important to ensure health care facilities are located closely
enough to meet the needs of the patients timely

A single-payer system increases efficiency as well as equity

Based on the solidarity principle
Management costs reduced
Universal benefit package regardless of employment status

Retrospective payments such as FFS not helpful in

containing cost