Health Care System in Korea. Tae Hyun Kim, Ph.D. Associate Professor Graduate School of Public Health Yonsei University

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1 Health Care System in Korea Tae Hyun Kim, Ph.D. Associate Professor Graduate School of Public Health Yonsei University

2 Contents Snapshot of Korean Health Care System Health Care Financing Long-Term Care Insurance for the Elderly Health Care Delivery Health Care Reform Implications

3 SNAPSHOT OF KOREAN HEALTH CARE SYSTEM

4 Financing & Delivery National Health Insurance (NHI) Public and mandatory system Universal Health Coverage (UHC) since Private sector dominance of medical care delivery Compulsory designation by NHI No selective contracting Almost free choice of providers Lacking a strong community-based primary-care system 4

Source: National Health Insurance Service (NHIS) The Korean Health Insurance System as A Part of The Social Security System Social Security System Social Insurance Public

5 Source: National Health Insurance Service (NHIS) The Korean Health Insurance System as A Part of The Social Security System Social Security System Social Insurance Public Assistance Social Welfare Service Health, Long- Term Care Basic Livelihood Protection Elderly Pension Medical Aid Disabled Unemployment Children Industrial Accident Compensation Women

6 Population Health Coverage (Unit: 1,000 persons, %) Total Population 51,169 National Health Insurance Medical Aid Employees Self-employed 1,507 (2.9) 34,106 (68.7) 15,556 (28.4) (NHIS Statistical Yearbook, 2013)

7 Cost & Quality High quality, but relatively inexpensive system. Life Expectancy = 79.8 yrs (2014) Total Health Expenditure as a % of GDP = 7.8% (2013)

8 Total Health Expenditure as a % of GDP for OECD Countries Source: OECD Health Data 2012

9 Life Expectancy of Korea Source: OECD Health Data, Men Women Average

10 HEALTH CARE FINANCING

11 Contributions (Premium Setting) Source: National Health Insurance Corporation

National Health Insurance Copayment Structures Inpatient 20% of total health care costs Outpatient 30%~60%, depending on type of health care providers

12 National Health Insurance Copayment Structures Inpatient 20% of total health care costs Outpatient 30%~60%, depending on type of health care providers Patients with serious conditions 5%~10%, such as cancer, cardiovascular, cerebrovascular diseases or rare diseases, tuberculosis, and severe burn injuries 12

13 Operational Structure of the National Health Insurance (NHI) Program NHIS Source: National Health Insurance Service

14 National Health Insurance Expenditure Administrative expenses(1.6%) and others(2.4%) 4.0% Insurance Benefits 96.0% (NHIS, 2013) 14

8% Outpatient 41.5% Pharmacies 24.7% Pharmacies 24.7% Clinics 28.

15 National Health Insurance Expenditure Service utilization type Health Facilities Type Etc.(Health Centers) 0.4% Inpatient 33.8% Outpatient 41.5% Pharmacies 24.7% Pharmacies 24.7% Clinics 28.6% General Hospitals 30.4% Hospitals (including LTC hospitals) 16.0% (NHIS, 2012) (NHIS, 2012)

rehabilitation. Health check-ups Benefits Cash benefits (659.6 billion KRW, 1.

16 National Health Insurance Service benefits (36.7 trillion KRW, 98.2%) Health care benefits such as diagnosis, tests, drugs, medical materials, treatments, surgery, rehabilitation. Health check-ups Benefits Cash benefits (659.6 billion KRW, 1.8%) Refunding allowance for Health care Co-payment Ceiling System and Reimbursement Appliance expenses for the disabled Pregnancy & Childbirth Examination Expenses

17 National Health Insurance Benefits Adult Health Screening Cost : Free Eligible : Employee insured, All householders, Dependents of employee or members of household aged over 40 Screening Cycle and items : Biennial except for non-office workers(annual), with 1 st step 21 items, 2 nd consultation Cancer Screening Program : 10% Copayment (Free for lower 5 deciles) Target disease Subject Stomach Cancer Those aged 40+ Liver Cancer Those aged 40+ Colon Cancer Those aged 50+ Breast Cancer Women aged 40+ Cervical Cancer Women aged 30+

18 Financial Protection by the NHI Providers tend to actively introduce uncovered services, which are usually very expensive because there are no fee controls. These problems lead to an inefficient allocation of resources and the persistent expansion of uncovered services Makes it difficult for the National Health Insurance Service to improve the financial protection offered by the system (Lee 2015). Burden of copayment and uncovered services 78.1% of the household having private supplementary health insurance plans in 2014 (Korea Health Panel, 2016)

19 LONG-TERM CARE INSURANCE FOR THE ELDERLY

9% 12.9% 3.0% 4.1% 5.4% 6.6% 19.9% 7.9% 1,190 24.

3% 21.5% 16.1% 18.9% (%) 40.0 35.0 30.0 25.0 20.

20 Demographic Change Population Aging No. Population (10,000) 1,800 1,600 1,400 1,200 1, % % of Elderly % of % 10.9% 12.9% 3.0% 4.1% 5.4% 6.6% 19.9% 7.9% 1, % 9.8% 28.0% 13.0% 1, % 34.7% 1, % 21.5% 16.1% 18.9% (%) * 자료원 : 통계청 장래인구특별추계 20

Health Care Costs for the Elderly % of Elderly Population 10.2% in 2010 6.

00 14.00 12.00 10.00 8.00 6.00 ( 조 ) 21.3 22.9 24.4 Elderly HC 25.

21 Health Care Costs for the Elderly % of Elderly Population 10.2% in % in 2001 Health Care Costs for the Elderly $14Billion(32.2%) in 2010 $3.5Billion(19.0%) in ( 조 ) Elderly HC 25.9 (%) % of Elderly HC to Total HC Source: 2010 Health Insurance Statistics

22 Background Increase in the number of elderly population in need of long-term care, with the rapid population aging in Korea Difficulty of making family caregiving to the elderly, due to change in family composition and increasing prevalence of full-time female workers (who used to be caregivers to their family members)

23 Background Lack of affordable long-term care services for middle to low income households Escalating health care costs for the elderly Long-term care insurance system was introduced as the 5 th social security system by the government To address the above issues and to provide health care system for the elderly and to lessen the burden of the households.

24 Key Features List Contents Eligibility All citizen People aged 65 or older and people who have had Benefit Recipients difficulty taking care of themselves for at least six months due to geriatric diseases including dementia, stroke, or Parkinson s disease Details of Benefits Financing Method Facilities benefits, In-home benefits, and Special cash benefits Long-term Care Contributions, Government Support, Partial Co-payments

25 Key Features List Contents 1 (Long-term care center at each NHIC branch) Application 2 (NHIC staff) On-site Long-Term Care Acknowledgment and Service Utilization Process examination 3 (Grading committee) Longterm care acknowledgment and grading 4 (Long-term care center) Delivery of a long-term care certificate and standard long-term care utilization plan 5 (Long-term care center) Use of services

26 HEALTH CARE DELIVERY

27 Health Service Delivery Model in Korea* CENTRAL GOVERNMENT: The Ministry of Health and Welfare (MoHW) Strategy, Policy, Planning, Regulations, and Safety Nets INSURER: National Health Insurance Services (NHIS) & Health Insurance Review and Assessment Service (HIRA) Payment, Medical Claims Review, and Quality Assessment Health Services: Health promotion and disease prevention Primary, secondary and tertiary services Long-term care services PUBLIC SECTOR: Local Public Health Units and Local Governments DOMINANT PROVIDERS: Private Practitioners or Organizations * Based on the contents of WHO and MoHW (2012)

28 The Provider Network Central and local governments and private insurers Health promotion and disease prevention Primary care facilities Mostly privately owned Run by physicians who are not mostly general practitioners, but are specialists in other areas Secondary and tertiary facilities Not-for-profits (though they act like for-profits) under the Medical Act Main providers for either primary level or higher levels of care

29 Referral Pathways in Korea Overall links not strong No gatekeeping Little encouragement for patients to enter at the primary care level Medical shopping Self-referral

30 The Big 5 Tertiary Hospitals in Korea

31 Changes in Healthcare Costs of the BIG 5 Tertiary Hospitals Healthcare Costs in BIG5 Big5-to-Total Ratio Big5-to-All Tertiary Hospitals Ratio

Hospital Outpatients per Person Annually Outpatient Italy USA Japan 0.8 0.

32 In-and Outpatient Utilization per 10,000 population United Kingdom Canada Netherlands Australia OECD France Germany Korea, Republic Number of Visits Hospital Outpatients per Person Annually Outpatient Italy USA Japan Inpatient

33 Average length of stays for acute care in hospitals, 2011 (or nearest year available)

51 Doctors Nurses Netherlands OECD Canada Japan United

34 Doctors and Nurses per 1,000 Population Italy Korea, Republic Doctors Nurses Netherlands OECD Canada Japan United Kingdom Australia USA Germany

35 Hospital beds per 1,000 population, 2011 (or nearest year available)

Australia Japan 0.74 0.56 1.11 0.65 1.13 1.10 1.39 0.

36 CT & MRI per 100,000 population United Kingdom France Netherlands Canada OECD Italy USA Korea, Republic Australia Japan CT MRI 9.73

37 HEALTH CARE REFORM

38 Strengthening Primary Care National Health Plan 2020 A key guidance role in the provision of public health services. Building a consensus on values of health promotion policy focusing on prevention. Communication with professionals and the public about the objectives of the plan Training human resources regarding the necessary policy and programs Improving information systems for health promotion Funding research to guide implementation of the policy and program and central and local levels Developing public health education programs and materials

39 Financial Sustainability and Provider Payment System Adoption of Diagnosis-Related Group (DRG) Based Prospective Payment System Currently for only 7 DRGs May expand DRG payment further in the long term Using P4P & Considering Other Payment Systems Global budget system New-DRG payment, similar to Japan s DPC system

40 Increasing Value of Health Care Two Dimensions Purchasing Improving efficiency of current spending Spending on services with comparative effectiveness outweigh opportunity cost 40

41 Increasing Value of Health Care Purchasing Efforts to Improve Efficiency and Quality of Care Purchasing based on health technology assessment (HTA) Positive list system for pharmaceuticals Considering reference price system & global budgeting for drug expenditure Hospital accreditation system HIRA Evaluations & P4Ps Differential payment for hospital inpatient services based on the patient-to-nurse ratio

42 IMPLICATIONS

43 Summary Since achieving UHC in 1989, Korea has made significant improvements in the quantity and quality of health services. But, challenges remain. Rising health care costs Population aging Increasing demand for more & better health care Increasing number of people with private supplementary health insurance Tension between payer and providers

44 Major Challenges and Issues Addressing the increasing costs Securing more financial resources to support the current national health insurance scheme Enhancing financial protection and expanding coverage Increasing efficiency of health care services Ensuring accountability of private health care facilities Promoting comprehensive, continuous and coordinated care

45 References HIRA (2010). Health Resources by Category of Health Car Organizations. HIRA (2013). Major Activities of HIRA. KHIDI (2012). Health Resources Statistics Handbook. Korea Health Industry Development Institute (KHIDI). MoHW (201). National Health and Welfare Statistics, Ministry of Health and Welfare (MoHW). NHIS (2013). National Health Insurance Statistics. OECD Health Data, OECD Health Data, OECD Health Data, OECD (2012). OECD Health Care Quality Review: Korea. WHO & MoHW (2012). Health Service Delivery Profile-Republic of Korea 2012.

46 THANK YOU!

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