Korea’s health insurance system was first introduced in 1977 and in only 12 years accomplished universal coverage. By 2000, Korea’s health insurance system achieved a heightened level of maturity through major reforms including consolidation of multiple payers to a single insurer under the National Health Insurance Corporation. Currently, 97.1% of Korea’s population is covered by the National Health Insurance, while 2.9% receive medical care through the Medical Benefits System for low-income households. As a result, Korea has longer life expectancy and lower mortality rates than OECD averages.
Despite such rapid success, however, Korea’s health insurance system has its limitations. The National Health Insurance excludes a wide range of treatments and medications from coverage, and even for many of such treatments and medications that are covered patients are required to pay high deductibles. As a result, roughly 35 million people who are covered patients carry secondary private insurance to cover exclusions and deductibles, while others who are less fortunate are following into the lowest income bracket due to the burden of medical expenses.
Recognizing these limitations, the Korean government has strived for over 10 years since 2005 to find a solution for providing better insurance coverage for its people. Such efforts, however, have had very little success mainly because of the increase in non-reimbursable therapeutic treatments and drugs due to lack of financial justification for reimbursement and budgetary concerns.
To overcome the failed attempts of solving these problems by progressively expanding reimbursable coverage for treatments and drugs, the reform plan introduced by President Moon Jae-In, known as “Moon Jae-In Care” or “Moon Care,” takes a more aggressive approach with two main goals, namely “complete control of non-reimbursables” and “revolutionary relief of the burden of medical expenses for low-income households.”
Moon Jae-In Care can be summarized as: (1) “resolution and elimination of non-reimbursables,” which is the main cause for increased medical costs and out-of-pocket expenses; (2) “setting maximum deductibles” to relieve individual burdens; and (3) “expanding emergency financial assistance” to protect low-income households.
To implement Moon Jae-In Care, the government plans to invest KRW 30.6 trillion (roughly USD 27 billion) by 2022 and has newly established a position for Director General for Healthcare Security within the Ministry of Health and Welfare, for which, a new senior officer was appointed. Some of the main responsibilities of the Director General for Healthcare Security include oversight of: (i) expanding insurance coverage for various non-reimbursable therapeutic treatments and drugs, including MRI and ultrasound which are essential for treatment; (ii) including coverage for use of 2-peson and 3-person hospital rooms; (iii) establishing regulations for provisional reimbursables; and (iv) improving regulations on public and private health insurance.
The approach being taken by Moon Jae-In Care to expand reimbursement coverage under the National Health Insurance is expected to have significant results by breaking away from previous paradigms. Rather than using a positive list where coverage was only available for treatments and drugs in certain categories, Moon Jae-In Care adopts a negative list where all treatments and drugs, except for cosmetic and plastic surgery, are to be covered, including coverage for optional treatments and higher-grade hospital rooms. The increased coverage would then be managed by regulating prices, treatment methods and number of treatments.
Specialist groups and industry participants have been closely monitoring developments in the implementation of Moon Jae-In Care as it is expected to have a significant impact on the market and bring rapid change to the industry at large. Therefore, we hope you find this three-part special report to be insightful in planning for the changes to come.