Health for All in the Republic of Korea

One Country's Experience with Implementing Universal Health Care

Published In: Health Policy, v. 31, no. 1, Jan. 1995, p. 29-42

Posted on RAND.org on December 31, 1994

by John Peabody, Sung-Woo Lee, Steven Bickel

Reviews the Republic of Korea's experience in implementing universal health insurance and the dilemma of providing such coverage while trying to control spiraling costs. In 1977, Korea adopted a policy designed to achieve universal coverage while maintaining fee-for-service reimbursement. Korea established an employer-based health care system in just twelve years by first mandating coverage for businesses, followed by government employees and teachers. Coverage was later extended to the poor, the self-employed, and residents of rural areas. Independent insurance societies manage each scheme, set premiums and copayments, and are responsible for maintaining financial viability. Health care reform in Korea has been successful in achieving universal coverage, providing for a full range of services, and eliminating adverse selection. The system is financially solvent, costs are equitably distributed, with the government providing subsidies when necessary, and small businesses have not been unduly burdened economically. However, attempts to limit costs have been unsuccessful. The percentage of health care accounted for in the gross national product increased from 3 to 7 percent between 1975 and 1991, and the percent of financing provided by public funds increased from 12 to 30 percent. Patient demand for health care has remained surprisingly resistant to increasing copayments. Providers have responded to lower physician and hospital fees by providing shorter, more frequent patient visits, relabeling services, and increasing hospital admissions. Competition between insurance societies has not materialized in any meaningful way to control costs. The lessons learned from Korea might be relevant to other countries in designing and implementing universal health care systems.

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