• Spending overview
• Policy overview
• Diseases overview

Spending overview

Total healthcare spending in South Korea is among the lowest in the OECD, at an estimated 6% of GDP, but is expected to rise to 6.5% in 2014. South Korea has a universal health-insurance system, which is financed by employer and employee contributions, and government subsidies. National Health Insurance (NHI) covered 96.3% of the population in 2007, according to the National Health Insurance Corporation, while a medical aid programme, financed from general taxation, exists for the remainder. Public satisfaction with the health system is low because of long waiting lists for treatment and high costs. Furthermore, not all medical services are covered by the NHI system.

The split between public and private spending within healthcare expenditure is almost even, with public spending accounting for an estimated 52.7% of the total in 2008, according to OECD indicators. Around 90% of specialist doctors and healthcare institutions are private. The public sector’s role in provision is limited to basic primary-care services delivered through health centres. Patients may choose their healthcare provider, and often go directly to specialists. The roles of different types of healthcare institution are not clearly defined. For example, hospitals provide extensive outpatient facilities and some clinics offer inpatient treatment. Private providers are mostly paid on a fee-for-service basis, according to a standardised set of charges. Although hospitals may not operate for profit, they tend to be run along commercial lines.

Policy overview

Rising demographic pressures and chronic inefficiencies in the healthcare system are forcing the government to focus on cost management, despite the already low level of spending on healthcare relative to the size of the economy. For example, reforms in 2000 changed the way in which prescription drugs were dispensed. Prior to the reforms, doctors and pharmacists both prescribed and dispensed medication. The profit margins on many drugs were high, thus increasing dispensers' incentive to overprescribe. Government reforms separated the prescribing and dispensing functions, allowing only doctors to prescribe medications and pharmacists to fill prescriptions. This removed the economic incentive to overprescribe and misuse medications, but healthcare expenditure has still continued to rise.

The government has employed other cost-containment measures in recent years, including so-called actual transaction pricing, under which hospitals are reimbursed for the actual price that they pay for a drug. Previously, hospitals could profit from the difference between the discounted price that they paid to a supplier and the official reimbursement list price. A reference pricing system, which would set reimbursement ceilings on drugs with similar efficacy, is under discussion, but has not yet been implemented. Foreign manufacturers are strongly opposed to the plan, which they say will discriminate against higher-priced, brand-name drugs.
In an attempt to promote South Korea's appeal as a tourist destination, the government is seeking to boost medical tourism, copying a model that has been successful in other Asian countries.

Diseases overview

South Korea's population is ageing rapidly. Estimates from the National Statistics Office suggest that the share of the population over 65 years of age is currently 11% and that the level will soon reach 14%, at which point the country will become an “aged society” as defined by the UN. Life expectancy has been rising steadily in recent decades, to stand at an estimated 79 years in 2009. Although below the rate in Japan on this indicator, life expectancy in South Korea compares favourably with other countries in Asia, such as China and Malaysia and Indonesia. The infant mortality rate in South Korea has also fallen markedly.

South Korean longevity owes much to the huge improvements in water supply, sanitation, housing and diet that have accompanied the country’s rapid economic growth. However, South Koreans are more likely to commit suicide than nationals of any other OECD country. According to the World Health Organisation, the leading causes of death are cerebrovascular disease; trachea, bronchus and lung cancers; ischemic heart disease; diabetes mellitus; and stomach cancer. Tobacco consumption is marginally higher than the OECD average, with around 25% of South Korea's population aged at least 15 years smoking on a daily basis. However, around 50% of males smoke, which is significantly higher than the OECD average. Compared with other OECD countries, South Korea's obesity rates are not particularly high, with 27% of the population classified as overweight or obese.