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Overview of Korea’s development experience

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Development Overview
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Health

Growth in health care services

The introduction and expansion of the NHI system was the defining feature of health care policy during the late 1970s and 1980s, which led to the increased use of medical services. By the late 1970s, Korea started to pay more attention to social development issues. These changes were reflected in the fourth Five-Year Plan (1977-1981).

Under the plan, medical care was extended to recipients of public assistance, while compulsory national health insurance was introduced for firms with 500 or more workers. In 1979, the insurance system was extended to civil servants, private school employees and firms with 300 or more workers, and in 1981 to firms with 100 or more workers. In 1988, the system expanded to include firms with five or more workers and the self-employed in rural areas, including farmers and fishermen. This was followed a year later by providing health insurance to the self-employed in urban areas. With that step, Korea completed the development of a universal national medical insurance system in the short span of 12 years, one of the fastest rates in the world in achieving that goal.

The introduction of the NHI system represented a significant turning point in the development of health care in Korea. First of all, it underscored the national commitment that all citizens should be entitled to health care and this should be provided on an equitable basis and in an efficient manner.

The NHI system led to a dramatic increase in the use of medical services and the estimated number of untreated patients fell to 7 percent of the population by 2006. The number of hospitalized days per insured person annually increased from 0.1 days in 1977 to 1.32 days in 2006. The annual number of days of visits to hospitals by outpatients rose from 0.7 days to 14.7 days, raising concerns about the excessive use of medical services by the public.

The NHI scheme shifted the supply of medical services from a market-based system to one in which government played a bigger role by funding medical expenditure. The government requires all Koreans to contribute to the NHI system and all hospitals and clinics to accept NHI patients. Such compulsory participation created controversy, but has been seen as improving public access to medical services.

The NHI system led to the systematic collection of medical data, which has improved the efficiency of health care services and policies. Before its introduction, there was no systematic information on the rates of disease contagion and the use of medical services, which proved a liability in establishing data-based health care policies. Based on information about patients collected from the NHI system, health care resources can now be applied more effectively.

Finally, the NHI system was a key driver in bringing medical services to rural villages. A village health pilot project was started in 1976 in selected farming areas, where village leaders could serve as health care advisors. Another pilot project established health centers in remote areas and dispatched nurses to serve as community health practitioners after six months’ training. The Act on Special Measures for Health Care in Farming and Fishing Villages was introduced in December 1980, which promoted the establishment of health care centers and clinics in rural areas.

The government encouraged the establishment of private hospitals in rural regions starting in 1980 by offering financial assistance for the building of medical facilities and the purchase of equipment. The expansion of the NHI system to cover all rural residents in 1988 led to the establishment of hospital-grade facilities in 41 districts.

The NHI program also led to the growth of medical resources and services in the private sector to meet increased demand. There was a corresponding rise in the number of doctors and medical workers, along with an increase in the number of medical schools and hospitals. General hospitals expanded by 6 times between 1975 and 1990, while specialized hospitals grew by 2.6 times and clinics by 1.8 times.

Source : SaKong, Il and Koh, Youngsun, 2010. The Korean Economy Six Decades of Growth and Development. Seoul: Korea Development Institute.

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