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A study for improving the efficiency of health security system: the division of roles between public and private health insurance in Korea

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  • A study for improving the efficiency of health security system: the division of roles between public and private health insurance in Korea
  • Hong, Seokpyo홍석표
  • Korea Institute for Health and Social Affairs
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Title A study for improving the efficiency of health security system: the division of roles between public and private health insurance in Korea
Similar Titles
Material Type Reports
Author(English)

Hong, Seokpyo

Author(Korean)

홍석표

Publisher

Seoul:Korea Institute for Health and Social Affairs

Date 2009
Series Title; No Research Paper / 2009-12
ISBN 9788981875879
Pages 101
Language English
File Type Link
Subject Social Development < Health
Holding Korea Institute for Health and Social Affairs

Abstract

The Korean National Health Insurance (NHI), Korea's public health
insurance, has made a great stride since its introduction in 1977.
Despite its remarkable growth in both quantitative and qualitative
terms, the coverage and financial structure of NHI have been
criticized. Expansion of the role of private health insurance to
overcome these weaknesses has become an issue of heated debate in
Korean society. The point of the discussion is whether the expansion
of private health insurance would result in undermining the
foundation of the public health care system rather than
complementing it. The key argument of the negative aspect is
weakening of equity of medical services.
It is well known that health care is a sector in which the
efficiency of market competition is relatively limited. Nevertheless,
the need for adopting market competition is continuously argued for
in areas where there is no rationale for government intervention. The
U.S. government practices the competition principle even in health
care and intervenes only in areas where external effect is maximized
such as medical services for the underprivileged and R&D. On one
hand, such policy has made great strides in medical technology. On
the other hand, however, the U.S. faces serious problems such as
rising health care expenses and a significant portion of the population
left uninsured.
A study for improving the efficiency of health security system
On the contrary, most OECD member states including western
European countries have approached heath care from the social
security perspective. The traditional approach helped realize universal
coverage, but has been criticized for not meeting the needs of the
people in responsiveness. To counter this weakness, ways of
introduction of competition and appropriate utilization of private
insurance have been explored.
Competition is a fundamental principle. But the problem is whether
the principle of competition can effectively function in the health
care system. Competition and choice in health care has intrinsic
limitations because of asymmetric information with regard to medical
goods and services. Therefore, European examples provide
implications for Korea since they seek to provide medical services
equally and efficiently for the whole population by strengthening the
coverage of the public health insurance and containing demand based
on the principle of equity.
This study has examined the current status of healthcare system in
Germany, France, and the Netherlands. They view health care as
public goods, and this approach has been criticized for not rapidly
responding to customers' needs though it realized universal coverage.
That was why many advanced countries have explored ways to adopt
competition and make use of private health insurances. The role of
private health insurance differs from one country to another.
However, what is in common is that, the private insurance system is
a pillar of social security while equity of health care system is
maintained through strict regulations on private plans. The expansion
of the role of private health insurance needs to be discussed from a
number of different perspectives. If the topic is limited to
responsiveness to consumer needs and weakening of equity in health
care system with expansion of private health insurance, the European
experience provides a lot of lessons to be learned.