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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 9788981876879
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.
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.