This report analyzes the Korea Health Care Panel Study and the National Health Insurance Patient Medical Expenses Survey to examine the impact of the 2014-2018 Mid-term Plan to Reinforce National Health Insurance Coverage, the governmental framework to strengthen health insurance coverage, on effectiveness and equality for treatment of different illnesses and income classes of the national health insurance scheme, thereby suggesting measures for improvement.

  Analysis shows that measures to revamp three major non-insured items, including specialist services, have contributed to enhancing insurance coverage. However, the plan to include selected items to strengthen coverage of the four severe illnesses has performed poorly due to a ‘balloon effect’—increases in other ‘out-of-pocket’ payment items—while undermining equality of treatment for other serious and chronic diseases. While sub-segmentation of patients has been done to provide payment ceilings as one of the representative measures for the lower-income population, the fact that these ceilings are confined to the costs shared by patients, and do not include non-insured items, serves to limit this measure in preventing excessive medical costs for low income households. The research also reveals that the scale of financial investment in the lower-income population remains small. National health insurance programs converted from fiscal programs require supplementary measures to curb the growing burden shouldered by the second lowest-income bracket. Introduction of the limited coverage with payment shared by patients to 50-80%, as well as the 50% subsidy for use of a room with one to three beds before and after child delivery, raises concerns that it may deepen the polarization in medical care as the benefits of these programs to the middle- and upper-income classes outweighs their effect in stimulating the lower-income class to use them.

  Therefore, the government needs to thoroughly monitor and limit out-of-pocket payment items and introduce a comprehensive scheme for patient payment ceilings that phases in these items, thus substantially enhancing national health insurance coverage. Doing this will reduce the need for people to purchase private health insurance and prevent deterioration in their standard of living due to excessive medical costs. In order to avoid a balloon effect, expanding the diagnosis-related group system needs to be considered, thus supplementing the fees-for-service scheme as it is ineffective in preventing unnecessary medical treatments. In addition, transformation of coverage from “low burden, low coverage” into “appropriate burden, appropriate coverage” is essential. To this end, promoting equality between income classes is a prerequisite to reforming the insurance premium scale into a system where payment is in accordance with ability to pay.