While South Korea has a Universal National Health Insurance Scheme, the proportion of out-of-pocket (OOP) medical payments paid by patients is around 35 to 39 percent higher than most OECD countries.1 In order to reduce the financial barriers to healthcare for low-income households, Korea has implemented the Catastrophic Medical Expenses Support Program since 2013. In 2021, 18,277 households received monetary support of KRW 2.44 million (USD 1,892) on average.2
Korea’s Catastrophic Medical Expenses Support Program is operated by the National Health Insurance Service (NHIS), a public institution under the Ministry of Health and Welfare. People can apply online or by visiting the local office of NHIS.
The program has two eligibility criteria. First, in principle, the household’s income should be under the median household income of South Korea (KRW 2,077,892 or USD 1,612 per month in 2023), and household members should not own property valued at more than KRW 700 million (USD 0.54 million). However, households whose income is up to 200 percent of the median income can also receive support after going through an in-depth screening process by the NHIS. Second, a household is eligible for support if the out-of-pocket medical expenses that are not covered by the NHIS exceeds 10 percent of the annual household income.
If these criteria are met, the program reimburses 50 to 80 percent of the out-of-pocket medical payment not covered by the NHIS. The lower the household income, the higher the proportion of support received. The amount of support can be up to KRW 30 million (USD 23,273) a year.3
The program was first introduced in 2013, and went through continuous expansion and changes. For five years, it operated merely as a “pilot project” without legal foundations. Also, the scope of support was limited to a few severe diseases (cancer, cardiac disorders, cerebrovascular diseases, rare or incurable diseases, severe burn injuries). The program reimbursed 50 percent of the out-of-pocket medical expense up to KRW 20 million (USD 15,515).
In 2018, there were significant changes to the program. First, the Act On The Support For Catastrophic Health Expenditure was enacted. Second, the criteria was expanded to cover all diseases in case of hospitalization. In 2021, during the pandemic, in order to provide more concentrated support to low-income households, the government differentiated the proportion of reimbursement (50 to 80 percent) according to income level and increased the maximum amount of support to KRW 30 million (USD 23,273). In 2022, the newly elected government loosened the eligibility criteria to 1) cover all diseases regardless of hospitalization, and 2) provide support when out-of-pocket medical expenses exceed 10 percent of annual income (the previous criterion was 15 percent).
The program has multiple financial sources: the Lottery Fund,4 the National Health Insurance Fund, and tax payments from the public. The Lottery Fund generally provides for around 60 percent of the total budget. The total expense in 2021 was KRW 44.6 billion (USD 34.6 million), which takes up 0.05 percent of Korea’s National Health Insurance Fund.
The program has contributed to preventing poverty due to excessive medical expenses. The possibility of falling into poverty (for those earning under 40 percent of the median income) due to medical expenses dropped from 42.4 to 27.8 percent after receiving support from the program in 2018. However, the decrease was less significant in households with lower incomes. In households under 50 percent of the median income, the poverty rate fell from 96 to 86.3 percent, while in households earning 50 to 100 percent of median income, the decrease was from 45.7 to 24.5 percent. In households earning 100 to 200 percent of the median income, the rate fell from 10 to 2.6 percent. This indicates that the program does not sufficiently support low-income households.5 It is important to note that these figures were before 2021, when the government changed the program to increase support for low-income households.
There is wide consensus among different political parties on the importance of the medical support program. For instance, expanding the program was pledged by all of the main candidates in the presidential election of 2022.6
Even then, one of the main problems that this program faces is the low take-up rate of patients, especially those from low-income households. According to the NHIS, the program only spent 54.3 percent of its estimated budget in 2019.7 According to the Seoul Patients’ Rights Ombudsman, this is largely due to the complicated criteria and application procedure,8 which calls for guaranteeing easier access.
The incidence of catastrophic medical expenses in South Korea, defined by the World Health Organization as out-of-pocket spending exceeding 40 percent of a household’s non-subsistence income, is also high. For instance, according to a 2019 OECD report, the incidence of catastrophic medical spending was over seven percent for Korea, while it was less than two percent for countries such as France, Sweden, the UK, Ireland.9
- 1. Hwa-Young Lee, Juhwan Oh, and Ichiro Kawachi, “Changes In Catastrophic Health Expenditures For Major Diseases After A 2013 Health Insurance Expansion In South Korea,” Health Affairs 41, no. 5 (May 2022): 722–31, https://doi.org/10.1377/hlthaff.2021.01320
- 2. Calculated by the author using inside administrative data of the Ministry of Health and Welfare.
- 3. Korea Ministry of Health and Welfare, “Chaenanjŏg Uiryobi Chiwŏn Shinch’ŏng Munt’ŏk Taep’ok Najajinda [The Government Loosens the Eligibility Criteria for the Catastrophic Medical Expenses Support Program],” 2023.
- 4. Korea’s Lottery Fund is composed of profits from sales of the Korea Lottery Ticket. The Fund, about USD 2 billion a year, is used to improve public welfare in accordance with the Lottery Fund Act. 35 percent of the Fund goes to statutory allocation projects (e.g., the Catastrophic Medical Expenses Support Program), and the remaining fund is used for projects selected by the Korea Lottery Commission.
- 5. Su-jin Kim et al., “Pojangsŏngganghwadaech’aegi Chaenanjŏgŭiryobi Chiwŏnjedoe Mich’inŭn Yŏnghyang Mit Che-Do Chungjanggi Kaesŏnbangan [Effects of National Healthcare Insurance Policies on the Catastrophic Medical Expenses Support Program and Long-Term Policy Recommendations],” Korea Institute for Health and Social Affairs, 2019.
- 6. Tae-sun Eom, “Hwanjajŏngch’aek Parosŏlkka...Taet’ongnyŏng Hubo 3In, 12Kaji Kongyak [Will proper policies regarding patients be put in place? 12 promises of 3 presidential candidates],” News The Voice Healthcare, 4 March 2022, http://www.newsthevoice.com/news/articleView.html?idxno=25710.
- 7. Won-seop Yoon, “Chŏsodŭkch’ŭng Wihan “Chaenanjŏk Ŭiryobi”, Chiwŏn’gijun Nop’a Chip’aengnyul Chŏjo [Catastrophic Medical Expenses Support Program for the Low-Income Households Shows Low Take-up Rate Due to Strict Eligibility Criteria],” Cheongnyeon Uisa, 20 October 2020, http://www.docdocdoc.co.kr/news/articleView.html?idxno=2003947.
- 8. Dae-hyun Shin, “Chaenanjŏk Ŭiryobi Chiwŏnje-Do Kaesŏn Ponmult’tchŏngbu-Do P’ongnŏlbŭn Chiwŏn Komin [Calls for Improvement on the Catastrophic Medical Expenses Support Program Intensify],” Medifonews, 22 January 2021, https://www.medifonews.com/news/article.html?no=158092.
- 9. "Medical insurance concept with a health insurance card," ©Adobe Stock/JYPIX