Long-Term Care Insurance and Health Care Financing of the Korean National Health Insurance Program

Abstract

This paper is to evaluate how the new element of public health insurance for long-term care services, the Long-Term Care Insurance (LTCI), financially affects the preexisting National Health Insurance (NHI) program. We focus on examining the effects of the LTCI benefit payment on the NHI expenditure and service use of the elderly members. Using longitudinal data of 245 municipalities of South Korea for the period of 2008-2010, we conduct the fixed-effects panel estimation and find the statistically significant positive association of the LTCI spending with the NHI benefit payment for the elderly: additional 7,263 million KRW spending in the NHI program for one percent increase in the LTCI spending on the elderly. Findings further show that the intensity of the NHI service use among the elderly is positively associated with the LTCI benefit payment. It suggests that coordinated management across acute care service delivery and long-term care service provision is warranted to achieve cost effectiveness of the NHI program with the support of the LTCI program.