Establishing a New Paradigm for Healthcare

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. Korea's public health insurance was found to have covered only 62.2% of total health expenditure in 2008, a figure way below the OECD average of around 80%. Estimated to have spent KW35 trillion in 2010 alone, the National Health Insurance (NHI) is financially at grave risk with its reserves of as little as KW880 billion as of the end of 2010. To make matters worse, many experts are taking issue with the NHI’s reimbursement method. Ever since it was implemented, the NHI has reimbursed based on a cost-incurring fee-for-service method. The annual rate of increase in fee-for-service has been kept under 3%, but many finger the costly fee-for-service reimbursement approach as one of the factors responsible for increasing health insurance benefits by 15% every year. Whether the level of fee is appropriate also remains an issue of constant contention. Providers claim that the fee level is set far too low for the world-class quality of services they provide. Consumers on the other hand feel that the services they get are overly priced. The current fee reimbursement contract, which since 2008 has been made based on provider type, is also a matter of unending dispute. Problems also abound when it comes to the question of how insurance premiums should be collected. A few rounds of reform took place over the recent years, whereby in 2000 the National Health Insurance Corporation was made the only insurer and in 2002 its financing underwent unification. Yet, the rate of premium applied is vastly different for employees and the self-employed, which has become the subject of increasing public complaints. Against this backdrop, this study suggests new paradigm of health care system integrating health care delivery, reimbursement, financing, system and resource allocation all together through Coordinated Care Organization adopting at Oregon Health Plan in U.S.