The Economic Effect of the Basic Pension and National Health Insurance: A Social Accounting Matrix Approach

Abstract

It is critical to keep track of, and analyze the income protection effect of the Basic Pension and the economic effect of increasing Basic Pension benefits in order to increase the fiscal sustainability of the basic pension system and alleviate old-age poverty. Also, according to the Social Security Fiscal Projections of March 2015, NHI spending is expected to grow rapidly to reach between KRW 694 trillion and KRW 1,099 trillion by 2050. Such rapid growth of NHI spending calls for analyses of the NHI policy effects and measures to ensure their fiscal sustainability. So, we apply the SAM (Social Accounting Matrix) in this study to analyze the micro- and macro-level effects of the BP and NHI on the rest of the national economy. Our analysis provides basic information with which policymakers can estimate the impact of the Basic Pension and National Health Insurance policy.