5 - South Korea

Summary

This chapter documents healthpolicy problems that exist in South Korea, the policy tools that are used to address them, and the outcomes they produce. We see that the Korean government has gone to great lengths to establish mechanisms to provide health care to all while containing financial burden on both households and the government. The root cause of the high out-of-pocket payments in Korea is the fee for service (FFS) mode of paying providers which incentivizes over-supply of services that generate higher returns for providers. Unable to replace FFS with capped payments due to political opposition, the government has had to resort to controlling fees and volume of services and requires co-payments from patients. Korea has also established a detailed decision and monitoring processes to curb over-supply and over-charging which have shown only limited success. The financing and payment arrangements and weak regulations coupled with political power of the vested interests make it very difficult to reduce the burden of out of pocket expenditures on households without shifting the burden to the government, a burden that the latter is unwilling to shoulder.