South Korea’s per capita health insurance spending rose by 28% over the past decade, driven largely by higher treatment costs rather than more frequent medical visits. (Image courtesy of Yonhap)
SEOUL, April 22, (Korea Bizwire) — South Korea’s per capita health insurance spending rose by 28% over the past decade, driven largely by higher treatment costs rather than more frequent medical visits, according to a report released Monday by the Korea Development Institute (KDI).
The report, titled “Factors Behind Health Insurance Spending Growth and Policy Implications,” analyzed national health insurance claims data from 2009 to 2019. Adjusting for inflation, it found that price increases — rather than utilization rates or demographic shifts — were the dominant force behind rising medical expenditures.
Price-related factors accounted for 76.7% of the total increase in per capita spending, while higher service volume contributed just 14.6%. Demographic factors, such as population aging, made up 8.6%.
“The data point clearly to rising unit costs — not more doctor visits — as the primary reason for soaring health insurance bills,” the report said.
Local clinics, or primary care facilities, were identified as the largest contributors to cost inflation, responsible for 24.9% of the total increase in unit costs. Tertiary hospitals and general hospitals followed at 17.0% and 14.6%, respectively.
Outpatient services drove much of the price growth, particularly in the treatment of chronic and high-cost illnesses like cancer. The shift toward intensive, outpatient-centered care and increased use of expensive services further contributed to the trend.
Meanwhile, overall usage of healthcare services showed signs of leveling off. Although inpatient service use rose by 45.9% over the decade, annual growth rates have slowed. The volume factor’s overall contribution to spending growth has also declined.
South Korea’s per capita health insurance spending has surged by 28% over the past decade, fueled primarily by rising treatment costs rather than an increase in the frequency of medical visits. (Image created by AI/ChatGPT)
While aging has long been considered a driver of healthcare costs, its impact proved less significant than commonly believed. Among early seniors aged 65–74, healthcare usage actually fell, suggesting a broader trend of “healthy aging.”
In contrast, the 85-and-over group showed a marked rise in service use, with population aging accounting for 50% and volume increases for 27% of cost growth in that demographic.
In light of the findings, KDI urged a shift in policy focus toward curbing unnecessary high-cost services and over-treatment. Central to this recommendation is reforming Korea’s fee-for-service reimbursement system, which pays providers per procedure and offers few incentives to limit treatment volume.
“The current payment model offers little reason for providers to self-regulate service volume or intensity,” the report noted. “There is a pressing need to introduce performance-based compensation systems that encourage primary care clinics to focus on prevention and chronic disease management.”
KDI also called for stronger oversight of costly end-of-life care, increased investment in preventive health initiatives for the elderly, and regular evaluation of the drivers behind health insurance spending.
The findings come as South Korea prepares to confront the long-term fiscal sustainability of its public health insurance system amid a rapidly aging population and rising demand for healthcare.
M. H. Lee (mhlee@koreabizwire.com)
