South Korea: #19 in the 2020 World Index of Healthcare Innovation

Introduction

South Korea’s single-payer health system ranks 19th overall in the World Index of Healthcare Innovation, with a score of 46.47. Korea performs especially well at keeping health care spending low, at 8.1% of GDP. Its debt-to-GDP ratio of 39.5% is excellent.

On the other hand, Korea largely relies on scientific and technological discoveries made elsewhere to treat its patients, ranking second-to-last in Science & Technology (18.83, #30). While access to new therapies is strictly limited by Korea’s single-payer structure, the low cost of health care services enables a reasonable amount of choice.

Background

In 1977, South Korea mandated employer-sponsored medical insurance for employees and dependents for businesses with more than 500 employees. By 1989, all South Korean citizens had coverage. However, larger funds sponsored by larger businesses proved to be more stable than smaller and more rural insurance pools. Conditions worsened during the 1997 financial crisis. In 2000, the Korean government sought to address these problems by replacing the multi-fund, German-style insurance system with a single, government-run insurer, the National Health Insurance Corporation.

The average actuarial value of NHIC insurance is approximately 65%; that is, cost sharing and out-of-pocket payments represent roughly 35% of patient health spending. Patients must pay fully for health care services that are not part of the standard NHIC benefit package.

Korea’s small but growing innovative health care sector is led by Samsung Biologics, Celltrion, and LG Chem.

Quality

Overall, South Korea ranked well on Quality (12th). Most notably, the South Korean system ranked 3rd in measuring preventable disease, with only Israel (2nd) and Ireland (1st) ranking ahead. While South Korea ranked in the top third regarding patient-centered customer service (11th), its aging hospital infrastructure caused it to rank towards the bottom of the subscore metric (25th).

Choice

The South Korean model offers a high freedom of choice regarding health care services (8th). In particular, its freedom to choose health care services within the single-payer system ranked 2nd in the subsection. However, the cost of health insurance was relatively high, ranking the country 23rd. Nevertheless, on balance, the South Korean system offers a high level of choice for patients.

Science & Technology

South Korea performed weakest in fostering innovation — ranking 30th out of 31. On both fronts of medical and science innovation, South Korea ranked 29th and 28th, respectively. South Korea’s adoption of EHRs ranks slightly below the median (18th) puts them on part with other advanced nations working toward a more streamlined electronic medical records system.

Fiscal Sustainability

South Korea’s debt-to-GDP ratio (11th) and public health spending per capita (10th) rank within the top third of the WIHI analysis. Most distinctly, South Korea’s growth of health care spending as a share of its GDP over the last 10 years increased substantially, ranking it in the bottom third of findings (24th). Subsequently, South Korea ranked in the top third for overall fiscal sustainability at 10th.