Before 1997, the Federation of Korean Medical Insurance Societies administered all insurers (over 350) and processed all claims. Private insurers covered 90% of the population, and the government directly insured a portion of those not covered privately. Each insurer covered a well defined population segment based on workplace and geography. The benefits packages were largely consistent across insurers but provided relatively limited coverage. In 1997 South Korea replaced this fragmented payer landscape with a government-run, single payer system. This reform deepened the benefits package and broadened coverage.
The Ministry of Health and Welfare (MoHW) sets overall health sector policy and budget including the reimbursement ceiling for the system. The Ministry also monitors the National Health Insurance Corporation (NHIC) and Health Insurance Review Agency (HIRA).
The NHIC is a not-for-profit, single payer covering over 98% of the population. The benefits package is comprehensive, covering almost all inpatient and outpatient services, dental care, traditional medicine, prescription drugs, and preventive services.
NHIP has 3 sources of funding: monthly premium contributions from the insured and employers; government subsidies; and tobacco surcharges. Premium contributions are proportional to income and are shared equally between the insured individual and the employer. For the self-employed, premiums are calculated based on their income level in conjunction with the person’s property, motor vehicles, age and gender. There is a reduced contribution requirement for those who live on islands and remote areas and those serving in the military are exempt from paying premiums.
Providers are reimbursed via fee for service, though moving to a DRG system is currently under consideration. The HIRA is responsible for medical fee review and evaluating performance and economy of provision.