South Korea introduced mandatory social health insurance for industrial workers in large corporations in 1977, and extended it incrementally to the self-employed until it covered the entire population in 1989. Thirty years of national health insurance in Korea can provide valuable lessons on key issues in health care financing policy which now face many low- and middle-income countries aiming to achieve universal health care coverage, such as: tax versus social health insurance; population and benefit coverage; single scheme versus multiple schemes; purchasing and provider payment method; and the role of politics and political commitment. National health insurance in Korea has been successful in mobilizing resources for health care, rapidly extending population coverage, effectively pooling public and private resources to purchase health care for the entire population, and containing health care expenditure. However, there are also challenges posed by the dominance of private providers paid by fee-for-service, the rapid aging of the population, and the public-private mix related to private health insurance.

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Since its introduction in 1977, the national health insurance programme in Korea has paid health care providers on a fee-for-service basis. Regulated fee-for-service payment has resulted in an increased volume and intensity of medical care. It has also distorted the input mix of treatment because physicians have substituted more profitable and uninsured (no coverage) medical services for those with lower margins, as is evidenced by the sharp increase in the caesarean delivery rate. This paper examines two recent supply-side reforms in Korea: Diagnosis Related Group (DRG) and Resource-based Relative Value (RBRV). Since 1997, through a pilot programme covering a selected group of diseases for voluntarily participating health care institutions, the DRG-based prospective payment system has proven to be effective in containing cost with little negative effect on quality. RBRV-based payment was implemented in 2001, but led to an almost uniform increase in fees for physician services without a mechanism to control the volume and expenditure. Challenges and future issues in the reform of the payment system in Korea include the expansion of benefit coverage, quality monitoring and improvement, strategic plans to overcome the strong opposition of providers and the introduction of global budgeting.

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In July 2000, national health insurance in the Republic of Korea was transformed into a single insurer system. This major reform in healthcare financing resulted from the merger of more than 350 health insurance societies. Inequity in healthcare financing and the chronic financial situation of the health insurance societies for self-employed workers in rural areas have been the driving forces leading to the unified health insurance system. The unique institutional context together with political change opened the window of policy change, and various stakeholders such as politicians, rural self-employed workers, trade unions and civic groups were involved in the healthcare reform process. Fair income assessment of the self-employed and the role of the single insurer as a prudent purchaser of medical care will be vital for the new system to achieve its intended goal and improve social solidarity and efficiency of healthcare.

When the Asian financial crisis took a heavy toll on Korea in the late 1990s, policy makers responded by extending welfare policy. For many analysts, this was a paradoxical move, marking a fundamental reconfiguration of the social policy system. This article contests that interpretation. It examines the changes made to Korean social policy in recent years, and considers their impact on the Korean welfare state. It notes both that welfare extensions have been comparatively limited, and that they have often formed part of wider attempts to boost labour market flexibility. It thus concludes that limited expansion of the Korean welfare state is chiefly an attempt to bolster industrial competitiveness and economic growth. For now, Korea retains the productivist social policy orientation that has long characterised it. It also concedes, however, that in the future underlying social change, notably a rapidly ageing population, may prompt policy makers to make significant changes to the Korean welfare state.

Recently, many developed countries have moved toward comprehensive Long-Term Care (LTC) systems. Along with the conventional explanations of these policy changes based on domestic factors, learning from abroad should be considered. We focus on the social insurance model of LTC, particularly how Japan learned from Germany and the Republic of Korea learned from Japan. Some approaches for how to think about policy learning in general as well as cross-border learning are suggested.i ssr_1346 63..80

This study showed a possibility of adverse selection in CBHI enrollment. Additionally, perceived quality of health services, knowledge, and information (awareness) are positively associated with CBHI enrollment. Therefore, policy interventions to mitigate adverse selection as well as provision of social marketing activities are crucial to increase enrollment in CBHI. Furthermore, policy interventions that enhance the capacity of health facilities and schemes to provide the promised services are necessary.