Why did Korea integrate multiple health insurers into a single insurance body in 2000? This study argues that the combination of institutional frictions and reinterpretations of them led to institutional changes by reshaping coalitions of healthcare policies. This study demonstrates how the interaction between institutional mismatches and policy feedbacks caused by policy transfer distortions and actors' ideas can trigger the institutional changes. When Korean policymakers adopted the Japanese health insurance system in the 1970s and 1980s, they deliberately modify some institutional sub-components to reflect the interests of bureaucrats and dominant groups. As a result, the mismatched institutional and ideational patterns created frictions for institutional changes. The self-governance of health insurance societies has hardly been achieved in Korea and it reduced individual health insurance societies to no more than a governmental body that collected contributions. In problem-solving mechanisms, there was a weak commitment for support such as loosely institutionalized finance assistance for rural health insurance schemes since the nascent democratic regime wanted to manipulate the subsidy for political reason, with low financial burden. Due to these distorted institutional practices, the health insurance system was seen as a symbol of the social exclusion of the disadvantaged and as a malfunctioning social policy stemming from an irresponsible government. Meanwhile, by reshaping its orientations and preferences, Korean labor reinterpreted the meaning of the health insurance system and socially oriented labor movements in Korea have formed a coalition with civil movement for the health insurance reform.