Merger of statutory health insurance funds

Overview

Three types of health insurance funds existed in the Republic of Korea which covered formal sector employees, civil servants including school teachers, and self-employed people. Management of these funds was fragmented among more than 350 quasi-public not-for-profit insurers. Although these three schemes provided the same statutory health service benefits and reimbursement of providers, their contributions were unequal depending on their base income, property and household size for self-employed and wage income for salaried employees. The burden of contributions also differed from region to region, and fiscal deficits were common among schemes for self-employed people. In 2000, these health insurance funds were merged into a single risk pool that resulted in significant savings in administrative costs. The paper analyses the consequences for efficiency of this reform that aimed to re-organize multiple health insurance funds to a single insurer system, identifying critical factors such as political support, good governance, regulation, management of organizational interests, involvement of health professionals’ associations, labour unions and civic groups that contributed to this reform.

Synthesis report

The Republic of Korea case study is part of a synthesis report that applied a causal framework to synthesize lessons from ten case studies of various health system reforms which aimed to improve the efficiency in health systems.