In 2025, South Korea entered an ultra-aged society. The number that caught the reporting team's attention was '53.9%.' Among registered persons with disabilities in South Korea, 53.9% are aged 65 or older. This indicates that aging and disability are interrelated. The reporting team analyzed health statistics for the elderly population and met with persons with disabilities, caregivers, and healthcare professionals, amplifying their voices. The lives of elderly persons with disabilities serve as a call for a bold shift in our society's medical and welfare paradigms. [Editor's Note]
South Korea introduced health insurance in 1977 and established universal health insurance by 1989. To reduce the financial burden of health insurance, the government set low medical fees (underpricing policy), and hospitals actively sought to attract patients to secure revenue.
The South Korean health insurance system demonstrated its effectiveness during the 'COVID-19 pandemic' that swept the globe from 2020 to 2023. The World Health Organization (WHO) and prominent foreign media outlets praised South Korea's health insurance system, stating that "the country has effectively overcome the pandemic with affordable medical fees, high accessibility to healthcare, and systematic cost management."
However, the voices of healthcare professionals caring for elderly patients and health policy researchers tell a different story. They point out that "the health insurance system was created during a time when it was considered longevity to live only into one's 60s or 70s, making it unsuitable for an ultra-aged society where 20% of the entire population is aged 65 or older," emphasizing the need for a redesign of the system.
Three reasons why it doesn't fit an ultra-aged society
① Is the fee-for-service system appropriate?
Mr. Noh (80) was diagnosed with osteoporosis in his early 70s. He also has increasing chronic conditions such as hypertension, diabetes, and hyperlipidemia. Mr. Noh visits Hospital A for osteoporosis treatment and Hospital B for diabetes and hypertension treatment. He also takes herbal medicine from Clinic C, named by his daughter. Mr. Noh stated, "Due to health insurance coverage, the cost of medication is not burdensome. However, it's overwhelming to manage so many medications every day."
Professor Lee Jae-ho, an authority in primary care and chronic disease management at Seoul St. Mary's Hospital, described the health care utilization patterns of elderly persons with disabilities as a "disaster." He explained, "As one ages, they tend to have more chronic illnesses and frequent minor ailments, resulting in a higher demand for necessary medical services. Without a competent managing entity (primary physician), it is difficult to provide proper treatment to patients, leading to overlapping treatments, excessive medical care, waste of medications, and especially misuse of antibiotics."
The health insurance system operates on a fee-for-service basis. Charges are set for each medical procedure, leading to excessive medical practices by healthcare institutions, which then harms the finances of the health insurance system.
In fact, the potential deterioration of health insurance finances due to the increasing elderly population is evident in the indicators. As of 2023, health insurance medical fees were approximately 110 trillion won, a 4.7% increase from the previous year, with the medical fees for the population aged 65 and older, which represents around 18.4% of the population, reaching about 49 trillion won (44.1% of total medical fees).
According to the Korea Disease Control and Prevention Agency, as of 2023, chronic disease medical expenses accounted for about 90 trillion won, representing 84.5% of total medical expenses, which is also significantly related to the increase in the elderly population ratio.
② Is the hospital-centered medical model appropriate?
Currently, the health insurance system operates on a hospital-centered treatment model. According to the Medical Law, healthcare professionals are required to work solely within their established medical institutions, making house calls essentially illegal. This was a measure put in place at the beginning of the health insurance system to guarantee quality and safety in medical care.
Because of its hospital-centered model, healthcare professionals explain that it is challenging to reflect the demands of chronic disease management, long-term care, and community care services, which are necessary due to the increasing elderly population. Lack of adequate medical services for elderly patients after acute care treatment significantly contributes to the occurrence of disabilities in old age.
Professor Yoon Jong-ryul, an honorary professor at Hallym University of Science and Technology, noted, "The current healthcare system provides segmented medical care centered around diseases, which is not suitable for the elderly who need comprehensive, continuous, and coordinated care. There is a need to establish an elderly-friendly healthcare system that organically combines home care, primary care, geriatric specialized care, visiting care, nursing, and rehabilitation."
Professor Noh Seung-hyun from Luther University’s Department of Social Welfare proposed in a research report in December 2023 that "If a welfare and health care network response system is established through partnerships with local hospitals and clinics, a multidisciplinary team of professionals could respond immediately to emergencies and falls."
South Korea, unfriendly to the elderly society, view it through interactive content
③ Is application-based welfare appropriate?
Kim Yejin (pseudonym, 32) is the eldest daughter among three siblings caring for her father with congenital brain lesions and her mother who suffered significant damage to her frontal lobe from a traffic accident three years ago. Kim had to run around to obtain the disability certification for her mother, who acquired a disability later.
While Kim spends six out of seven days a week caring for her father, it is not easy to gather the necessary documents from university hospitals, rehabilitation hospitals, district offices, and community service centers. Preparing various documents for grade assessment results, such as a long-term care physician's opinion, basic pension application history, and social security benefits application forms, has been challenging. Kim said, "I’m lucky in a way because my siblings can share the load."
Elderly persons with limited mobility can receive government-provided services such as washing, oral care, laundry, meals, grooming, and accompaniment by receiving long-term care grades (1-5 grades, cognitive support grades). The National Health Insurance Service raises funds by integrating and collecting long-term care insurance premiums and health insurance premiums.
The issue is that individuals with low education, the elderly, and daily laborers often fail to apply due to a lack of understanding of the system. South Korea's welfare system is fundamentally 'application-based.' If individuals do not apply themselves, they cannot receive welfare services. Long-term care grading also requires an application to be received.
Moreover, without family support, access to medical and welfare services significantly decreases. According to the 2023 Ministry of Health and Welfare elderly survey, the proportion of elderly individuals living alone reached 32.8% of the total elderly population. Elderly individuals living alone are at a high risk of falling through welfare gaps.
The United Kingdom established a comprehensive public healthcare system based on the Beveridge Report, managing and operating all healthcare institutions under national control. In contrast, the United States developed a private insurance-centered healthcare system based on free-market economics. South Korea hastily adopted health insurance in 1977 during the regime competition with North Korea, operating it as a kind of social insurance system.
Woo Bong-sik, director of IM Rehabilitation Hospital (former director of the Medical Policy Research Institute of the Korean Medical Association), remarked, "Initially, it started in a limited form applicable only to business sites with more than 500 employees, resulting in structural issues like low premiums, low benefits, and underpricing, leading inevitably to excessive regulations, punitive measures, and populist healthcare policies." He emphasized that "this is why it is fundamentally difficult to improve the system despite the financial pressure on health insurance from the growing elderly population."
Suggestions for designing Health Insurance 2.0
① Primary physician system
Professor Lee Jae-ho claims that "like advanced countries such as the United States and Europe, South Korea should institutionalize the operation of primary care facilities and primary physicians."
Primary care involves providing medical services such as minor treatment, health check-ups, and vaccinations at neighborhood clinics or public health centers. In South Korea, there has been a trend of patients increasingly seeking large hospitals, weakening the role of primary care. The primary physician system allows each patient or family to designate a specific physician as their primary physician, enabling consistent health management and consultations.
Professor Yoon Jong-ryul explained, "For example, if blood pressure and blood sugar levels are well managed, it is difficult to understand why patients are increasingly struggling under the current segmented medical system. If a single primary physician managed a patient, they would better understand individual changes."
Director Lee Sang-beom of Seoul Sinnae Clinic pointed to Japan's 'regular physician system (かかりつけ医制)' as a good model South Korea should benchmark. This system involves a specific physician continuously managing the overall health status of patients, having developed the primary physician system tailored to the Japanese medical environment.
The regular physician system in Japan has reportedly improved the quality of patient-centered medical services and achieved cost reduction effects by linking primary care with specialized medical care. He added, "If incentives such as partial medical expense reductions are provided to hospitals utilizing regular physicians and persons with disabilities, the system could be quickly established."
Since May 2018, South Korea has been operating a health primary physician system for persons with disabilities. However, according to data from the Ministry of Health and Welfare as of October 2024, only 5,255 persons with disabilities are using this system, with 765 registered primary physicians. The percentage of active registered primary physicians is below 15%.
Professor Lee Jae-ho emphasized that "for the primary physician system for persons with disabilities to be effective, they must be able to easily find trustworthy doctors periodically, but there are very few participating doctors and medical institutions, making it difficult for persons with disabilities to utilize it properly."
② Community comprehensive care system
Japan established a home healthcare and community comprehensive care system as it entered an ultra-aged society in 2003. The core of Japan's community comprehensive care system is to enable patients to easily access healthcare services regardless of their location. It also emphasizes strengthening preventive health management activities.
Director Woo stated, "For instance, Japan provides elderly individuals with regular health education and exercise programs, and they are seeing results in extending healthy life expectancy by providing incentives when certain criteria are met. This preventive healthcare model must be actively adopted to reduce medical expenses and increase the healthy elderly population."
➂ Introduction of flat-rate pricing
Japan has also introduced the Diagnosis Procedure Combination (DPC) system, harmoniously combining fee-for-service and flat-rate pricing methods. This approach has helped control rising medical expenses while maintaining the quality of medical services.
Director Woo remarked, "South Korea's new flat-rate payment system is failing to operate properly while benchmarking Japan's healthcare system, particularly due to insufficient efficient utilization of medical resources and policies for adjusting hospital beds, leading to increased medical expenses."
When there are many hospital beds, hospitals will attract patients to fill them, which leads to increased medical expenses. South Korea exceeded the OECD average healthcare expenditure in 2022 and is among the countries with the fastest medical expense growth rates. Japan strategically adjusts the number of hospital beds to control medical expenses, while South Korea continues to increase the number of beds without a proper plan, as explained by Director Woo.
He emphasized that "the situation in South Korea, which entered an ultra-aged society in merely seven years, closely resembles that of Japan," stating that South Korea must properly benchmark Japan’s health insurance system to complete a 'Korean-style health insurance system.'