Since 1960 the health landscape of South Korea has drastically changed. From being a mostly agrarian society to being one of the most industrialized countries in the world, the causes of death in South Korea have shifted from acute and communicable diseases to chronic and noncommunicable diseases (WHO). In this massive and incredibly fast growth, several problems interwoven between the social, economic, and health spheres of the country have developed. By nature of the demographics left in the country at the end of the Korean War, combined with the increased life expectancy that came with industrialization, South Korea now has the fastest-growing elderly population in the world, with the current population of Koreans over 60 accounting for 17% of the current population (WHO). Should this trend continue, 37% of Korea’s population will be over 65 by 2050 and the elderly dependency ratio will be near 70% (The U.S.’s current dependency ratio is only about 21%).
Several critical problems have arisen out of Korea’s increased elderly population. Currently, South Korea has the highest population of elderly living in poverty among OECD countries. Of people over 65 in Korea, half live in relative poverty (OECD Database). Less than 20% of the elderly, regardless of their living conditions, report having “Good/Very Good” health, making Korea one of the lowest-scoring countries for health reports in the OECD system (OECD Database). Studies such as the Korean Longitudinal Study of Aging have shown a clear correlation between elderly who rank their health as “Poor/Very Poor” and insufficient funds to seek medical attention (Park, WHO). This explains the inconsistency that develops between the elderly’s poor health and South Korea’s high healthcare consumption. The issue therefore isn’t in South Korea’s healthcare not being in enough supply per se, but rather the limitations to accessibility, delivery, insurance, or even willingness to seek medical care.
(Source: OECD Database)
The issue goes even further beyond basic medical care. Korea also has the highest suicide rate per capita of any other OECD country in the region, and tops among OECD countries for elderly suicides. In 2012 there were 29.1 self-inflicted deaths per 100000 people in Korea (OECD Database), and The Health and Wellness Ministry published a study that showed around 90% of the suicide victims suffered from diagnosable mental health conditions such as depression. This indicates that a significant portion of South Korea’s elderly population is not only suffering from poor physical health but poor mental health as well.
The purpose of this article is to analyze the compounding healthcare and social issues affecting elderly South Koreans, the economic effect that those issues have on South Korea as a whole (which also feed back into the healthcare system), and propose possible policy changes to improve the situation.
Current State of Korean Healthcare
Before assessing methods of improving the Korean elderly’s access to medical and mental care, it’s important to first analyze the Korean healthcare system and identify problems within the system that may particularly target the elderly.
As of 2007, South Korea had over 91,000 physicians, averaging at 2.1 physicians per 1,000 people (The U.S. averaged 2.5 / 1000 the same year). Korea has a national health insurance program, of which over 96% of the population is enrolled. Employers and employees split the bill on paying approximately 5% of an employee’s average annual salary towards the national healthcare program. The out-of-pocket payout distribution is as follows:
|Classification||Portion of Healthcare Costs|
|10-20% of total treatment costs|
|Tertiary Care Hospital||Per-visit Consultation fee + 50% of treatment cost.|
|General Hospital||50% of (treatment cost + per-visit consultation fee)|
|Hospital||40% of (treatment cost + per-visit consultation fee)|
|Clinic||30% of treatment cost|
|Pharmacy||30% of total cost|
|In-Home Care||15% of total cost|
|Institutional Care||20% of total cost|
(Source: National Health Insurance Corporation)
At first glance, the system seems very good. Because doctors can’t negotiate with private insurance firms over prices, doctor visits cost less and doctors make much less (as much as a quarter less than U.S. physicians). Under the national insurance, Koreans also have the freedom to choose whichever doctor they want to see whenever they want. However, 90% of the physicians practice in urban areas and less than 80% of the population lives in urban areas. Those who live in rural areas without access to quality healthcare usually fit into the elderly bracket. Furthermore, the low cost of healthcare consumption means Koreans spend far more time in the hospital per visit (14.6 days) than the OECD average (7.2), increasing the overall cost incurred.
Due to their lower average income, Korean doctors are often prone to order expensive medical tests – such as MRIs that aren’t covered by insurance (except in instances of cancer or catastrophic disease) – or excessive amounts of prescription medications in order to generate profit. The price of an MRI can be anywhere from 250,000 won to over 1,000,000 and is the most common method Korean doctors use to generate profit. Accidents and physical injuries are also not covered, which is particularly bad for the elderly who are naturally more prone to physical injury.
Overall, there are only a few issues within the Korean healthcare system that could possibly pose large economic burden on the elderly or dissuade Koreans from taking advantage of available healthcare, as the cost of healthcare is relatively affordable. The mental health system, however, is a much different story.
Of the 90% of suicide victims who suffered from diagnosable mental disorders, only 15% sought regular mental healthcare. Less than 25% had seen a mental health professional in the month before their suicide, and only 28% had even seen a physician or traditional medicine doctor (Lee). This shows the difficulty in fully quantifying the problem of mental health in Korea because so much of Korea’s mental health facilities are underused due to social stigma – and to some extent ignorance – involved with mental disorders. A government report on suicide showed that 93% of korean suicide victims showed telltale behaviors related to suicidal tendencies, but 81% of family members “did not consider these signs of anything to be alarmed about” (Lee). How much of this statistic represents true ignorance or feigned ignorance is unknown.
Korea’s suicide rate – a definite correlate of mental disorder – has continued to rise, as has perceived sense of depression and anxiety due to education-related stress in students and social isolation in elders, and yet only 5.6 of the Korean population (roughly 2 million people) have been diagnosed with any sort of mental disorder. Of those 2 million people, only 150,000 of them – .3% of the population – sought regular treatment last year (Lee). Although the Korean government has a western-style medical care program in place, once again they are centralized in urban areas that exclude care for many elderly patients who dominate the rural areas, treatment periods are much longer than average, and there’s no efficient system in place to matriculate patients back into society after prolonged psychiatric care because primary mental healthcare is done through existing public healthcare centers. If further treatment or long-term care is necessary, insurance coverage decreases, along with willingness to pay. As of May 2016 the Korean government passed measures that aim to increase early detection of mental illness, reduce the copayment rate on mental healthcare, and design programs aimed at reducing the social prejudice of mental illness. It’s too early to judge its effectiveness.
The Elderly Economic Support System
South Korea is a society that was built on confucian ideals of honoring the elderly and for much of its history had a support system that was built into the family structure specifically for the elderly’s financial needs. Since the industrialization of the country, however, the structure of a nuclear family has shifted its center away from grandparents and more towards a (usually young) husband and wife, who acts as the financial managers and decision-makers of the family. Young families, much like the majority of health institutions, are also centered in urban areas of South Korea, leaving most of the population in the rural country elderly as previously mentioned. Along with this change in family structure, the growing labor participation of women call for a higher need in long-term care (LTC) and support for the elderly. Movement of such young families into the city not only physically isolates the elderly from familial care but it also increased the cost of living, cost of education, and personal spending drastically and reduced the amount of financial assistance the elderly can expect from their families. In summary, the rapid expansion of the aging population, the active female participation in the job market, and the shift in the paradigm of illness all account for the increase in social isolation for Korean elders.
Of the approximately 6 million elderly Koreans, 1.2 million live alone (National Statistics Office 2012). This over double the amount of a decade ago. According to Yi and Hwang, “Those who are socially isolated are exposed to various dangers potentially leading to negative health conditions, and the issue of social isolation brings about malnutrition, repeated hospitalization, cognitive regression, and grave alcoholic problems.”
However, despite all the described substandard conditions the Korean elderly face, there is another barrier, a sufficient lack of welfare programs to satisfy the growing insurance benefit requests. South Korea has three layers of health security or ‘The Three Arms of Healthcare Security’ (IMC 1): the National Health Insurance Program (NHI), the Medical Aid Program, and the Long-term Care Insurance Program. As the first insurance law in Korea, the NHI is a general coverage for all citizens. Upon ten years since its establishment, all health insurance communities were integrated into a single indemnity, the NHI. The NHI is a guarantee and safety net for most of the Korean citizens to benefit from when their health is at risk and the situation calls for medical care and help. Yet, despite its role as the main supervising institution in Korea, the objective of maximizing efficiency and achieving distributive justice is still a task that remains unfulfilled.
The NHI’s preparation for a timely adjustment adapting to the future rise in health costs wasn’t fully effective and the confined government subsidy limited their capabilities as well. The universal coverage of the act is a good approach to promote gross welfare. However, compared to the improvement of quantity, the financial instability forces the quality of the health care to fall, eventually dealing damage to the effectiveness of the NHI.
Trying to achieve the coverage it offers within a short period of time, the government had paid little attention in assembling a good setting for the medical professionals to afford their medical earnings and sovereignty. It had constructed a medical healthcare plan at the expense of the medical faculty. This caused the professionals to seek their separate ways of securing their gains through the use of excessive medical care services that at times turned out to be unnecessary and costly for the patients. The list includes a range of services from excessive prescriptions of antibiotics to unreasonable amounts of magnetic resonance imaging and c-section delivery rates. Not only should there be an improvement in the monitoring process to prevent such misuse of medical treatments, there should be a general shift in focus in the way the government approaches and achieves to construct a well fortified health insurance.
Repairing the loopholes and rehabilitating the medical professionals would drastically minimize the abuse of authority and ameliorate the disfavoring situation for the elderly. Continual development of new medical technology at an unstable and fragile state could only become unintentionally harmful to the medical systems, pressurizing them into higher costs and worsening the vicious cycle that only victimizes the elderly population. The government should tighten their loose healthcare service structure by devising policies to put precedence on the people’s health needs and the quality of care.
National Pension Scheme
South Korea has a wide-spreading pension scheme that covers most of the population’s employees and elderly, however the particular elderly pension was reported by the OECD to be the least effective in the system for reducing elderly poverty. In 2007 South Korea spent 1.6% of its GDP on elderly welfare, but this is only a quarter of the OECD average. The system has matured since it was first drafted in 1987 (and subsequently reformed in 1998 and again in 2008), but many argue that the system hasn’t gotten any better. The 1998 reform raised the eligibility rate to 65, changed the contribution rate from 6% to 9%, and reduced the benefit level from 70% income replacement to 60%. Under these conditions, the assets were projected to dry up by 2047 (Yang). The 2008 reform reduced the benefit level to 50% and will reduce them to 40% in 2028, but even then assets are still projected to dry up around 2060, as shown by the following graph:
Raw number of contributions from the insured have increased year by year within the national pension scheme, but it hasn’t grown fast enough to continue increasing benefits to the faster-growing elderly population. In fact, benefits have been reduced (Kim). 70% of the elderly population is covered by the pension scheme, but the benefits are so small that it has been assessed as having “little impact on ameliorating poverty of the elderly” (Kim). In summary for the purposes of this article: because the relative benefit from welfare is so low, it plays a very small role in affecting the generalized hypotheses made of how the elderly will act in the healthcare economy.
Assessment and Suggestions
What does this mean for the healthcare economy of the elderly? Given that nearly half of all South Koreans aged over 65 live in relative poverty and many others live very close to the poverty line, it means that the opportunity cost of receiving healthcare is very high. When faced with relative (or close to relative) poverty the time costs are already very high, but given the low cost of healthcare with insurance the price for visiting a doctor and possibly facing more costs if something is wrong, buying a meal or paying rent is a much more attractive offer. The poverty issue is clearly the most prominent part of the elderly’s ability to consume healthcare, even without any sort of statistical analysis. When paired with the isolation issue and / or the silent mental disease issue, the problem becomes a lot more pronounced. Unfortunately, because the issues are so far-spread, it’s difficult to suggest reasonable solutions
As for the issue of healthcare delivery to the rural areas of Korea, a possible suggestion would be for hospitals to set up clinics in the rural towns which could have regular doctor visits on selected days, a pharmacy, and – most importantly – a shuttle option to the parent hospital if the elderly need more attention than the clinic can provide.
The issue of providing mental healthcare to the elderly in Korea is a more difficult one simply because one can’t force a social stigma to go away. As long as the stigma surrounding mental healthcare still exists among the Korean public, there is no “solution” to providing mental healthcare to those that need it. In the meantime, money could be redirected to simply providing mental healthcare consultations instead of keeping empty beds in unused long-term mental healthcare facilities. For those that do need attention in a long-term facility, there needs to be a better support system for integrating back into society, one not made up of government workers but of lay people who understand the mental stress that comes as part of living with the social issues permeating through Korea.
One solution that could prove very effective, in our opinion, is a centralization of Long Term Care programs in neighborhoods and small cities. LTC is so woefully underutilized in Korea where it could potentially have a huge impact in the health utilization and quality of living for the elderly. One of the major issues facing the elderly is that they have no reasonable social structure in their lives to rely upon financially or mentally. We believe that establishing community centers where the elderly could not only socialize but also have access to long-term healthcare or otherwise simple health services. This idea is a bit different from the current community centers in Korea, which are more like neighborhood associations that discuss issues currently affecting the physical neighborhood such as trash collection or sidewalk murals. This idea is also different from current homeless centers in Korea, another program woefully underused but out of the scope of this article. The vision for this project would be a hybrid between a community center and a clinic, a place with free membership under a certain set of conditions (age, income, etc.) where the elderly could not only socialize but get informed on their LTC options and receive mental / physical examinations. The immediate use in urban areas where there are already many options to socialize, but the impact in rural areas where the elderly are most likely to not only be isolated but in need of LTC could be huge. Obviously the logistics of working these centers into the current korean LTC and mental healthcare pensions would not look good given how thinly-spread both pensions are, but that is more an issue of policy economics and less so healthcare economics.
Because the Korean elderly crisis has roots growing outside the scope of healthcare economics, it’s impossible to provide any clear-cut causational data between the elderly and their ability to access affordable healthcare. What this article has outlined, however, are sources that all work together in targeting the elderly and their healthcare consumption capabilities. This issue is not something that the Korean government and Korean private hospitals can sit idly by with measly half-attempts at fixing. The population is going to continue growing older and will be very old in the next 30 years, something that will likely ravage Korea’s economy regardless of any preemptive measures taken today. What can be done, however, is a thorough re-evaluation of the issues discussed in this article and begin designing ways to alleviate them so that when 37% of the population is over 65 in 2050 the framework for a program that keeps healthcare available for the massive elderly population is already in effect.