In this event, Dr. Jaeun Shin will discuss the historical and policy background of expanded private health insurance in South Korea. Looking at the public-private mix of health care financing and its impacts, Shin conducted a comparative study of thirty member countries of the Organization for Economic Co-operation and Development (OECD) during the period 1980 to 2007 to ask whether private health insurance can counterbalance limited government financing, high out-of-pocket payments, and the persistent financial deficit of South Korea’s National Health Insurance system.

The panel analyses of OECD Health Data from 2009 suggest that private health insurance financing is unlikely to reduce government spending on health care and social security. Also, Shin found little evidence that out-of-pocket payments will be replaced by private health insurance payments. Private health insurance payments, however, are found to have a statistically significant positive association with total spending on health care, which indicates that the coverage effect of private health insurance—in addition to national health insurance—may exceed the efficiency gain through the market competition that private insurers may deliver to the health care sector. These findings leave it unclear whether private initiatives in health care financing will be as effective as the policy advocates hope for, in dealing with the challenges of national health insurance in South Korea. Shin suggests that further studies of how public and private insurers, and providers and consumers interplay in response to  a given structure of private-public mix in financing are warranted to decide the right balance between private coverage and publicly provided universal coverage.

In this study, we discuss the historical and policy background of expanded private health insurance in South Korea. Looking at the public-private mix of health care financing and its impacts, we conduct a comparative study of 30 member countries of the Organisation for Economic Co-operation and Development (OECD) over the period 1980–2007 to ask whether private health insurance can counterbalance limited government financing, high out-of-pocket payments, and the persistent financial deficit of South Korea’s National Health Insurance system. The panel analyses of OECD Health Data 2009 suggest that private health insurance financing is unlikely to reduce government spending on health care and social security. Also we find little evidence that out-of-pocket payments will be replaced by private health insurance payments. Private health insurance payments, however, are found to have a statistically significant positive association with total spending on health care, which indicates that the coverage effect of private health insurance—in addition to national health insurance—may exceed the efficiency gain through the market competition that private insurers may deliver to the health care sector. These findings leave it unclear whether private initiatives in health care financing will be as effective as the policy advocates hope for, in dealing with the challenges of national health insurance in South Korea. Further studies of how public and private insurers, and providers and consumers interplay in response to  a given structure of private-public mix in financing are warranted to decide the right balance between private coverage and publicly provided universal coverage.