Unintended consequences of healthcare reform in South Korea: evidence from a regression discontinuity in time design

• Published in: Health research policy and systems Vol. 21; no. 1; p. 60
• Main Author: Kim, Moon Joon
• Format: Journal Article
• Language: English
• Published: England BioMed Central Ltd 22.06.2023; BioMed Central; BMC
• Subjects: Adverse selection; Clinics; Copayment; Costs; Discontinuity; Expenditures; Financial services; Health care; Health care access; Health Care Costs; Health care expenditures; Health care industry; Health care policy; Health Care Reform; Health Expenditures; Health insurance industry; Health Policy; Health services; Health services utilization; Healthcare utilization; Homeopathy; Hospitalization; Humans; Insurance; Insurance coverage; Materia medica and therapeutics; Medical aid; Medical care, Cost of; Medical treatment; Medicare; Moral hazard; National health insurance; Older people; Outpatient services; Patients; Per capita; Policyholders; Regression discontinuity in time; Republic of Korea; Therapeutics; Utilization; Republic of Korea; South Korea; Slovakia; Hungary; United States > US; Japan; Adverse selection; Healthcare utilization; Copayment; Regression discontinuity in time; Moral hazard
• ISSN: 1478-4505; 1478-4505
• DOI: 10.1186/s12961-023-00993-9

To address concerns over the financial stability of South Korea's National Health Insurance (NHI) programme, the government transitioned from an outpatient copayment system to a coinsurance system in 2007. This policy aimed to reduce healthcare overutilization by increasing patients' financial responsibility for outpatient services. Using comprehensive data on NHI beneficiaries, this study employs a regression discontinuity in time (RDiT) design to assess the policy's impact on outpatient healthcare utilization and expenditures. We focus on changes in overall outpatient visits, average healthcare cost per visit and total outpatient healthcare expenditures. Our findings indicate that the transition from outpatient copayment to coinsurance led to a substantial increase in outpatient healthcare utilization (up to 90%) while decreasing medical expenditures per visit by 23%. The policy shift incentivized beneficiaries to seek more medical treatments during the grace period and enroll in supplemental private health insurance, which provided access to additional medical services at lower marginal costs. The policy change and the emergence of supplemental private insurance contributed to moral hazard and adverse selection issues, culminating in South Korea becoming the country with the highest per capita utilization of outpatient health services worldwide since 2012. This study underscores the importance of carefully considering the unintended consequences of policy interventions in the healthcare sector.