Graduate Thesis Or Dissertation
 

A Study on National Health Benefits Expansion Policy and Its Ramifications in South Korea

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https://ir.library.oregonstate.edu/concern/graduate_thesis_or_dissertations/cv43p4758

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  • Since 1989, when South Korea achieved universal health coverage (UHC), 97.1% of the population has been covered under the NHI system with remaining 3% receiving services through the Medical Aid Program. Regardless of the sufficient population coverage, patients who require high-cost procedures still experience overwhelming costs of care due to a limited range of covered services in NHI. To compensate for the deficiency of covered services, the government has implemented the ‘Mid-term Health Benefits Expansion Security Plan’ since 2005. Despite the long-lasting implementation, this plan has been criticized for not showing any prominent evidence of reducing patients’ health spending. In addition, it has been accused of triggering providers to induce patients’ consumption of non-covered services to increase their profits against the government’s regulations towards covered services. This study aims to provide empirical evidence on the effect of the benefits expansion policy, whether the benefits expansion policy increased healthcare expenditures and utilization and lead to supplier-induced demand (SID) for services not covered by the NHI. We employ the Two-Part Difference-in-Differences (Two-Part DiD) estimation for analysis with the Korean Health Panel Survey (KHPS) data. We divide the DiD model into two separate equations of the probability of accessing any care and the intensity of care conditional on the initiated care to consider a high skewness with a peak at zero and heterogeneity between zero and non-zero in health claims data. We find that the government’s benefits expansion policy reduced the patients’ total and inpatient OOP payments without significant changes in utilization. Although spending for outpatient services increased, it was statistically insignificantly associated with the policy. In this study, as the primary beneficiaries of the policy were the patients with major catastrophic diseases who essentially needed inpatient services, the policy’s benefits were mainly concentrated on inpatient services. The policy also primarily affected the reduction of health spending of patients with the highest income. Given that the policy’s purpose is to redistribute the social resources, this result might not be a desired outcome. We find no evidence of SID for non-covered services. The absence of such an effect might result from the fact that we mainly examine the critical patients with major catastrophic diseases. By considering the necessity of care for those patients, providers did not significantly change the quantities of non-covered services to maintain their profits after the policy. The benefits expansion policy affects to reduce patients’ health spending in terms of total and inpatient services without significant changes in utilization. However, as the policy’s benefits are mostly limited to a particular portion of patients and services, the government might need to reinforce the benefits coverage for more general patients to benefit from the policy.
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