Recent analysis by the Korea Development Institute (KDI) found that the main factor behind the increase in health insurance expenditure over the past decade is not aging or an increase in the frequency of treatments, but rather the "rise in treatment prices" at medical institutions, especially at clinics. KDI suggested that structural reforms, including improvements to the "fee-for-service" system, are urgently needed to curb the increase in treatment costs.
Researcher Kwon Jeong-hyun of KDI presented the focus titled "Factors contributing to the increase in health insurance expenditure and implications" on the 21st.
Researcher Kwon classified the factors contributing to the increase in treatment costs from 2009 to 2019 into three categories: ▲ Increase in the number of treatments (quantity factor) ▲ Price increase (price factor) ▲ Structural changes due to population aging (demographic factor), measuring the contribution rate of the increase in real treatment costs per person.
As a result, real health insurance expenditure per person increased by 28.0% over 10 years, with the price factor accounting for the largest contribution at 76.7%. The quantity factor contributed 14.6% and the demographic factor contributed 8.6%. This indicates that medical institutions increasing high-cost services or the intensity of treatments under health insurance coverage is the biggest background to the overall increase in expenditure.
In particular, when breaking down the price factor by type of medical institution, the contribution of clinic-level medical institutions was the highest at 24.9%. This was followed by tertiary hospitals at 17.0% and general hospitals at 14.6%. The impact of price increases was more pronounced in outpatient care than in inpatient services. This can be interpreted as a reflection of the expansion of outpatient-focused treatment for high-cost diseases, the introduction of expensive tests, and increased treatment density.
Conversely, the influence of quantity factors such as the number of patients or the frequency of treatments has decreased compared to the past. Although the utilization of inpatient services increased by 45.9% compared to 2009, the annual growth rate is gradually slowing down.
Aging was analyzed to have a distinct impact only among the ultra-aged population. Among those aged 85 and older, demographic factors accounted for half (50%) of the overall increase in expenditure, while quantity factors contributed 27%. However, among those aged 65 to 74, the "younger elderly" population, there was a reduction in treatment frequency, leading to a slowdown in health insurance expenditure growth. This is interpreted as a reflection of the so-called "healthy aging" trend, with more healthy seniors.
Based on these findings, KDI suggested that priorities in expenditure management should shift to controlling high-cost services and unnecessary treatments. The current "fee-for-service" system, which pays for each treatment item, lacks sufficient incentives to autonomously control the volume of treatments and thus needs improvement.
The report noted, "Clinics need to introduce performance-based compensation systems to faithfully fulfill primary healthcare functions," and added, "To ensure the sustainability of health insurance finances, structural supplements such as managing life-sustaining treatments, expanding preventive investments, and regular evaluations of expenditure factors are needed."