The effect of universal coverage on catastrophic health expenditures in the AP region: evidence from South Korea and Taiwan

Presenter: Jui-fen Rachel Lu, Chang Gung University

Abstract

One of the key objectives of introducing a compulsory health insurance is to provide its citizens regardless of socioeconomic status with risk protection against unexpected catastrophic expenditures in the face of illness. South Korea and Taiwan are two advanced Asian economies that achieved universal coverage through mandatory social insurance schemes in 1989 and 1996 respectively. Their experience provides valuable evidence to countries that seek to expand insurance coverage, and on what deficiencies may arise. In spite of South Korea and Taiwan’s attempts to achieve the goal of financial risk protection for more than a decade, past research has demonstrated that household out-of-pocket payment still accounts for more than one-third of total health expenditures in both countries. When OOP payment represents a significant share of financial sources for health care, one should be particularly concerned about the distribution of such payments, in particular, catastrophic health expenditures, across households of differing economic levels. This paper examines the change in the incidence and distribution of catastrophic health expenditures before and after the introduction of the Health Insurance (NHI) programs in South Korea and Taiwan.

Our analyses were performed on household expenditure surveys composed of representative samples and 10%, 15%, 25% were chosen as the threshold levels of incurring catastrophic payment. The preliminary results show that the headcount of catastrophic payment did decrease when NHI was first introduced, but it seems to level off as years went by. Korea in general demonstrated a higher headcount of catastrophic payment at any given threshold level than Taiwan. However, the catastrophic payment incurred tends to concentrate more on the poor in Taiwan than in Korea. The results are further examined along with use rates to dissect the differences in pro-poor tendency in incurring catastrophic payment between Korea and Taiwan, and how this relates to the design of the insurance schemes.