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Long-term Care Financing for the Elderly

Country: 
South Korea
Partner Institute: 
Department of Health Policy and Management, School of Public Health, Seoul National University
Survey no: 
(4)2004
Author(s): 
Soonman Kwon
Health Policy Issues: 
Long term care, Funding / Pooling
Current Process Stages
Idea Pilot Policy Paper Legislation Implementation Evaluation Change
Implemented in this survey? yes no yes no no no no

Abstract

National Committee on Planning for Long-term Care recently produced a policy paper, proposing to introduce social insurance for elderly long-term care. Public hearings and discussions on the pros and cons of introducing a separate long-term care insurance from the existing health insurance continues.

Purpose of health policy or idea

Korea currently does not have a public financing mechanism for long-term care of the elderly. Rapid aging along with the increase in women's labor participation and change in family structure substantially increases the need for long-term care for the elderly. Long-term care financing aims to provide coverage for those elderly who need long-term care.

National Committee on Planning for Long-term Care recently produced a policy paper describing a few options associated with long-term care financing for the elderly. It proposes to introduce social insurance for elderly long-term care, separate from the existing health insurance. The report by the Committee has been followed by public hearings and debates.

Public debates are focused mainly on whether the long-term care should be covered by the existing health insurance system rather than introducing a separate financing scheme. Many are worried that separate long-term care financing will substantially increase the demand for long-term care (moral hazard effect) and results in huge financial burden on the society.

Those who oppose to a separate long-term care insurance maintain that limited coverage of long-term care through health insurance is more efficient because it will help keep the role of family or informal care givers and reduce social costs. Those who support a separate long-term care financing mechanism maintain that extension of health insurance to long-term care will increase medicalization of social care and health insurance cannot provide the elderly with sufficient coverage for long-term care.

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Characteristics of this policy

Degree of Innovation traditional innovative innovative
Degree of Controversy consensual controversial highly controversial
Structural or Systemic Impact marginal fundamental fundamental
Public Visibility very low high very high
Transferability strongly system-dependent system-neutral system-neutral

Providing long-term care to the elderly through a separate public financing mechanism is very new and will introduce a fundamental change in the financing and delivery of health and social care for the elderly in Korea. Although many have agreed on the need for a new financing system, the detailed aspect on the design of the mechanism and timing of introduction has been causing many public debated controversies.

Political and economic background

Korea has experienced very rapid aging. The proportion of the elderly over 65 years of age was 7.2% in 2000 but is projected to be 20% in 2026. Old age dependency is expected to be 36% in 2030. Low fertility (total fertility rate was 1.17 in 2002) also contributes to that trend. Increase in women's labor participation and the change in family structure (decrease in cohabitation of the elderly with adult children) all leads to the increase in the need for public financing mechanism to cover the long-term care of the elderly.

Purpose and process analysis

Current Process Stages

Idea Pilot Policy Paper Legislation Implementation Evaluation Change
Implemented in this survey? yes no yes no no no no

Origins of health policy idea

Although the need for elderly long-term care is increasing, there is no public coverage for long-term care, and long-term care facilities are very limited, too. As a result, those elderly who need long-term care either stays in short-term hospitals after medical treatment or suffer from huge expenses associated with long-term care. Long-term care elderly patients who occupy short-term care beds have been a serious burden on the national health insurance.

To search for solutions for those aging-related problems, Ministry of Health and Welfare established a National Committee on Planning for Long-term Care in 2003, which produced a report recently. There have been several public hearings on when and how long-term care insurance is introduced, and public discussions have continued.

Initiators of idea/main actors

  • Government

Approach of idea

The approach of the idea is described as:
new:

Stakeholder positions

National Committee on Planning for Long-term Care proposes that long-term care insurance covers long-term care of elderly above 65 years of age and aged-related long-term care of those who are 45-64 years old. Those who are below 45 years of age contribute but are not eligible to benefits of long-term care insurance. Although young people have not paid much attention to the debate of long-term care insurance so far, it can cause debates and tension among generations because the proposed long-term care insurance targets only the age-related long-term care.

Ministry of Finance and Economy is not as enthusiastic about the long-term care insurance as the Ministry of Health and Welfare. In Korea, social insurance is not a pure insurance, but government provides subsidies to social insurance financing. Because of the burden on government expenditure, Ministry of Finance and Economy maintains that if a new social insurance should be introduced for long-term care, it should be done in a very incremental manner with limited benefits.

In the delivery of long-term care, there is a subtle tension between people in social works (welfare) and those in health care (e.g., nursing). Both maintain that they should be the core personnel in the delivery system of long-term care for the elderly. People in social works sector maintain that long-term care as social care should be provided in a different paradigm from medical care while those in health care maintain that there should be an effective coordination between health care and long-term care and medical personnel should make key decisions in coordination and resource allocation in long-term care,  too.

Actors and positions

Description of actors and their positions
Government
Ministry of Health and Welfarevery supportivevery supportive strongly opposed
Ministry of Finance and Economyvery supportiveopposed strongly opposed

Actors and influence

Description of actors and their influence

Government
Ministry of Health and Welfarevery strongstrong none
Ministry of Finance and Economyvery strongstrong none
Ministry of Health and WelfareMinistry of Finance and Economy

Positions and Influences at a glance

Graphical actors vs. influence map representing the above actors vs. influences table.

Results of evaluation



 

Expected outcome

Once implemented, long-term care insurance will have a huge impact on the quality of life of the elderly, and (time and financial) burden of family or informal care givers. But it will also have a critical impact on the differential financial burden among those with different ages and income levels, not to mention its impact on the financial burden on the society as a whole.

Much more public hearings and debates will continue regarding more detailed design of the long-term care financing for the elderly -e.g., level of benefits (or cost sharing), whether to introduce cash benefits, how to build infrastructure of facilities and care personnel, etc.

Impact of this policy

Quality of Health Care Services marginal rather fundamental fundamental
Level of Equity system less equitable system more equitable system more equitable
Cost Efficiency very low very high very high

Public financing for long-term care of the elderly will improve the access to care of the elderly and the poor. It can also move many long-term care patients out of (short-term care) hospitals and improve cost-efficiency of the health care system.

References

Sources of Information

Various documents from the Ministry of Health and Welfare at www.mohw.go.kr.

Soonman Kwon, "Future of Long-term Care Financing for the Elderly in Korea," mimeo (http://plaza.snu.ac.kr/~kwons/cv(Kwon,Soonman).htm)

Author/s and/or contributors to this survey

Soonman Kwon

Suggested citation for this online article

Soonman Kwon. "Long-term Care Financing for the Elderly". Health Policy Monitor, October 2004. Available at http://www.hpm.org/survey/kr/a4/1