Health Care Delivery System
A Comparison of Health Care Delivery Systems: United States versus South Korea
Excelsior College
Abstract
The United States and South Korea have very different health care delivery systems. The United States currently operates under mostly private sector insurance programs stemming from employer-based policies while South Korea provides universal health care coverage to all of its citizens. The United States is currently transitioning their health care system to provide coverage for all. It took South Korea only 12 years to implement universal health care where it has taken the United States several decades. There is no health care system that runs perfectly. Both the United States and South Korea each have challenges they face within …show more content…
their current health care systems. Each system is funded differently and based on a different set of cultural values and beliefs.
The system of health care delivery utilized by the United States is considered an imperfect market. According to Shi & Singh (2012), “even though the delivery of services is largely in private hands, health care is only partially governed by free market forces” (p. 11). The free market side of health care has the greatest impact in shaping the present US health care delivery system. The majority of private insurance is employer-based. The other part of the system is government-controlled through programs such as Medicare and Medicaid. The government also provides a small portion of our population such as military families and veterans directly. In comparison, in South Korea, there are three entities that comprise the health care system. The National Health Insurance Program (NHIP) provides care to all of its citizens. It relies heavily on the private sector health care providers. The Medical Aid Program covers only 3.7% of the entire population of South Korea. This part of the system covers those families that fall in the lowest bracket of income. The Long Term Care Insurance Program is the final component. “Elderly people with serious limitations in performing activities of daily living (ADLs) are qualified to apply for the program.” (Song, 2009, p. 209) This is a very recent addition to the health care system due to the increase in life expectancy and the need for care for the elderly.
According to Shi & Singh, in the United States, as of 2009, the national health expenditures (NHE) represented 17.6% of the gross domestic product (GDP). Total spending in the United States on health care has reached 2,483.6 billion dollars annually. 57.5% of the NHE comes from households while 42.1% is paid by private businesses. (p. 232-3) The text continues to explain “of the total public share of NHE, 62.6% was borne by the federal government; state and local governments paid the remainder (Shi & Singh, 2012, p. 234). Information collected by the World Health Organization (WHO) revealed that, in contrast to the United States, the national health care expenditure represented 6.8% of the gross domestic product of South Korea in 2009. (p. 44) “The NHI system is predominantly funded through contributions, government subsidies and out-of-pocket (OOP) payments by users of health services. In 2007, public financing was about 54.9% of total health care expenditure, while private financing was about 45.1%. Of the latter, 35.7% was made up of OOP payments, 4.1% came from private health insurance and the remainder was financed by voluntary and charitable funds.” (Chun, Kim, Lee, & Lee, 2009, p. 28)
Health care in the United States is and always has been a hot topic of debate both politically and economically. Because a majority of health care is employer-based, the economy has a direct impact on coverage. When there is a recession, jobs are lost and families lose insurance coverage. Politically, health care can be impacted positively or negatively by the political party in power at the time. Currently, an example is the Affordable Health Care Act. The AHCA is a change that is correlated with the Democratic Party. For over a century, both political parties have attempted and failed at implementing national health insurance. Ultimately, due to the imperfect market, there have been too many hands in the pot and too many special interests groups for government-based universal health care to run smoothly. “Except for a very small Chinese minority (approximately 20, 000 people), South Korea has one of the most ethnically and linguistically homogeneous populations in the world (Connor, 2002). Korean (Hangul) is the official language, with English, Chinese and Japanese being widely taught in primary and secondary schools.” (Chun et al., 2009, p. 3) The Medical Insurance Act was the first law passed in South Korea that applied to health care insurance. It was implemented at the end of 1963. Reform began in 1977 of the law that included more and more citizens over the years. “It took 12 years from the establishment of the Medical Insurance Act to achieve universal health insurance coverage for all citizens. About ten years later, in 2000, all health insurance societies were integrated into a single insurer, the National Health Insurance Program.” (Song, 2009, p. 207) The citizens have the choice to go to any medical doctor or hospital that they want. They are only required to obtain a referral when they have to see a specialist. There are only certain cases that allow them to bypass the referral system: labor and emergency services are examples. “The current system of health services delivery traces its roots to the traditional beliefs and values espoused by the American people.” (Shi & Singh, 2012, p. 56) The United States is a society built on immigration and ‘the melting pot’. There are many subcultures that are embedded in this belief system. Generally speaking, in the American culture as a whole, some of the main beliefs are: medical advancements that places the United States at the forefront of medicine and technology, capitalism, an “entrepreneurial spirit and self-determination”, care for vulnerable populations, and free enterprise coupled with mistrust of big government. (p. 56-57) “Certain European countries tend toward a very high reliance on governmental activity to provide for social welfare. In this setting, individuals must relinquish some of their individual expectations in deference to the common societal good.” (Holtz, 2013, pg. 115) With the implementation of the Affordable Care Act, the United States is leaning more toward the European mindset. South Korea is already at this point where they have a very high reliance on the government to provide health care and for the welfare of the people.
The needs of the population are not being met at this time because “eighty-four million people―nearly half of all working-age U.S. adults―went without health insurance for a time last year or had out-of-pocket costs that were so high relative to their income they were considered underinsured.” (CommonWealth Fund, 2013) Cost and access to health care go hand in hand. If you can’t afford it, you don’t have access to it. The bracket that has the hardest time is the middle class. Middle class makes too much money to qualify for government-funded health care such as Medicare or Medicaid, but struggle to pay premiums in the private sector. According to our text, “rising health care costs take a toll on average- and low-income Americans. The 2010 Commonwealth Fund International Health Policy Survey pointed out that affordability of health care was one of the biggest economic problems for many Americans…only 25% of Americans were confident in their ability to afford care in case of serious illness.” (Shi & Singh, 2012, pg. 479) With the Affordable Care Act going into effect, access to care will be expanded due to ‘everyone being covered’, but it has not been shown that premiums will decrease for the middle and upper classes. The ACA is posing a tax on insurance companies starting in 2014 that will cause them to go out of business if rates do not increase. In addition to that, the ACA is dictating how insurance companies can create their rates. For example, in 2013 a 1:5 compression ratio was used where an older, higher risk person may pay 5 times the rate as a younger, healthier person. According to the ACA, that rate compression is limited to 1:3. Also, the ACA is mandating that certain things be covered, which may not have been covered before. According to the healthcare.gov site, some families are eligible for credits that offset the cost of their monthly premium. It is based on income and the size of the family. According to the site, if a family doesn’t qualify for Medicaid in that state, they will not qualify for credits and will pay the entire monthly premium. Also, if a person doesn’t enroll, they are subject to a ‘fee’. Medicare and Medicaid are both government programs that a person must qualify for either by age or by income. For South Korea, “the National Health Insurance Program has three sources of funding: contributions, government subsidies, and tobacco surcharges.” (Song, 2009, p. 208) The first source of funding is contributions from the insured. Each individual that is insured through their employer is required to pay 5.08% of the annual income back into the program. The cost is divided equally between the employer and the employee so the burden does not all fall on the insured. The self-employed person’s contribution is based on their income. For those who do not have ready access to care such as living in a remote area, the contribution requirement is lowered. Another funding source is government subsidies. “The National Government provides 14% of the total annual projected revenue, which is comprised of the contributions paid by the insured of National Health Insurance Program.” (Song, 2009, p. 208) An additional 6% is provided by a surcharge that is placed on tobacco. The Medical Aid Program pays for the health care services all of those citizens who cannot afford to pay for insurance. It also covers children and individuals with certain chronic illnesses. Even with advancements in technology, South Korea faces its own challenges. There is a growing population of elderly due to the increase in life expectancy of citizens, which will eventually raise the cost of health insurance to offset the cost of medical expenses for that generation. Even more importantly, “a major problem concerning healthcare resources in South Korea is regional disparities in medical services. Most private medical facilities are located in urban areas, and around 90% of physicians are concentrated in cities while 80% of the population lives in urban areas.”(Song, 2009)
“Utilization refers to the consumption of health care services and the extent to which health care services are used.” (Shi & Singh, 2012, pg.
72) There are many mechanisms that determine whether health care services are utilized more or less. According to the CDC, primary preventive measures and the use of antibiotic therapy have lowered the need for health care services, whereas the growing elderly population and growing chronic illnesses such as diabetes has increased the need for health care services. (pg. 13) One issue that occurs with the current health care delivery system in the United States is, those who need to seek treatment choose not to because they are uninsured or underinsured and cannot afford the out-of-pocket costs. According to the Institute of Medicine, health insurance improves health outcomes, and health may be negatively affected for all individuals living in a community with large numbers of uninsured members (IOM, 2009) In South Korea, when a person does not seek out medical treatment, it is normally a cultural issue and not a financial issue. For example, mental illnesses such as depression are seen as a weakness in the South Korean culture. There is a stigma attached and many will not seek the medical help they need for this
reason.
Quality is defined differently by the physician, the patient, and the payer. According to our text, “the IOM has defined quality as the degree to which health services for individuals and populations increase the likelihood of desired health outcomes and are consistent with current professional knowledge.” (Shi & Singh, 2012, pg. 500) The United States spends more money than any other country on health care, yet it ranks 27 out of 37 countries in infant mortalities and 21 out of 37 on life expectancy from birth for both genders. (pg. 501) The amount of money spent in medical advancements and technology is not reflected in these numbers. Shi & Singh elaborate on the six areas of quality improvement that need to be addressed to provide the best care possible. These six areas are patient safety, effectiveness of care, patient centeredness including cultural competence and special needs, timeliness of care, efficiency, and equity. (p. 537) There are many ways to measure quality outcome such as the number of nosocomial infections, postoperative infections, hospital re-admits, as well as patient satisfaction. Discharged hospital patients receive surveys that rate quality of care and changes are made based on the findings. The quality of care in South Korea has continued to improve over the years through medical technology and the NHI program. Where South Korea falls short is access to care. As stated above, 80% of the population live in rural areas while 90% of physicians are in urban areas. Incentives to physicians who practice in rural areas would be a possibility of widening access to care. Life expectancy has increased for both genders and the infant mortality rate has decreased. Outcomes “refer to the effects or results obtained from utilizing the structure and processes of health care delivery.” (Shi & Singh, 2012, p. 509) South Korea has been diligent in improving acute care settings, but has not yet prepared itself for the chronic illnesses that will accompany an aging population. The downfalls that South Korea faces in quality of care are that there is not a strong community health program that focuses on primary prevention, quality of care is not a main priority within the system, and the government does not utilize the data made available to them in a way that would benefit patient outcomes.
Both the United States and South Korea are continuing to reform their health care systems in ways that the citizens as a whole will benefit. Neither of the systems are perfect and both have a long way to go to fulfill the needs of the entire population. Although each country’s health care system is different from each other, the goal is the same: provide health care coverage to all citizens.
References
Chun, C.B., Kim, S.Y., Lee, J.Y., & Lee, S.Y. (2009). Republic of Korea: Health System Review. Health Systems in Transition, 2(7). Retrieved from: http://www.euro.who.int/__data/assets/pdf_file/0019/101476/E93762.pdfHoltz, C. (2013). Global Health Care: Issues and Policies. Burlington, MA: Jones & Bartlett Learning.
Shi, L. & Singh, D.A. (2012). Delivering Health Care in America: A Systems Approach. Burlington, MA: Jones & Bartlett Learning.
Song, Y.J. 2009. The South Korean Health Care System. JMAJ 52(3), 206-209. Retrieved from: http://www.coopami.org/en/countries/countries_partners/south_korea/social_protection/pdf/south_korean_health_care_system.pdfOECD Health Care Quality Review: Korea. (2012). Retrieved from: http://www.oecd.org/korea/49818570.pdfhttp://www.commonwealthfund.org/News/News-Releases/2013/Apr/New-Health-Insurance-Survey.aspxhttps://www.healthcare.gov/how-does-the-affordable-care-act-affect-me/http://www.cdc.gov/nchs/data/misc/healthcare.pdfhttp://www.iom.edu/~/media/Files/Report%20Files/2009/Americas-Uninsured-Crisis-Consequences-for-Health-and-Health-Care/Americas%20Uninsured%20Crisis%202009%20Report%20Brief.pdf
Excelsior College
Abstract
The United States and South Korea have very different health care delivery systems. The United States currently operates under mostly private sector insurance programs stemming from employer-based policies while South Korea provides universal health care coverage to all of its citizens. The United States is currently transitioning their health care system to provide coverage for all. It took South Korea only 12 years to implement universal health care where it has taken the United States several decades. There is no health care system that runs perfectly. Both the United States and South Korea each have challenges they face within …show more content…
their current health care systems. Each system is funded differently and based on a different set of cultural values and beliefs.
The system of health care delivery utilized by the United States is considered an imperfect market. According to Shi & Singh (2012), “even though the delivery of services is largely in private hands, health care is only partially governed by free market forces” (p. 11). The free market side of health care has the greatest impact in shaping the present US health care delivery system. The majority of private insurance is employer-based. The other part of the system is government-controlled through programs such as Medicare and Medicaid. The government also provides a small portion of our population such as military families and veterans directly. In comparison, in South Korea, there are three entities that comprise the health care system. The National Health Insurance Program (NHIP) provides care to all of its citizens. It relies heavily on the private sector health care providers. The Medical Aid Program covers only 3.7% of the entire population of South Korea. This part of the system covers those families that fall in the lowest bracket of income. The Long Term Care Insurance Program is the final component. “Elderly people with serious limitations in performing activities of daily living (ADLs) are qualified to apply for the program.” (Song, 2009, p. 209) This is a very recent addition to the health care system due to the increase in life expectancy and the need for care for the elderly.
According to Shi & Singh, in the United States, as of 2009, the national health expenditures (NHE) represented 17.6% of the gross domestic product (GDP). Total spending in the United States on health care has reached 2,483.6 billion dollars annually. 57.5% of the NHE comes from households while 42.1% is paid by private businesses. (p. 232-3) The text continues to explain “of the total public share of NHE, 62.6% was borne by the federal government; state and local governments paid the remainder (Shi & Singh, 2012, p. 234). Information collected by the World Health Organization (WHO) revealed that, in contrast to the United States, the national health care expenditure represented 6.8% of the gross domestic product of South Korea in 2009. (p. 44) “The NHI system is predominantly funded through contributions, government subsidies and out-of-pocket (OOP) payments by users of health services. In 2007, public financing was about 54.9% of total health care expenditure, while private financing was about 45.1%. Of the latter, 35.7% was made up of OOP payments, 4.1% came from private health insurance and the remainder was financed by voluntary and charitable funds.” (Chun, Kim, Lee, & Lee, 2009, p. 28)
Health care in the United States is and always has been a hot topic of debate both politically and economically. Because a majority of health care is employer-based, the economy has a direct impact on coverage. When there is a recession, jobs are lost and families lose insurance coverage. Politically, health care can be impacted positively or negatively by the political party in power at the time. Currently, an example is the Affordable Health Care Act. The AHCA is a change that is correlated with the Democratic Party. For over a century, both political parties have attempted and failed at implementing national health insurance. Ultimately, due to the imperfect market, there have been too many hands in the pot and too many special interests groups for government-based universal health care to run smoothly. “Except for a very small Chinese minority (approximately 20, 000 people), South Korea has one of the most ethnically and linguistically homogeneous populations in the world (Connor, 2002). Korean (Hangul) is the official language, with English, Chinese and Japanese being widely taught in primary and secondary schools.” (Chun et al., 2009, p. 3) The Medical Insurance Act was the first law passed in South Korea that applied to health care insurance. It was implemented at the end of 1963. Reform began in 1977 of the law that included more and more citizens over the years. “It took 12 years from the establishment of the Medical Insurance Act to achieve universal health insurance coverage for all citizens. About ten years later, in 2000, all health insurance societies were integrated into a single insurer, the National Health Insurance Program.” (Song, 2009, p. 207) The citizens have the choice to go to any medical doctor or hospital that they want. They are only required to obtain a referral when they have to see a specialist. There are only certain cases that allow them to bypass the referral system: labor and emergency services are examples. “The current system of health services delivery traces its roots to the traditional beliefs and values espoused by the American people.” (Shi & Singh, 2012, p. 56) The United States is a society built on immigration and ‘the melting pot’. There are many subcultures that are embedded in this belief system. Generally speaking, in the American culture as a whole, some of the main beliefs are: medical advancements that places the United States at the forefront of medicine and technology, capitalism, an “entrepreneurial spirit and self-determination”, care for vulnerable populations, and free enterprise coupled with mistrust of big government. (p. 56-57) “Certain European countries tend toward a very high reliance on governmental activity to provide for social welfare. In this setting, individuals must relinquish some of their individual expectations in deference to the common societal good.” (Holtz, 2013, pg. 115) With the implementation of the Affordable Care Act, the United States is leaning more toward the European mindset. South Korea is already at this point where they have a very high reliance on the government to provide health care and for the welfare of the people.
The needs of the population are not being met at this time because “eighty-four million people―nearly half of all working-age U.S. adults―went without health insurance for a time last year or had out-of-pocket costs that were so high relative to their income they were considered underinsured.” (CommonWealth Fund, 2013) Cost and access to health care go hand in hand. If you can’t afford it, you don’t have access to it. The bracket that has the hardest time is the middle class. Middle class makes too much money to qualify for government-funded health care such as Medicare or Medicaid, but struggle to pay premiums in the private sector. According to our text, “rising health care costs take a toll on average- and low-income Americans. The 2010 Commonwealth Fund International Health Policy Survey pointed out that affordability of health care was one of the biggest economic problems for many Americans…only 25% of Americans were confident in their ability to afford care in case of serious illness.” (Shi & Singh, 2012, pg. 479) With the Affordable Care Act going into effect, access to care will be expanded due to ‘everyone being covered’, but it has not been shown that premiums will decrease for the middle and upper classes. The ACA is posing a tax on insurance companies starting in 2014 that will cause them to go out of business if rates do not increase. In addition to that, the ACA is dictating how insurance companies can create their rates. For example, in 2013 a 1:5 compression ratio was used where an older, higher risk person may pay 5 times the rate as a younger, healthier person. According to the ACA, that rate compression is limited to 1:3. Also, the ACA is mandating that certain things be covered, which may not have been covered before. According to the healthcare.gov site, some families are eligible for credits that offset the cost of their monthly premium. It is based on income and the size of the family. According to the site, if a family doesn’t qualify for Medicaid in that state, they will not qualify for credits and will pay the entire monthly premium. Also, if a person doesn’t enroll, they are subject to a ‘fee’. Medicare and Medicaid are both government programs that a person must qualify for either by age or by income. For South Korea, “the National Health Insurance Program has three sources of funding: contributions, government subsidies, and tobacco surcharges.” (Song, 2009, p. 208) The first source of funding is contributions from the insured. Each individual that is insured through their employer is required to pay 5.08% of the annual income back into the program. The cost is divided equally between the employer and the employee so the burden does not all fall on the insured. The self-employed person’s contribution is based on their income. For those who do not have ready access to care such as living in a remote area, the contribution requirement is lowered. Another funding source is government subsidies. “The National Government provides 14% of the total annual projected revenue, which is comprised of the contributions paid by the insured of National Health Insurance Program.” (Song, 2009, p. 208) An additional 6% is provided by a surcharge that is placed on tobacco. The Medical Aid Program pays for the health care services all of those citizens who cannot afford to pay for insurance. It also covers children and individuals with certain chronic illnesses. Even with advancements in technology, South Korea faces its own challenges. There is a growing population of elderly due to the increase in life expectancy of citizens, which will eventually raise the cost of health insurance to offset the cost of medical expenses for that generation. Even more importantly, “a major problem concerning healthcare resources in South Korea is regional disparities in medical services. Most private medical facilities are located in urban areas, and around 90% of physicians are concentrated in cities while 80% of the population lives in urban areas.”(Song, 2009)
“Utilization refers to the consumption of health care services and the extent to which health care services are used.” (Shi & Singh, 2012, pg.
72) There are many mechanisms that determine whether health care services are utilized more or less. According to the CDC, primary preventive measures and the use of antibiotic therapy have lowered the need for health care services, whereas the growing elderly population and growing chronic illnesses such as diabetes has increased the need for health care services. (pg. 13) One issue that occurs with the current health care delivery system in the United States is, those who need to seek treatment choose not to because they are uninsured or underinsured and cannot afford the out-of-pocket costs. According to the Institute of Medicine, health insurance improves health outcomes, and health may be negatively affected for all individuals living in a community with large numbers of uninsured members (IOM, 2009) In South Korea, when a person does not seek out medical treatment, it is normally a cultural issue and not a financial issue. For example, mental illnesses such as depression are seen as a weakness in the South Korean culture. There is a stigma attached and many will not seek the medical help they need for this
reason.
Quality is defined differently by the physician, the patient, and the payer. According to our text, “the IOM has defined quality as the degree to which health services for individuals and populations increase the likelihood of desired health outcomes and are consistent with current professional knowledge.” (Shi & Singh, 2012, pg. 500) The United States spends more money than any other country on health care, yet it ranks 27 out of 37 countries in infant mortalities and 21 out of 37 on life expectancy from birth for both genders. (pg. 501) The amount of money spent in medical advancements and technology is not reflected in these numbers. Shi & Singh elaborate on the six areas of quality improvement that need to be addressed to provide the best care possible. These six areas are patient safety, effectiveness of care, patient centeredness including cultural competence and special needs, timeliness of care, efficiency, and equity. (p. 537) There are many ways to measure quality outcome such as the number of nosocomial infections, postoperative infections, hospital re-admits, as well as patient satisfaction. Discharged hospital patients receive surveys that rate quality of care and changes are made based on the findings. The quality of care in South Korea has continued to improve over the years through medical technology and the NHI program. Where South Korea falls short is access to care. As stated above, 80% of the population live in rural areas while 90% of physicians are in urban areas. Incentives to physicians who practice in rural areas would be a possibility of widening access to care. Life expectancy has increased for both genders and the infant mortality rate has decreased. Outcomes “refer to the effects or results obtained from utilizing the structure and processes of health care delivery.” (Shi & Singh, 2012, p. 509) South Korea has been diligent in improving acute care settings, but has not yet prepared itself for the chronic illnesses that will accompany an aging population. The downfalls that South Korea faces in quality of care are that there is not a strong community health program that focuses on primary prevention, quality of care is not a main priority within the system, and the government does not utilize the data made available to them in a way that would benefit patient outcomes.
Both the United States and South Korea are continuing to reform their health care systems in ways that the citizens as a whole will benefit. Neither of the systems are perfect and both have a long way to go to fulfill the needs of the entire population. Although each country’s health care system is different from each other, the goal is the same: provide health care coverage to all citizens.
References
Chun, C.B., Kim, S.Y., Lee, J.Y., & Lee, S.Y. (2009). Republic of Korea: Health System Review. Health Systems in Transition, 2(7). Retrieved from: http://www.euro.who.int/__data/assets/pdf_file/0019/101476/E93762.pdfHoltz, C. (2013). Global Health Care: Issues and Policies. Burlington, MA: Jones & Bartlett Learning.
Shi, L. & Singh, D.A. (2012). Delivering Health Care in America: A Systems Approach. Burlington, MA: Jones & Bartlett Learning.
Song, Y.J. 2009. The South Korean Health Care System. JMAJ 52(3), 206-209. Retrieved from: http://www.coopami.org/en/countries/countries_partners/south_korea/social_protection/pdf/south_korean_health_care_system.pdfOECD Health Care Quality Review: Korea. (2012). Retrieved from: http://www.oecd.org/korea/49818570.pdfhttp://www.commonwealthfund.org/News/News-Releases/2013/Apr/New-Health-Insurance-Survey.aspxhttps://www.healthcare.gov/how-does-the-affordable-care-act-affect-me/http://www.cdc.gov/nchs/data/misc/healthcare.pdfhttp://www.iom.edu/~/media/Files/Report%20Files/2009/Americas-Uninsured-Crisis-Consequences-for-Health-and-Health-Care/Americas%20Uninsured%20Crisis%202009%20Report%20Brief.pdf