Research Stories

Financial Integration Scenario for Integrated Care: Focusing on the Case of Korea

This study presents a scenario for reform based on integrated care in Korea, which is experiencing rapid aging, and a specific method for financial integration.

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  • Financial Integration Scenario for Integrated Care: Focusing on the Case of Korea
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Korea is experiencing a high rate of population aging and a low fertility rate at the same time. The OECD predicts that Korea will enter a “super-aged society” (having more than 20% of the population as the elderly) in 2026, eight years after entering the aging society.

The purpose of this study is to examine the potential financial outcomes and the sustainability of implementing the British policy of integrating healthcare and social care in Korea. Furthermore, we predict the size of the integrated funds through this approach and analyze the operational and policy design requirements for successful integration through a case study of an existing financially integrated social care policy. Many countries, including Korea, are spending a lot of money on healthcare and social care due to the rapidly aging population, and the scale is expected to increase in the future. In such a situation, it is important to suggest a direction for reform through institutional analysis and to make a financial estimate based on the analysis of existing cases. Based on this, we find it meaningful to present an alternative policy that can be used for reform in the medical welfare field and to provide a policy direction for other countries that have become aging societies.

We first analyze the size and trend of funds used for the care of the elderly out of Korea’s health insurance, long-term care insurance, and national budget. We then analyze the number of financial resources required and the cost-saving effect when the related financial resources are converted into local community care funds. This approach sheds light on the possibility of harmonizing healthcare policy for the elderly and integrated care under the existing insurance system and suggests a direction for reform in policies pertaining to healthcare for the elderly. Given that the same services are provided, we find that combining the finances from the insurance and the national budget would result in a fund of KRW 2.6 trillion to KRW 4.7 trillion. This approach also confirms that health care costs for the elderly can be reduced by 1-5% in the long term, which we estimate to be between KRW 1 trillion to KRW 4 trillion by 2050.

We find that by tapping into the national budget to manage the pre-medical stage care, we can utilize an efficient operation mechanism, unlike insurance. We also confirm that information exchange and harmonious operation between the national budget and state-run insurance as well as feedback and incentives through performance management are necessary for these results to become a reality.