Introduction to Korean Medicine Health Insurance

(Health Insurance Scheme)The Korean medical social security system is called National Health Insurance (NHI), through which single insurers manage and operate health insurance schemes as social insurance for the entire nation.

According to Article 1 of the National Health Insurance Act, which puts into effect the Korean health insurance scheme, insurance benefits are given to citizens to prevent, diagnose, treat and rehabilitate patients from diseases and injuries, while also covering childbirth, death, and general health promotion programs to encourage better national health for a happier society.

The amount (insurance premium) to be paid is based on the income and earning potential of every subscriber to ensure that each citizen contributes a fair and reasonable amount to the NHI scheme. The health insurance payment structure is based mainly on an activity-based payment system①,  and also includes a diagnosis-related group payment system②  and a per diem payment system③.  

①Activity-based payment system is a price point calculation system for each action, drug, and treatment material type. 

②Diagnosis-related group payment system is a classification system that analyzes and groups together treatment types of similar in-patient cases to establish a price point (specifically regarding cataract surgery, tonsillectomy/adenoidectomy, appendectomy, inguinal hernia repair, ileostomy, hysterectomy and adnexectomy, and cesarean section operation).

③Per diem payment system is for each instance of care service based on patient groups requiring nursing home care or palliative care. It is a fixed price for care provided by public health office or another official medical center. 

(History of Korean Medicine Health Insurance) The Korean medical insurance program began in December 16, 1963 with the promulgation of the Medical Care Insurance Act. After this, the population of citizens eligible for coverage increased and were divided into categories of labor, civil service and education, and region (agricultural region, city), finally expanding into the nationwide medical insurance program in 1989. The Medical Care Insurance Act and National Medical Insurance Act were replaced in February 1999 with the National Health Insurance Act.

Although the Korean medical service system is officially two pronged (Western medicine, Korean medicine), insurance coverage for Korean medicine services was introduced from 1987—differing from its Western counterpart—and it was universalized in 1989.

(Range of Health Insurance Coverage) The items eligible for coverage under Korean medicine health insurance is illustrated in Table 1, including consultation fees, administration of medicines and production of medicines, drugs, traditional medical examinations, traditional medical procedures and medical treatment, meals, and supplies.

Table 1. Coverage for Korean Medicine Health Insurance

(Medical Resources in Korean Medicine & Current Claims) Chart 2 shows the number of Korean medical doctors (KMD), facilities, and claims to-date. The number of KMDs is growing each year, and an average of 357 Korean medicine medical facilities (traditional Korean medicine hospitals and Korean medicine clinics) also increases each year. The number of annual claims in the Korean medicine category in 2013 surpassed 100 million, and now continues to grow after a slight recession in growth in 2015.

Table 2. Number of Korean Medicine Professionals / Number of Facilities / Number of Health Insurance Claims and Medical Expenses 

Note: For the number of facilities, we referred to the reporting statistics submitted by each health center to the Ministry of Health and Welfare in 2014 and statistical data from the Health Insurance Review & Assessment Service after 2015. 

Source: Korea Institute of Oriental Medicine et al. 2016 Yearbook of Traditional Korean Medicine (published in 2017) 

(Personnel and Facilities: Ministry of Health and Welfare; 2017 Yearbook of Health and Welfare Statistics, Health Insurance: Health Insurance Review & Assessment Service; Medical Expense Statistical Indicators from 2007 to 2016) 

(Traditional Korean Medicine Policy) The Korean medicine doctor system that was created thousands of years ago was formally introduced in 1951 and the Korean medicines pharmacist system in 1994. For the maximum development of traditional Korean medicines, the traditional Korean Medicine Promotion Act was enacted in August 2003 to respond to the demands of the times, establishing a legal framework to promote comprehensive policy measures that could help further develop traditional Korean medicine technology and lay a foundation for boosting activity in the herbal medicines industry. In 2006, the first Strategic Development Plan for traditional Korean Medicine was released as a comprehensive plan for the herbal medicines industry, scientific development, and strengthening of protections. The third, most recent plan for 2016-2020 is currently in effect.

As a national body responsible for policies on Korean herbal medicines, the Ministry of Public Health and Society opened the Office on traditional Korean Medical Practices in 1993 and the Office on Herbal Medicines Policy in 2008, creating two divisions to expand policies relating to Korean herbal medicine. In 1998, the Ministry of Food and Drug Safety also created an exclusive division for herbal medicines to manage and support research on traditional Korean herbal medicines. A public institution paving the way for R&D and policies on traditional Korean herbal medicines, the National Development Institute of Korean Medicine (NIKOM), was also established in 2016 under the auspices of the Ministry of Health and Welfare as an authority on traditional Korean herbal medicines that works to standardize, develop scientific base for, and globalize Korean herbal medicines to secure its future value, further national public health, and strengthen the national economy.

In 2018, various attempts have been made to understand the efficacy of Korean herbal medicine through enhancement of protective measures on traditional Korean medicine through chuna therapy coverage and conducting pilot projects. Especially, current research aims to continuously promote the expansion of Korean herbal medicine health insurance policies for the public, like establishing health insurance infrastructure for packaged herbal medicines.