The ambitious healthcare agenda under Moon Jae-in's liberal presidency will seek to expand national health insurance reimbursement and limit the burden of excessive medical costs, while overhauling the healthcare system. BMI Research looks at the winners and the losers in the presidential agenda.

The healthcare agenda of President Moon Jae-in of the Minjoo (Democratic) Party, who took office in May 2017, will aim to increase the role of the public sector in the healthcare system and expand national health insurance reimbursement cover to reduce the burden of high medical costs, including an annual cap of W1 million (US$862) on patient contributions to medical care costs for citizens on low incomes. In order to secure the long term sustainability of the healthcare system, the president will seek to move the focus of healthcare delivery from large hospitals to cheaper primary care structures. This will involve limiting the expansion of large hospitals and restricting the number of small and medium supply hospitals, some of which will be encouraged to convert into specialised institutions.

In August 2017, President Moon Jae-in announced an investment of KRW30.6trn (USD26.4bn) over his five-year presidential terms to fund the expansion of health insurance cover to all major illnesses and to pay for costs that are currently uninsured such as specialist appointments and nursing care. Reimbursement for technical aids such as dental implants and hearing aids will also improve. The government estimates that full implementation of its plans would reduce personal spending on medical care costs by an average of nearly one fifth by 2022, with a reduction of nearly half for citizens on lower incomes.

We note that South Korea has an unusually high level of private sector health funding for an OECD country and the level continues to grow. In 2017, we estimate that the private sector will fund 46.7% of total healthcare expenditure of W131.7 trillion (US$113.5 billion), up from 43.3% in 2010. More than three-quarters of private health spending is in the form of out-of-pocket payments.

In order to achieve long term financial sustainability, the government will seek to limit the amount of hospital based outpatient care in favour of more cost-effective primary care services. This will increase financial pressures on hospitals and is also likely to frustrate the Ministry of Health and Welfare's plans to develop telemedicine, limiting the rollout to areas with the least developed healthcare resources.

The government's healthcare agenda has already met with fi erce opposition from healthcare providers and doctors, including the National Union of Korean Medical Doctors and the Korean Medical Practitioners Association. Healthcare providers have condemned the plans as unviable and a threat to the financial position of the health insurance system, which would either lead to a sharp increase in health insurance premiums or a drop in fees paid to medical institutions, forcing many of them bankruptcy.

We highlight that the Moon administration will struggle to fully implement its healthcare agenda given it lacks a majority in parliament, which will hinder efforts to achieve policy objectives. We note that Moon's first 100 days in government have been characterised by considerable opposition as the president struggles to implement his various campaign policies, despite persistently high public approval ratings. We therefore maintain our short term political risk score at 70.0 to reflect these difficulties.