Aging and Health Policy in Korea - Challenges, Health System, Expenditure, and Long-term Care

1. Aging and Health Policy in KoreaIAGG, Seoul June 24, 2013 Soonman KWON, Ph.D. Dean School of Public Health Seoul National University, Korea

2. OUTLINE of Presentation I. Challenges of Population Aging II. Health System in Korea III. Health Expenditure for Older People IV. Long-term Care System in Korea IV. Policy Recommendations S. Kwon: Aging and Health Policy, Korea

3. I. Challenges of Population Aging Rising demand for health and long-term care • Health status, mental health, disability • Live longer with lower health status in Korea Declining family support - Increased labor participation of women - Increased number of older people living alone Insufficient financial capacity of the elderly - Limited pension and public assistance for the elderly S. Kwon: Aging and Health Policy, Korea

4. Old-Age Dependency (65+/(20-64)) S. Kwon: Aging and Health Policy, Korea

5. Self Assessed Health (unit: %) Source: 2011 National Elderly Survey (Sample size 10,544) S. Kwon: Aging and Health Policy, Korea

6. Prevalence of Chronic Diseases (unit: %) Source: 2011 National Elderly Survey S. Kwon: Aging and Health Policy, Korea

7. II. Health System in Korea • Health Care Financing Universal coverage of population thru social health insurance (SHI) since 1989 Lower benefit coverage: Out-of-pocket payment amounts to 35-40% of total health expenditure Fee-for-service reimbursement by the insurer: increase in quantity and intensity of care Rapid increase in health expenditure: highest in OECD S. Kwon: Aging and Health Policy, Korea

8. Source: NHIC, Health insurance DB & The World Bank DB Health Expenditure and Insurance Contribution Rate S. Kwon: Aging and Health Policy, Korea

9. Some Protection Mechanisms • Discounted copayment: elderly, children under 6, patients with chronic conditions (e.g., renal dialysis) • 5% OOP pay for catastrophic conditions: e.g., cancer • Exemptions of copayment: the poor (Medical Aid) - Ceiling on out-of-pocket payment for covered services: 3 different ceilings for 3 income groups (lower 50%, middle 50-80%, upper 80-100%) -> will be further segmented based on income S. Kwon: Aging and Health Policy, Korea

10. 2. Health Care Delivery Private delivery (More than 90% of hospitals are private) Lack of coordination and differentiation • Outpatient and inpatient • Primary care physicians and specialist • Acute care hospitals and long-term care hospitals • Long-term care hospitals and long-term care facilities S. Kwon: Aging and Health Policy, Korea

11. III. Health Expenditure for Older People S. Kwon: Aging and Health Policy, Korea

12. Health Expenditure of Older People Elderly H exp as % of Total H Exp H Exp per old person (1,000 KRW) H Exp per person (1,000 KRW) Source: Health Insurance Statistics, 2002~2012

13. Health Expenditure per Capita by Age Groups Source : NHIC. Health Insurance Statistics 2001~2011.

14. Controversies over the Impact of Aging on Health Expenditure a. Health status of the elderly improves b. Medical cost towards the end of life: Proximity to death has bigger impact than demographic change (medical cost does not rise uniformly with increasing patient age) • Hospitalization (vs. dying in LT care institutions) is a key factor for medical cost • Physician behavior and clinical decision on treatment at the end stage of patient life has a crucial impact on medical cost of the elderly -> Importance of end-of-life care S. Kwon: Aging and Health Policy, Korea

15. Health Expenditure at the Last Year of Life Note: data of 2008 Source: HC Sin, MY Choi and BH Tchoe, “Health expenditure at the end of life” Korean J. of H Policy & Adm 22:1, 2012, 29-48 15

16. IV. Long-term Care (LTC) System 1. Structure of LTC Insurance Covers LTC of 65+ and (only) age-related LTC of the others (<65) Contribution rate: 4.05% of health insurance contribution (2008) -> 4.78% (2009) -> 6.55% (2010, 2011) Financing mix - Government: 20%; Contribution: 60-65%; - Copayment: 20% (institution), 15% (home-based) -> exemption or discount for the poor S. Kwon: Aging and Health Policy, Korea

17. 2. Population Coverage Source: NHIS, LTC insurance statistics S Kwon: Aging and Health Policy, Korea

18. 3. Type of Benefits Service benefit in principle, cash benefit in exceptional cases (e.g., when no service providers in the region) • Cashbenefit can promote consumer choice and the role of family, but potential abuse? Payment to providers - pay per hour: visiting care, visiting nursing - pay per visit: visiting bath - pay per day: institutional care, day/evening care Ceiling on benefit coverage for non-institutional care: depending on the (three) levels of functional status S Kwon: Aging and Health Policy, Korea

19. 4. Assessment 3 levels of functional status: Level 1 (very severe), Level 2 (severe), Level 3 (moderate) Government planned to cover only levels 1 and 2 initially - Parliament passed the law to cover level 3, too -> But level 3 is eligible only for visiting/home-based care As of June 2012 • Among those who are certified to be eligible: 12% level 1 (most severe), 22% level 2, 66% level 3 (in April 2011: 14% level 1, 23% level 2, 63% level 3) S Kwon: Aging and Health Policy, Korea

20. 4. Assessment (continued) Visiting team from NHIS (National Health Insurance Service) branch offices, Annual assessment, 56 evaluation items Assessment committee in the regional offices of NHIS: less than 15 members including social worker, and medical doctor (or traditional medical doctor) Decision of the committee is based on • Assessment (ADL) made by a visit team, using algorithms • Doctor’s report S Kwon: Aging and Health Policy, Korea

21. 5. Key Issues/Challenges of LTC Insurance • Assessment of functional status (3 levels): defines eligibility and benefit levels for LTC insurance, but not fully accounts for health and long-term care needs of older people • Cost containment: compared with health insurance? • Types of benefits: cash benefit vs. service benefit • Balance between institutional care and community-based (CB) care: Current benefits for community-based care are mainly provided by visiting LTC providers -> need to expand the outpatient care of LTC facilities S. Kwon: Aging and Health Policy, Korea

22. Labor Market for LTC Providers Excess supply of training programs and LTC workers -> Problems associated with quality of care and work conditions of care workers: low pay, job stress, non-regular workers (e.g., more than half of care workers in ambulatory LTC providers) Number of LTC workers certified: 70,355 (June 2008) -> 1,200,000 (May 2013), Number employed, about 260,000 -> Need to tighten the requirement for licensure and training institutions Shortage is not an issue yet, but how about in the future? - Typical 3D jobs S Kwon: Aging and Health Policy, Korea

23. Coordination between H Ins and LTC Ins Health insurance covers long-term care hospitals (LTCH) Long-term care (LTC) insurance covers long-term care (residential) facilities (LTCF) Types of patients in the LTCH and LTCF are not clearly differentiated • Excess competition due to low entry barrier (e.g., low requirement for personnel and building, etc.) • Limited enforcement due consumer choice in the insurance system • Reduced fee (as provider incentive) for over 180 days of stay in LTCH: consumer incentives to stay longer S. Kwon: Aging and Health Policy, Korea

24. Number of Older People in LTC Hospitals (LTCH) and LTC Facilities (LTCF)

25. Characteristics of LTC Hospitals and LTC Facilities (Unit: %)

26. Expenditure in LTC Hospitals and LTC Facilities

27. V. Policy Recommendations • Governance and Leadership Need government commitment to mainstream aging issues and adopt and implement relevant policies Increase the awareness of aging and increase policy priority on the health of the aging population Coordination of various policies and programs across government ministries and agencies - Local government - Health insurance and LTC insurance - Coordination among different components of health system, such as financing, service delivery, and HR S. Kwon: Aging and Health Policy, Korea

28. Health Promotion Master Plan 2020 Targets for Older People in 2020 • Functional disability: IADL27.0%, ADL 11.4% • Dementia: 9.2% • Flu vaccination: 82.5% • Screening and check-ups: 74.1% in 2020 • Falls: 16% Other measures include health behavior such as drinking, physical exercise, nutrition, dental health, etc. S. Kwon: Aging and Health Policy, Korea

29. 2. Service Delivery Service delivery system needs to be re-oriented to meet the health and long-term care needs of the elderly • Coordination between health care and long-term care • Empower community-based care system -> Should introduce effective continuum of care Building health and long-term care facilities for older people should be based on need assessment, assessment of the efficiency of existing providers, and careful planning to avoid over-reliance on institutional care • Problems of rapid increase in LTC hospitals • Need effective regulatory policy for private providers S. Kwon: Aging and Health Policy, Korea

30. Problems of Acute Care-Oriented Facility-Based Service Delivery System Patients prefer large tertiary care hospitals • Recent policy to increase benefit package for catastrophic illnesses may aggravate the problem In total health insurance expenditure, share of • Physician clinics: 46.3% in 2001 -> 29.6% in 2010 • Tertiary care hospitals: 16.5% in 2001 -> 22.9 in 2010 Inefficiency: cost inflation due to the utilization of more expensive services in tertiary care hospitals <- problems due to fee-for-service payment Inequity: financial barrier for the poor S. Kwon: Aging and Health Policy, Korea

31. 3. Human Resource for Health Education and training for health professionals need to be re-oriented to respond to the needs of the elderly, cope with multi-morbidites and collaboration as a team Curriculum needs to be extended to geriatric health, health promotion, NCD management, functional disability, rehabilitation, and health education for the elderly Strengthen primary care and gate-keeping Training of long-term care providers and support and education program for family care givers S. Kwon: Aging and Health Policy, Korea

32. Need to Strengthen Primary Care System Most physicians are board certified specialists Many of specialists practice in a clinic in communities -> No gatekeeper Physician clinics and hospitals compete rather than coordinate • Physician clinics have (small) inpatient beds • Hospitals have huge outpatient clinics -> Fragmentation of care, duplication Those problems become more and more serious in an era of rapid population aging – Limited Continuum of Care S. Kwon: Aging and Health Policy, Korea

33. 4. Political Economy of Reform Korean Medical Association does not support primary care physician system • Only some specialties (e.g., family medicine, internal medicine) support the strengthening of gate-keeping primary care physicians -> Need effective strategy for policy change Participation of physicians in chronic disease management program is low • Potential conflict between physicians and public health center: competitor or coordinator? • Lack of trust among government, providers, Nat H insurer S. Kwon: Aging and Health Policy, Korea

34. THANK YOU !!! Prof. Soonman KWON kwons@snu.ac.kr (Seoul National Univ.) http://plaza.snu.ac.kr/~kwons (Homepage) S. Kwon: Aging and Health Policy, Korea