The impact of benefits coverage expansion of social health insurance: Evidence from Korea

Abstract

Despite mandatory social health insurance in Korea, the fraction of total healthcare spending paid out-of-pocket has been considerably high. In 2013, the Korean government expanded benefits coverage of social insurance for patients diagnosed with the costliest disease groups (cardiovascular and cerebrovascular diseases, cancer, and intractable diseases). We analyze individual longitudinal information from the 2010 to 2016 Korea Health Panel to estimate the impact of the policy change on healthcare spending, utilization, and enrollment in private supplemental health insurance. Impacts on other health-related and financial measures are additionally assessed to evaluate the effects in multiple dimensions. Our difference-in-differences approach with entropy balancing weights shows that the expansion of benefits coverage of public health insurance reduced out-of-pocket spending on health by 30% without accompanying increases in healthcare utilization. The impact was smaller for the individuals with high socioeconomic characteristics, who are more likely to use other costly services that remained unaffected by the policy. We do not find evidence that expanding social insurance benefits coverage changed the demand for supplemental private health insurance.