Review of the KHDI health insurance pilot project in Okgu County, South Korea

Evaluation covers the period 9/79-4/80 and is based on interviews with project staff and a review of project documents. The SP has shown that voluntary health insurance in a rural setting is feasible. The Okgu Medical Insurance Cooperative (OMIC) offers voluntary (Class II) insurance to the mostly rural residents of Okgu County; other insurers provide compulsory (Class I) insurance to workers in firms of 300 or more employees. To date, 4,557 people (44% of the uninsured target population in the Deaya Myon subdivision of Okgu) have joined, compared to the 20% enrollment found in the only other similar Class II insurance experiment in Korea. Although community support was gained using traditional methods, OMIC enrollment may be inflated since the KHDI paid half the premiums for 51% of enrollees. The 87.6% payment collection rate and 0.8% attrition rate are considered acceptable. OMIC subscribers pay 400 Korean won per month (approximately 1.1% of their income), and OMIC in turn pays 60% of medical costs and offers a 10,000 won funeral grant to heirs of deceased members. In comparison, Class I subscribers contribute 1.5% of their earnings; receive matching employer contributions; pay only 30% of out-patient and 20% of hospitalization costs; are not charged for certain services (e.g., dentistry, prescriptions); and receive benefits for 6 months versus OMIC's 90 days. Although there are inadequate data with which to evaluate current OMIC rates, KHDI estimates that a 50% rise in premiums would cover program costs; allow subsidies to be reduced; and maintain present benefits -- assuming static income and medical costs. It is recommended that: (1) the SP be continued 2-3 years to establish a data base for analyzing the cost of rural health insurance; (2) subsidies be gradually reduced until eliminated; (3) OMIC benefits be extended until comparable with Class I benefits; (4) enrollment rates be increased by intensive information dissemination and target group identification; and (5) studies be undertaken to determine the effects of reducing or ending subsidies.