1. Construction of Korean Health Accounts and of Tables Cross-classifying Expenditure by financing agents, providers and functions Hyoung-Sun JEONG, Ph.D. Department of Health Administration Yonsei University Hyoung-Sun JEONG, Ph.D. Department of Health Administration Yonsei University

2. CONTENTSCONTENTS KOREAN NATIONAL HEALTH ACCOUNTS 1 CONSTRUCTING PROCESS 2 RESULTS AND POLICY IMPLICATIONS 3 CONCLUSION 4

3. KOREAN NATIONAL HEALTH ACCOUNTS With the new accounts by the OECD SHA, With the new accounts by the OECD SHA, it is now possible to better compare total health expenditure of Korea with other OECD countries and GDP share of total health expenditure in the OECD Health Data is currently the most frequently quoted figure on health expenditure in Korea Before the OECD SHA is adopted, Before the OECD SHA is adopted, considerable differences emerged in both methods (different health expenditure items) and results (total amount different by over 30%) among independent estimates of total health expenditure produced by several researchers

4. Constructing of a set of health expenditure tables that follow the framework of the OECD manual “A System of Health Accounts (SHA)” Constructing of a set of health expenditure tables that follow the framework of the OECD manual “A System of Health Accounts (SHA)” Until last year, Ministry of Health and Welfare (MOHW) commissioned Korean Institute for Health and Social Affairs (KIHASA) to produce Total Health Expenditure. Thus, produced were tables cross-classifying expenditure both by financing agents and by functions (sources-to-uses matrix). This year, MOHW commissioned Yonsei University to construct health accounts including classification by providers additionally. The figures presented here are its interim results, whose completion would be submitted for OECD Health Data 2004. (sources-to-providers and providers-to-uses matrices as well as sources-to-uses matrix)

5. CONSTRUCTING PROCESS Explanation of the Whole Process Explanation of the Whole ProcessWhole ProcessWhole Process New estimations depends on the Health and Nutrition Survey in terms of Private Health Expenditure New estimations depends on the Health and Nutrition Survey in terms of Private Health Expenditure New estimations depends on New estimations depends on The survey has been periodically performed through interviews with about 40,000 persons sampled from all over the country. The survey includes many items on medical use, such as name of disease, health care providers, number of visits, money paid out- of-pocket, etc. Health expenditure is not well classified according to function such as curative-rehabilitative care, long-term care and ancillary services Health expenditure is not well classified according to function such as curative-rehabilitative care, long-term care and ancillary services Long-term care facilities are not yet popular in Korea.

6. RESULTS AND POLICY IMPLICATIONS Health expenditure is below the level expected for a country with Korea’s income Health expenditure is below the level expected for a country with Korea’s income Low level of health expenditure is due, at least in part, to the high level of out-of-pocket payments (one of the highest in the OECD area) Can this be interpreted as showing that Korean government or consumers have attached lower priority to health care than have those in other OECD countries?

7. Public funding share has been increasing most quickly, but is still one of the lowest among OECD countries Public funding share has been increasing most quickly, but is still one of the lowest among OECD countries Korea has rapidly approached the “OECD norm”, but is still facing equity issue by leaving more medical services uncovered by health insurance and putting a higher co-payment burden on the people However, particularly after the reform for the separation between prescribing and dispensing of drugs in 2000, the public funding share has much increased. Korea has an unusual mix of health expenditure by mode of production, compared with other OECD countries Korea has an unusual mix of health expenditure by mode of production, compared with other OECD countries Very low in-patient share (23.4%), considerably high out-patient share (41.2%) and high drug share (20.3%) of total health expenditure in 2001.

8. CONCLUSIONCONCLUSION New estimation supported by the Ministry has added new tables including providers’ aspects, New estimation supported by the Ministry has added new tables including providers’ aspects, which are expected to be a paramount contribution for evidence- based health policy in Korea as well as for the construction of Korean health account itself. Further developments to be made for the KOREAN NHA Further developments to be made for the KOREAN NHA Linking of existing tables on expenditure by broad disease categories and age & gender to NHA tables