[Op-Ed] To Fix the Essential Healthcare Crisis, Start by Raising Reimbursement Rates

The sustainability of the essential healthcare system is being threatened by the government’s price controls. Korea’s medical standards are among the best in the world, but because the government artificially controls medical fees, the market’s price function cannot operate properly. Medical fees kept artificially low distort the compensation system for healthcare services and deepen the avoidance of essential care, ultimately leading to a broader crisis across the essential healthcare system.

In provincial areas, it has become harder to find pediatric clinics, and waiting times at university hospitals are growing longer. Outside the Seoul metropolitan area, shortages of pediatric specialists have also led to more cases in which patients are unable to receive emergency treatment or surgery in a timely manner.

Low medical fees and the fee-for-service payment system are encouraging the outflow of essential healthcare personnel. With low reimbursement and litigation risks, the number of workers in essential care is declining, while personnel are concentrating in non-covered medical fields. The fee-for-service model likewise incentivizes higher volumes of treatment and shorter consultations rather than better quality of care.

Low out-of-pocket costs have distorted price signals and created moral hazard, making it easy for patients to visit hospitals even for minor illnesses. As of 2024, Koreans averaged 17.9 outpatient visits per person annually, about 2.7 times the OECD average of 6.6. High levels of medical utilization are increasing the financial burden on the national health insurance system.

The low-fee structure may also weigh on the management of regional hub public hospitals, including local medical centers. Among the nation’s 35 local medical centers, the number of institutions with capital impairment rose from 8 in 2021 to 18 in 2025. Over the same period, medical losses also widened from about KRW 470.2 billion to KRW 557.3 billion.

Reform of the medical fee system can no longer be delayed. The government’s own analysis of medical costs also revealed imbalances in reimbursement. According to an analysis of about 6,000 national health insurance fee items, revenue relative to cost was 190% for specimen testing such as blood tests and 194% for advanced imaging tests such as CT and MRI. By contrast, consultations, hospitalization, and anesthesia were found to be relatively undercompensated.

Last June, the government finalized reforms to national health insurance reimbursement rates. It decided to lower fees in overcompensated areas such as specimen testing and CT/MRI, while expanding compensation for consultations, hospitalization, and essential healthcare. What matters now is ensuring that the revised fees actually lead to an expansion of the essential healthcare workforce and improvements in medical services. At the same time, the burden of litigation must be eased so that the distorted incentive structure in essential healthcare can also be corrected.

Korea must move beyond a fee-for-service system that merely increases the number of treatments and adopt a value-based payment system that rewards treatment outcomes and quality. It must also raise out-of-pocket costs for excessive medical use in order to prevent abuse. Only then can medical benefits be directed to critically ill patients in urgent need.

To normalize medical services, a shift is needed toward medical fees based on market mechanisms. When appropriate compensation is provided in line with the value of medical services, essential healthcare personnel will return, and the public will also be able to receive stable medical services.

Mina Kim, Intern Researcher, Center for Free Enterprise (CFE)

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Original title: [칼럼] 필수의료 위기, 낮은 수가부터 바로잡아야

Author: Min-a Kim

Date: 2026-09-28

Source: https://www.cfe.org/bbs/bbsDetail.php?cid=free_opinion&pn=1&idx=29562