Last year, South Korea's national healthcare spending approached 225 trillion won, setting a new record. According to the '2025 National Health Accounts' statistics released by the Ministry of Health and Welfare and the National Health Insurance Corporation, total national healthcare costs reached 224.9936 trillion won, an increase of 3.8% (approximately 8.4 trillion won) from the previous year. The average healthcare expenditure per person also hit a record high of 4.353 million won. The proportion of national healthcare costs to gross domestic product (GDP) soared to 8.4%. Excluding the temporary adjustment in 2023 due to the end of COVID-19 (203.4 trillion won), national healthcare costs have shown a steep upward trend each year, placing significant pressure on the national economy and healthcare finances.
Examining the detailed breakdown reveals distorted healthcare usage patterns and financial leakage factors. Direct personal healthcare spending at medical institutions and pharmacies reached 208.3 trillion won (92.6% of the total), surpassing 200 trillion won for the first time, while spending on public health initiatives such as prevention and control was only 16.7 trillion won (7.4%). By function, outpatient care accounted for the largest share of personal healthcare spending at 72.6 trillion won (32.3%), followed by inpatient treatment and medication costs. There was also a clear trend of concentration in high-level hospitals, widening revenue gaps between hospitals and clinics, and a simultaneous rise in pharmacy and treatment material costs. This situation has been exacerbated by a surge in chronic disease populations due to an aging society, the spread of expensive new medical technologies, and a market distortion driven by excessive outpatient care focused on non-covered services.
The explosive increase in national healthcare costs signals severe repercussions for the macroeconomy and future generations. In a context of a rapidly declining working-age population, the abnormal structure of rising healthcare costs without a corresponding increase in the population is shrinking households' disposable income and consumption capacity, potentially hastening the depletion of health insurance finances and undermining national fiscal health. Intergenerational equity is also at risk, as the social insurance premiums and tax burdens on working youth and middle-aged individuals are ballooning, which could ignite generational conflict. More alarmingly, despite pouring astronomical sums into healthcare, the system faces a comprehensive imbalance, with increasing avoidance of essential medical services and the collapse of local healthcare.
The government must make a decisive policy shift to fundamentally redesign the funding and expenditure structure of healthcare. Easy fixes like raising health insurance premiums or increasing government support through taxes will not prevent impending financial collapse. The structural flaws of a fee-for-service system, which increases profits with rising treatment volumes, must be overhauled in favor of a value-based payment system that reflects healthcare quality and outcomes. Additionally, a robust management and oversight framework should be established to control the expanding non-covered services, particularly in conjunction with private insurance.
In terms of funding, it is time to carefully consider reforming the health insurance premium system to diversify income sources beyond the existing labor income-based structure, adapting to rapid demographic changes. Moving away from post-hoc spending focused on hospital admissions and high-cost treatments, a shift towards a spending structure centered on chronic disease prevention and management through primary care is the only solution to ensure the sustainability of the '4.353 million won per person healthcare era' and to save essential medical services on the brink of collapse.
* This article has been translated by AI.
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