Comparison of out-of-pocket expenditure and catastrophic health expenditure for severe disease by the health security system: based on end-stage renal disease in South Korea

In most countries, the economic gap between the rich and the poor has become more serious in modern society. If healthcare intervention is necessary to sustain the life of an individual, it is more likely that he/she will be faced with poverty. Therefore, strengthening health equity through inclusive and universal healthcare is an important health agenda in most countries. Health insurance has a positive effect on dispersing the risk of health financing for people, and the utilization of healthcare services has also increased. However, as social inequity increases, the level of catastrophic health expenditure (CHE) that each individual or household can afford is also decreasing [1‐3]. The CHE is an indicator of the burden of healthcare expenditure and households’ capacity to pay [2]. The basic approach used to measure capacity to pay is based on consumption or income. Xu et al. [4] defined CHE as expenditure exceeding 40% of household consumption expenditure excluding subsistence expenditure (SE) [4]. On the other hand, Wagstaff & van Doorslaer [5] reported that prepaid income excluding that used for food consumption represents a household’s capacity to pay. Additionally, CHE is defined as out-of-pocket (OOP) medical expenditure that exceeds 2.5, 5, 10, 15 20, 25, 30% or 40% of a household’s capacity to pay [5].

Each country has a different type of health security system. The Korea National Health Insurance (NHI) system is a major health system that requires mandatory enrollment and involves the payment of premiums. On the other hand, the Korean Medical Aid (MA) system is operated by a national tax and local tax and acts as a national guarantee that all services used will be paid for. The NHI has been utilized by the entire population since 1989, and approximately 97% of Koreans, except those that use MA, are currently registered for this insurance [6‐8]. However, people have to pay premiums every month to maintain the NHI. At this time, the monthly premium is determined by each individual’s level of income and property ownership. In other words, rich individuals have higher premiums than poor individuals, so the government has already introduced vertical equity. In addition, the government continues to maintain a policy to control medical expenses, thereby providing high-quality medical services at low prices. However, the NHI covers only approximately 56% of the total healthcare costs related to the utilization of healthcare services [9]. The remaining 44% must be paid at personal OOP expenditure, regardless of the individual's economic condition. Therefore, the logic of horizontal equity can be applied to personal copayment and excessive OOP expenditure for the poor can be considered as CHE.

Korea’s MA recipients, who account for only approximately 3% of the population, have the lowest incomes or cannot maintain a job, and thus, this system guarantees the health rights of all people. MA recipients do not pay a monthly premium and when they use healthcare services, there is little or no OOP expenditure. Therefore, the largest group of beneficiaries of vertical equity does not pay a premium and are faced with a minimal personal cost. The nation chose to implement the MA program based on strict screening criteria such as assets, income, and the income of family members. Korea’s MA system has greatly contributed to an improvement in the basic health security of vulnerable groups such as low-income families since 1977. However, by applying tax reduction, Korea has been providing customized health insurance benefits since 2015 through the NHI, and as of 2019, the number of MA recipients was 1,489,000, a decrease of 19% from 1,841,000 in 2008 [6, 7]. This policy is based on the assumption that there will be no adverse effects even if a MA recipient qualifies for the NHI.

The implementation of different types of health security systems and different coverage rates have limited the use of healthcare services or created a moral hazard due to the overuse of unnecessary healthcare services. High copayments are utilized to limit the abuse of medical services and are in line with horizontal equity because everyone must pay for the services they need. Previous studies showed that the level of unmet healthcare needs was higher for NHI recipients than MA recipients [8, 10‐12]. Additionally, even when they have the same disease, the healthcare utilization rate for MA recipients was higher than that for NHI recipients, and the gap continues to widen [13‐16]. This problem occurs because how much each individual has to pay for medical services is determined by the health security system. However, if healthcare services are vital to sustain life, the healthcare utilization of NHI recipients cannot be further reduced. Additionally, if subjects have a serious illness, regardless of whether they have the NHI or MA, healthcare providers provide the appropriate treatment following standardized care guidelines. Therefore, OOP expenditure for serious diseases will vary depending on the type of healthcare coverage, and in some types, induce poverty.

In this study, subjects with a serious disease for which healthcare intervention is essential, namely, end-stage renal disease (ESRD), were studied to understand the financial burden associated with each type of health security system. ESRD refers to stage five chronic kidney disease (CKD) and requires dialysis, kidney transplantation, and conservative care. In Korea, for ESRD on hemodialysis (HD), the health care expenditure was $1561 million in 2014 and increased by 32.2% in 2009. The number of patients undergoing dialysis and kidney transplantation (KT) in Korea is 1446 per million people. Among them, 69.8% underwent HD, 10.0% underwent peritoneal dialysis (PD), and 20.2% underwent KT [17]. However, the gross expenditure will be larger because personal copayment is not included in the calculation. Even though ESRD is a serious high-cost illness in most countries, healthcare expenditure for this disease have not been determined. There have been few studies on OOP expenditure for individuals with ESRD.

Therefore, it is necessary to understand the financial burden of illness based on the types of health security system provided by the health security system. Few studies have assessed whether the rate of healthcare utilization of poor people and those are public guaranteed health benefits by the nation is equitable, and the general population has been required to pay insurance expenses to the NHI Corporation. This study aimed to compare the healthcare utilization, OOP expenditure, and CHE for Patients with ESRD with either the NHI or MA over a 6-year period (2008–2013) Korea Health Panel (KHP) data was obtained both cross-sectionally and longitudinally. This study estimated the reverse discrimination of individuals with ESRD with different types of health security system. In addition, this study provided basic data that can be used for international comparisons of the OOP burden of Patients with ESRD.

Regardless of the difference between the rich and the poor, the right to human health must be guaranteed. To this end, most countries are implementing various policies to ensure the health of the people. In particular, in Korea, there is an NHI system that practices universal medical care through horizontal equity that emphasizes the health rights of all people. This is a system that prevents people from falling into poverty due to medical care, as medical services are guaranteed through insurance premiums paid by the people. On the other hand, it has an MA system for the inclusive health of low-income families through vertical equity. MA is a public assistance program that supports the right to health of people without living ability under the responsibility of the nation and local governments. The selection of MA beneficiaries is for persons recognized by the Minister of Health and Welfare as needing medical benefits, recipients for basic life security, people without family guards, homeless people, disaster victims, adoptive children, etc. MA is a social safety net that resolves poverty after health problems happen without paying premiums.

Actually, resources are finite. Health policy for vertical equity requires financial resources and may be unfair from the standpoint of certain classes that value horizontal equity. In other words, new blind spots and reverse discrimination can emerge with the reinforcement of inclusive medical care that emphasizes vertical equity. However, scientific evidence for these health care issues is important for policy development. Health equity, fairness, and the relationship between poverty and health must be explored in a variety of ways. One of them is the difference in OOP expenditure under the health care system. In particular, ESRD is a high-cost chronic disease that requires kidney replacement therapy, such as HD, PD, and KT. Therefore, it prioritizes the life-sustaining effect as a disease serious enough that the efficiency cannot be considered. However, few studies have been performed on OOP expenditure on ESRD, especially the comparison of NHI and MA. In addition, most Patients with ESRD need lifelong treatment. Therefore, it is important to understand the OOP tendency of ESRD by the health security system.

In this study, 305 (0.27%) out of 111,869 subjects in the 6-year panel data were diagnosed with ESRD. The prevalence per 1 million was 2726, which was higher than the prevalence of 1446 Koreans published in 2013. This can be inferred because of the basic nature of the panel data that oversamples the vulnerable person such as low-income and disabled individuals. Among them, 77.7% belong to NHI and 22.3% belong to MA, which was a much higher distribution than only approximately 3% of MA among the Korean population. It could be interpreted that ESRD subjects are frail enough to warrant protection by the country. The elderly subjects accounted for 46.4% of the NHI, and the MA accounted for only 19.1%. The mean age of subjects with MA was 53.9 years, which was younger than 61.8 years of NHI. The reason why MA subjects are relatively younger can be thought of as a large number of innately vulnerable people, including genetic disorders, disabled, homeless and adopted persons. Therefore, people in MA can live longer in ESRD status than in Individuals who utilized the NHI. Additionally, the common causes of ESRD are chronic diseases such as diabetes and high blood pressure. It will increase due to aging in most societies [17, 20]. Therefore, we should also consider preventive strategies to ease the burden on individuals and countries due to ESRD.

For a severe disease such as ESRD, healthcare utilization did not differ significantly between NHI and MA. This was a different result from the previous study. In previous studies, including all diseases, MA subjects were using more health care than NHI beneficiaries. This was because the burden of copayment was relatively lower than that of NHI. They used 1.4 times more OPD and 1.6 times more admission [13‐15]. In particular, patients with NHI but low income had significantly lower medical use than patients with MA [8, 21‐24]. In contrast, in this study, there was no significant difference in the rate and frequency of healthcare utilization in ER, admission and OPD visits between NHI and MA. Therefore, in the case of serious diseases such as ESRD, health care can no longer be reduced regardless of the type of healthcare system. The treatments they receive are essential for survival.

Regardless of the equivalent healthcare utilization, annual OOP expenditure was significantly unequal between NHI and MA. Subjects with NHI had more OOP expenditure than MA. The OOP expenditure of admission was 2.9 times ($2020.8 vs. $692.1) (P = 0.01) and that of OPD visits was 3.9 times ($1120.6 vs. $290.2) (P < 0.001). Additionally, ESRD subjects with NHI expended more OOP expenditure over 6 years than those with MA (P = 0.005). In addition, in a previous study that included all diseases, the OOP expenditure of NHI was 1.5 times that of MA, which was relatively lower than that of ESRD disease [8]. Thus, subjects with a serious disease such as ESRD with NHI faced a much greater economic burden than those with MA. Furthermore, subjects with high OOP expenditure are more likely to face the risk of CHE [25‐28]. CHE was compared between subjects with NHI under the median of household income decile and with MA. CHE was 92.2 and 58.8% among the NHI and MA, respectively. Additionally, the medical poor, in which the household’s capacity to pay became more negative, was 34.4% in NHI and 16.2% in MA.

The purpose of this study was to identify the actual burden on ESRD because the cost studies in the previous have been based on insurance claims data [17, 29‐34]. The detailed meaning is as follows. First, in serious diseases such as ESRD, the NHI subject’s medical use was equivalent to MA. Second, in subjects with NHI, OOP expenditure was higher and more CHE than MA. Third, the higher OOP expenditure burden in NHI than MA was identified over a 6-year trend from 2008 to 2013. Higher OOP expenditure has been reported to have disadvantages that impede healthcare utilization when inevitably seeking health care [35‐39]. Therefore, Individuals who utilized the NHI with a severe disease, such as ESRD, have a greater financial burden than MA subjects. Heath policies should be able to provide more medical care to those who need more medical care [40]. We noted the possible factors leading to this discrimination. Korea has recently emphasized universal and inclusive medical welfare. However, unlike this phenomenon, the number of recipients of MA has gradually decreased in Korea. In 2006, it was 1,711,076 people, which was 3.8% of Korea’s total population. In 2020, it is 1,496,000, which is 2.8% of the nation. Approximately 215,000 people fewer people use MA [11, 14] because there has been a transformation in the MA system to stabilize national healthcare finances. Therefore, people who have to be covered by MA are likely to have the NHI and face an increase in CHE.

Healthcare policymakers should consider mitigating the medical burdens of those who belong to the NHI but are poor. Suggestions for this study are as follows. First, in the selection criteria of MA, not only the subject’s property and workability are considered but disease requiring long-term treatment and CHE should be used as selection indicators. Second, if the size of MA cannot be increased according to the policy, if it belongs to NHI but is medical poor, it is necessary to find a way to pay health subsidies. Third, for those who have not yet converted from CKD to ESRD, it is necessary to seek a program to prevent further progress by being registered by an academic society or public interest social group. In addition, a new prevention policy model, such as the payment of prevention incentives to the subject, could be considered.

Although this study aimed to identify OOP expenditure and CHE of serious diseases such as ESRD according to the health security system, there are many limitations. First, in this study, OOP expenditure was not analyzed as a fee for service of ESRD but integrated expenditure on ESRD. This is because the fee for services such as dialysis, KT and conservative care of ESRD could not be distinguished from the raw data. Second, the data of this study have accumulated data of relatively rare ESRD over the years, and despite a large number of survey variables, the patient’s disease history could not be explored. It is necessary to explore inequity according to disease progression. Third, this study found the reverse discrimination of ESRD by the health security system, but it was the result of not controlling household income at baseline. Therefore, the causal relationship between disease and poverty has not been revealed. If the number of subjects who are included is greater and the follow-up period is longer, an attempt to determine causal relationships is necessary. Fourth, the OOP expenditure of this study excluded indirect costs such as transportation and salary stoppages. Therefore, it must be estimated to be less than the actual cost of health care. Fifth, although the subject of ESRD is characterized by a relatively rare and serious disease, it is not possible to exclude the possibility of type 2 error because of the small size of the subject.

Strengthening health equity is an important health agenda in most countries. In Korea, the healthcare utilization of patients with ESRD that have the NHI or MA was the same because of the severity of the disease. Meanwhile, data for a 6-year period showed that OOP expenditure for the NHI program was consistently higher than that of the MA program. In other words, healthcare services provided to individuals with severe diseases such as ESRD who utilized the NHI could not be reduced even though their costs were higher than individuals who utilized MA. As a result, Individuals who utilized the NHI have larger CHEs than MA subjects. This study is significant because it identified inequity among individuals with the NHI and those with MA who had a serious disease such as ESRD. Therefore, healthcare policymakers should consider reducing the medical burdens of individuals who utilize the NHI and are poor.