South Korea medical expenditure and insurance trends

South Korea’s national medical expenditure reached a record high of approximately 225 trillion won in 2025, representing 8.4% of the nation’s GDP. This total includes a rise in the number of primary surgical procedures and a significant increase in the total medical costs associated with those surgeries.

Recent shifts in medical costs are also being driven by new insurance structures and holiday-related fees. Under the 4th generation indemnity insurance system, policyholders with high non-reimbursable medical expenses face premium surcharges of up to 300% on specific riders. Furthermore, medical expenses increase during public holidays due to a 30% surcharge on basic examination fees and pharmacy dispensing fees, as well as potential surcharges of up to 50% for certain emergency medical services.

New data submitted to the National Assembly indicates significant administrative issues within the National Health Insurance Service (NHIS). Over the past five years, approximately 4.2477 trillion won in health insurance premiums were overcharged or incorrectly paid across roughly 15.46 million cases. Of these overpayments, 45.5 billion won has not yet been returned to subscribers, with 38.2 billion won remaining unpaid. The volume of overpayments reportedly increased by nearly 30% in 2024 compared to 2021.

To mitigate costs, the NHIS has implemented a volume-price linkage system, negotiating price reductions for 80 pharmaceutical products. This resulted in an average price reduction of 4.6%, expected to save approximately 33.9 billion won. These reductions primarily target treatments for chronic conditions, such as hypertension and hyperlipidemia, which accounted for 43.2% of the adjusted drugs.