Health workers test commuters as they drive by in South Korea, whose centralized governance system has contained the pandemic relatively well. Photo: YouTube / NBC / Screen Grab

SEOUL – It is the greatest health care crisis of modern times, but South Korea’s national health insurance system has so far spent only US$310 million containing the novel coronavirus pandemic.

What makes that figure doubly remarkable is that the country of 51 million, which was the first to suffer a mass outbreak after China, has so far had 12,121 infections, but only 277 deaths.

What factors underpin this healthcare and cost effectiveness?

According to the head of the agency which oversees healthcare spending and the management of healthcare resources nationwide, a combination of sound information management, highly integrated supply and distribution databases, and prior expertize with MERS.

That, and the fact Covid-19 does not demand expensive treatments.

“It’s a relatively cheap disease,” Dr Kim Sun-min, president of the Health Insurance Review and Assessment Service, or HIRA, told Asia Times in an exclusive interview. “Other diseases require high-end technologies like MRIs and surgeries … Covid-19 does not.”

HIRA President Kim Sun-min. Photo: HIRA

Kim noted that there are no fully effective drugs for treatment, and the majority of patients will not require ventilators – “which are not that expensive” – but that “keeping patients in negative pressure isolation wards is very important.”

These wards, established in specialist hospitals set up to deal with respiratory epidemics, prevent airborne diseases from escaping and infecting others. A machine sucks air into the ward, then filters it before releasing it back outside.  

Since a $25 million expansion in late May, South Korea has more than 1,000 beds available in these wards nationwide.

But given that the bulk of the specialized wards had been previously established by South Korea in the wake of the 2015 MERS epidemic, the country has managed the disease at a strikingly low cost.

According to Kim, while the national health insurance system’s budget for 2020 is $62 billion, only 0.5% of that budget – or $310 million – has so far been spent on dealing with Covid-19.

The figure “includes direct medical costs, the cost of maintaining essential health services for non-Covid-19 patients and compensation for the losses incurred by the healthcare providers,” Kim said.

There are some caveats, though.

One is timing. “If you take into consideration the typical time it takes to go through claims submissions and the processing of healthcare providers, it will likely take several months to figure out the total cost incurred by Covid-19,” she said.

Another is, of course, well beyond Kim’s purview – the pandemic’s costs to the economy. “We cannot count the indirect costs,” she said.

Given school closures, output drops, business suspensions and unemployment benefits, those costs are likely to be “enormous.”

Free treatment for all

Even so, given that there have been worldwide fears of medical infrastructures being overwhelmed, South Korea’s ability to handle the disease well within budget and capacity is remarkable.

This is particularly so as not just treatment, but also the tests taken by those who suffer the disease are 100% covered by health insurance.

From early on, Seoul decided that a massive testing campaign was critical. The broader philosophy was to ensure that anyone who feared they had the disease had access to both tests – which cost about $130, but are cost-free for those patients who test positive – and treatment. These policies obviated cost concerns for the public.

“For infectious diseases, I think the goal should be to prevent spread,” Kim said. “When people don’t use healthcare services,  that has a negative impact.”

Technology has played a vital role. “The OECD has been emphasizing the importance of data infrastructure,” Kim said.

Notably, South Korea has won global attention for its use of database integration to contact-trace infected people.

A health worker administers a swab at a temporary Covid-19 novel coronavirus testing centre in Bucheon, south of Seoul, on May 27, 2020. Photo: AFP/Ed Jones

A system overseen by the Korea Center for Disease Control and Prevention combines databases run by immigration, mobile phone companies, police CCTV networks, credit card firms and public transport operators.

The resultant big data, mined by AI, enables contact tracing of infected people by mapping their routes and activities for two weeks prior to their positive test – all within 10 minutes.

Moreover, mobile phone apps and location-tracking information are monitored by authorities to ensure that those in home quarantine remain, physically, at home.

HIRA efficiencies

HIRA itself boasts a powerful centralized database that links the agency to all healthcare providers nationwide.

“Korea legally requires all people and healthcare providers to participate in its single-payer insurance system,” Kim said. “This allows HIRA to produce a wealth of healthcare-related big data which it provides to the public, healthcare providers and the government.”

Through this, HIRA is able to track all resources – test kits, vacancies in negative pressure wards, the supply of therapeutic drugs, even the numbers of healthcare personnel available in nationwide locations – on a real-time basis. 

HIRA’s infrastructure was flexible enough to respond to demand early in the crisis: the supply of masks, which have been widely credited with preventing the spread of the disease in East Asia. Amid massive public buying, reports of pharmacies selling out and fears of hoarding and profiteering, masks were temporarily added to HIRA’s list of anti-pandemic supplies.

“HIRA has a database connection to every healthcare facility in the country, including every single pharmacy,” she said. “That enabled us to respond to that crazy situation.”

Leveraging HIRA’s data and system, an inter-governmental agency was able to conduct public procurement, calibrate production capacities, stabilize prices and distribute via retail channels. Discounted masks were supplied to every citizen on the day of the week that corresponded to the number on their citizen’s ID card.

“For facilities outside the public health system such as post offices and public markets, a system was installed for selling masks,” Kim said. “This system allows providers to establish purchase histories and to record the number of masks sold to each person every week.”

Second wave?

While South Korea continues to experience clusters stemming from locations as diverse as nightclubs, logistics centers, churches and ping pong clubs, new infections are now fluctuating in the 30-50 people range.

With Seoul sticking to its school reopening plan and declining to tighten social distancing measures, the level of infection has been judged manageable within current capacities and South Korea’s curve has been effectively flattened.

But questions hover over the much-feared “second wave.” Many predict this will arrive along with the post-summer cooler weather – coinciding, perhaps, with an increase in international travel to produce a double whammy.

But with nothing certain, preparation is tricky.

One tactic is an expansion of the main weapon in South Korea’s healthcare armory. “Target testing populations will be continuously expanded,” she said.

New facilities are also being prepared.

Sample testing devices used in diagnosing Covid-19 are checked on a production line as they are prepared to be included in testing kits for shipment at the SD Biosensor bio-diagnostic company near Cheongju, south of Seoul, on March 27, 2020. Photo: AFP/Ed Jones

Now screening takes place off-site, to ensure that clinics and hospitals are not infected. Nationwide, a number of Covid-specialty hospitals have been designated, freeing other hospitals from the risk of infection while they deal with patients with other conditions.

The country is also adding new health care facilities – usually via conversion of extant spaces, such as corporate training centers. In early June, 17 respiratory care clinics will be designated by local governments and up to 1,000 of these clinics will be established nationwide by the end of 2020.

But more important, Kim said, is the ability to manage capacities efficiently and flexibly.

“It does not depend on total facilities,” she said. “No country has full capacity … [the issue is] how to distribute that capacity.”

Meanwhile, the HIRA itself is upgrading. “Using new lessons learned from the current pandemic, HIRA will continue to accelerate digital innovations,” Kim said.

There are three key areas. Firstly, HIRA is upgrading to Cloud services. It is also accelerating information delivery via data lakes and real-time data provision for clinical support. And it is building a new risk-management infrastructure.

Asia Times Financial is now live. Linking accurate news, insightful analysis and local knowledge with the ATF China Bond 50 Index, the world's first benchmark cross sector Chinese Bond Indices. Read ATF now.