South Korea’s National Health Insurance (NHI) system absorbed more than 8.6163 trillion won (approximately US$5.7 billion at approximately 1,501 won per US dollar, per the US Federal Reserve as of July 10, 2026) in costs linked to a prolonged government-doctor dispute and broader medical reform – a figure that has brought long-standing questions about the fund’s governance and financial sustainability into sharp focus.
The financial pressure traces back to February 2024, when the government announced plans to expand annual medical school admissions to address a chronic physician shortage. By March 8, 2024, more than 11,000 junior doctors had walked off the job, disrupting surgeries and emergency care nationwide. The dispute stretched for more than a year before the government announced in April 2025 that the medical school quota for 2026 would be reduced to 3,058 – the figure that had been in place before the standoff began. Throughout that period, the government directed substantial NHI resources toward managing the emergency.
In its “FY2025 Settlement Analysis” report, the National Assembly Budget Office found that 3.7089 trillion won in health insurance funds was spent operating the emergency medical system during the standoff. Of that total, 2.2245 trillion won went to emergency medical care support and 1.4844 trillion won to advance payments for teaching hospitals, according to the Seoul Economic Daily. Including 2.1685 trillion won for restructuring tertiary general hospitals and 2.7389 trillion won for essential medical care support measures, total health insurance funds directed at medical reform and emergency care reached 8.6163 trillion won.
The consequence for the NHI’s financial position has been significant. The NHI current account surplus fell 88% – from 4.1 trillion won in 2023 to 499.6 billion won in 2025, according to the National Health Insurance Service’s (NHIS) 2025 fiscal results cited by Seoul Economic Daily. Insurance benefit spending rose 8.4% in 2025, driven by emergency medical care support, a 1.96% increase in medical fees, and the full rollout of a restructuring support program for tertiary general hospitals, while total revenue grew only 3.8%. NHIS president Jung Ki-suck said, in remarks reported by Korea BioMedical Review and translated from Korean, that “although a deficit is projected for the 2026 current-year balance, the NHIS must continue to advance key national policy agendas,” committing to “strengthen the financial soundness of the health insurance system through rigorous expenditure management.”
South Korean law requires the government to contribute approximately 20% of expected NHI premium revenue – 14% from the national treasury and 6% from the National Health Promotion Fund. The Budget Office found the actual government support rate in 2025 stood at just 14.4%. Legislators have sought to amend the National Health Insurance Act to remove sunset regulations and strengthen the state’s financial commitment to the system, with the ruling party arguing that current government contributions fall short of the legal maximum.
A National Assembly Budget Office official identified the structural problem at the heart of the funding gap. “Even though health insurance is a public resource of about 100 trillion won a year, it is operated through an accounting method rather than as a fund, so its financial management plan and settlement are finalized with only [Ministry of Health and Welfare] approval, without going through the National Assembly’s budget and settlement review. It is necessary to expand the state’s share of the burden and to establish a financial management system, including converting it into a fund, to strengthen external controls,” the official said, as reported by Seoul Economic Daily.
The reform-related spending falls on a fund already under structural strain. South Korea’s Ministry of the Interior and Safety recorded 10.84 million people aged 65 and older in 2025 – 21.21% of a total population of approximately 51.11 million, according to Korea Herald. The OECD confirmed South Korea's total fertility rate fell to 0.72 in 2023, the lowest recorded by any country in the world. A study published in Health Economics Review in November 2025, using NHIS financial data and Statistics Korea population projections, found that NHI expenditures are projected to surpass revenues from 2025, with accumulated reserves expected to be depleted by 2030, and annual deficits growing from 21.8 trillion won in 2032 to 123.3 trillion won by 2042.
For insurance professionals across Asia-Pacific, the South Korean case presents a clear pattern: when a compulsory public insurance fund is used to finance government policy responses without commensurate increases in state contributions or parliamentary oversight, financial buffers erode faster than demographic pressures alone would predict. The Budget Office’s call to convert the NHI into a designated fund subject to legislative review is a governance question with direct implications for how public health insurance systems across the region are structured and monitored.
