South Korea’s rapid emergence as an industrialized nation with migration to urban centres and a declining fertility rate has led to increasing demand for long-term care services as the population continues to age. Informal care provided by family members has traditionally been the primary source of long-term care in the country. However, as the elderly constitute a larger percentage of the population, family size declines and women participate in the workforce in larger numbers, the government have been pressed to stimulate the growth of long-term care services and to develop a national insurance programme to fund them. Escalating healthcare expenditures for the elderly, driven by acute hospital stays used in lieu of long-term care services, further increased the pressure and pushed the issue to the forefront of the nation’s policy agenda.
In July 2008, South Korea introduced national Long-Term Care Insurance (LTCI). The programme mainly covers services for individuals age 65 and over and is independent of the National Health Insurance (NHI). Although NHI and LTCI maintain separate accounts, administrative services for both programmes are handled by the National Health Insurance Corporation (NHIC) to minimize overhead costs. NHI covers medical care for all citizens of the country and participation is mandatory. The intent of LTCI is to cover all elders in South Korea who need long-term care with contributions from public funding. Before the implementation of the dedicated insurance scheme, long-term care services were very limited and available only to the very poor and disabled through government welfare programmes, or expensive private institutions that served wealthy clients. Once the programme was initiated, an emphasis on increasing the number of providers of long-term care services led to an enormous expansion of the industry. Currently, about 6 per cent of the nation’s elders participate in LTCI and receive care from nearly 4,000 residential care providers and almost 20,000 home care agencies (NHIC, 2011: 15). This represents remarkable growth given that only 0.4 per cent of elders received formal long-term care services from approximately 200 facilities less than a decade ago (Cho et al., 2004). However, regulation and oversight have not developed commensurately, prompting concerns over the quality of care provided. These concerns have changed the focus of policy makers to improved quality assurance and away from merely increasing the supply of providers.