President Lee Jae Myung promised to “reimburse caregiving services” during the presidential election.

At the time, Lee said that the burden of care should be shared by society, not fall solely on individuals, and that it should be introduced by gradually increasing the scope of benefits according to financial conditions to the extent that health insurance finances allow.

The Yoon Suk Yeol administration also promoted reimbursed care. Since April 2024, the “Nursing Hospital Care Support Pilot Project” has been underway in 20 nursing hospitals nationwide, and the government plans to explore the possibility of introducing salaried care based on the pilot project.

However, the government has only just begun the basic work to introduce the system, such as raising financial resources estimated at 15 trillion won ($1.1 billion) per year, standardizing care services, and establishing qualification standards for caregivers. It has not yet come up with a concrete plan to reimburse caregiving.

However, after the early presidential election was held due to Yoon’s dismissal and the inauguration of the Lee administration, the pace of the government's policy to reimburse caregiving seems to be accelerating. The project, which was initially promoted by the Ministry of Health and Welfare’s Nursing Care Policy Division, has been transferred to the Health Insurance Payment Innovation Promotion Team of the Health Insurance Policy Bureau.

Considering that the biggest obstacle to introducing reimbursed care is detailed and realistic financial estimates and preparations, the Health and Welfare Bureau, which handles health insurance finances, will directly design and speed up the introduction of reimbursed care.

It is also noteworthy that Yoo Jung-min, the head of the promotion team, has been recognized for his ability to design the new system. He has worked on major healthcare reform projects, such as the “Support Project for Structural Transformation of Tertiary General Hospitals” and the “Support Project for Comprehensive Secondary General Hospitals.”

The problem is that many hospitals already have integrated nursing and care services, so the upcoming care reimbursement system will mean reimbursed care at nursing homes. There is a gap between the reimbursed care model demanded by the nursing hospital industry and the one envisioned by the government.

Nursing homes complain of problems with care support pilot project

The “Nursing Home Care Support Pilot Project” launched by the previous government has been running from April 2024 to December this year in 20 nursing hospitals in Busan, Daegu, Gwangju, Daejeon, Gimhae, Changwon, Bucheon, Ansan, North Jeolla Province, and South Chungcheong Province.

The target population is the elderly aged 65 or older or those with geriatric diseases under 65 who are in the nursing hospital service group and have a nursing care certification score of 75 or more as a result of the integrated judgment screening. The target patient selection uses the integrated medical, nursing, and care judgment system.

The introductory period of care is 180 days, with a maximum of 300 days for patients with the highest medical level and 270 days for patients with a high medical level. Patient co-payments will range from 40 to 50 percent, depending on the level of caregiver placement. Still, co-payments will increase by 10 percentage points per month beginning the month after the 180th day.

Caregivers must complete pre-placement training at participating organizations and can be hired directly or seconded. The threshold for deployment is four to eight patients per organization.

However, there are many problems with the ongoing pilot project, according to the nursing home industry.

"The current pilot project is too narrow in scope. In our view, the pilot program should include patients at the middle medical level," Lim Sun-jae, president of the Korea Convalescent Hospital Association, told Korea Biomedical Review over the phone.

Nursing home patients are categorized into five levels: the highest medical level, which requires intensive medical treatment; the high medical level, who have a serious illness and requires constant observation and management; the middle medical level, who are relatively stable but require a certain level of medical management; the low medical level, who are in good health and can perform daily activities; and the elective hospitalization group, which is a group of patients hospitalized for a specific illness or nursing needs and has low medical needs.

“Also, the co-payment rate increases after 180 days of hospitalization, and elderly patients can stay in a nursing home for 300 days or even two years,” Lim said. “With a typical monthly care cost of 1 million won, even with a basic co-payment rate of 40 to 50 percent, the patient pays 500,000 won per month, so the effectiveness of (the pilot project's care support) is minimal.”

Since participating in the pilot project requires hiring caregivers who comply with labor laws, care costs tend to be expensive. Suppose a 40-50 percent co-payment rate is applied to it. In that case, there is not much difference between nursing hospitals that do not participate in the pilot project and those that do, which receive 600,000 won to 1 million won per month for care.

Nursing homes want targer targets and smaller co-payments

The policy proposal for “Realizing a Welfare State Without Loneliness,” which the association proposed to the Democratic Party of Korea during the election and delivered to the Ministry of Welfare after the election, detailed the reimbursed care (National Responsibility System for the Elderly).

Its gist is to ensure that as many people as possible can receive care benefits, such as quickly converting the ongoing pilot project into a main project and including nursing hospital-type services in the integrated nursing and care services.

Specifically, the support targets are defined as patients with severe medical conditions and caregiving beneficiaries based on the classification of nursing home patients. The group proposed that the current pilot project's target selection method is complicated. The integrated judgment system has many problems, so it is appropriate to select targets using the nursing home patient classification group rather than the integrated judgment.

The target patients should start with the medically ill and be expanded to include all socially disadvantaged people who need care, such as those aged 65 and older, people with chronic diseases, low-income earners, and people with disabilities. In particular, unlike the current pilot project, those who need care support should be covered without a time limit, and the co-payment rate should be reduced from 40-50 percent of the pilot project to 20 percent.

Too wide gap in estimated cost between government’s 15 trillion won and nursing homes’ 1-2 trillion won

The government estimates that up to 15 trillion won annually is needed. Still, the association believes that 1-2 trillion won annually is sufficient.

The association also released specific estimates. As of the fourth quarter of 2024, it estimated the cost based on 80 percent utilization of 258,121 beds in 1,342 nursing hospitals nationwide, with 206,496 patients hospitalized and 142,069 patients, about 70 percent of the total, divided into 3,510 highest medical level, 62,155 high medical level, and 76,404 medium medical level.

First, if the A model, which assigns eight patients to one caregiver, is introduced, the annual care cost will total 1.52 trillion won, with a national burden of 1.21 trillion won and out-of-pocket expenses of 304.3 billion won. If the B model, which assigns six patients to one caregiver, is introduced, the annual care cost will total 1.74 trillion won, with a government burden of 1.39 trillion won and a co-payment of 349.8 billion won. If the C model, which assigns more than four but fewer than six patients to one caregiver, is introduced, the annual care costs total 2.53 trillion won, with 1.64 trillion won in the government burden and 410.7 billion won in out-of-pocket expenses, according to the association.

“(The government's estimate) is based on the assumption that everyone hires a personal caregiver, which is why the annual cost is 15 trillion won, but the association's calculation is between 1 trillion and 1.5 trillion won per year,” Lim said, emphasizing that nursing hospitals are not asking for reimbursed care through personal care and that they can reduce costs enough by adjusting staffing during the day and night.

"We're not suggesting that reimbursed care go 100 percent at one point. We're talking about starting with what we can afford and then expanding the scope of benefits over time,” Lim said. “We recognize that doing it all at once is unrealistic."

Should Korea import foreign caregivers to make up for workforce shortage?

The introduction of reimbursed caregiving would create a shortage of caregivers, which is being addressed by introducing foreign caregivers. While Korean workers can be considered first to meet the demand for care, it is impossible to meet the demand for care with only domestic workers.

Looking at overseas examples, such as Japan and Taiwan, the association believes that the introduction of foreign workers is essential when considering the size of the labor force required. To this end, it is necessary to improve visa and work permits, establish qualification certification and training systems, and especially actively utilize the “Regional Visa Pilot Project” recently promoted by the Ministry of Justice.

The regional visa pilot project aims to establish and implement regionally based immigration policies that reflect regional characteristics. It targets foreigners studying abroad (D-2) and engaged in certain activities (E-7) in 17 regional municipalities nationwide. Once the Ministry of Justice establishes the requirements for the regional visa, local governments will submit a business plan, which will be reviewed by the Ministry of Justice and presented to a review committee for decision.

“If caregiving is reimbursed, we will need 4.5 times more caregivers than now,” Lim said. “If we estimate the number of caregivers currently working in nursing hospitals, which is around 50,000, it will be difficult to supply caregivers with domestic labor alone if 4.5 times more people are needed."

“If you look at the current situation of nursing home caregivers, there are ethnic Koreans from China and Russia in addition to Korean nationals, but the caregivers themselves are aging, and they don't want to do it, recognizing caregiving as a 3D (Difficult, Dirty, Dangerous) industry,” he said. "Now we need to bring in young caregivers from Southeast Asia, as they do in Japan, Hong Kong, and Taiwan. We will create a system where the association is responsible for training, certification, practice, and deployment."

Government to devise implementation plan to ensure Lee’s pledge becomes a reality

The nursing home industry has already prepared a concrete plan. It is ready to be discussed with the government, but it has not yet established a detailed plan. However, the government recognizes the reimbursed care as a significant pledge and will prepare an implementation plan.

"Government ministries are currently working on and reporting on implementation plans for what was included in the pledge (during the presidential election). (The Ministry of Health and Welfare) is also making (specifics) to report on the contents related to the salaried care,” said Director Yoo, the head of the promotion team. “The specifics will come out once the direction of the discussion is set through the State Affairs Planning Advisory Committee."

However, Yoo noted that reimbursed care should be linked to measures to strengthen nursing hospitals' medical functions.

“The ongoing pilot project for nursing home care support is limited to 20 institutions, but there are many opinions that care payment should target patients with high medical needs by strengthening the medical functions of nursing hospitals,” Yoo said. “Therefore, we are thinking of linking care payment with strengthening the medical functions of nursing hospitals.”

The pledge also includes the redefinition of nursing hospitals' functions. For patients in need of care to receive proper benefits, the quality of nursing care services and nursing hospitals must be improved. You explained that this would be considered comprehensively.

He added that the government is also mindful that the care provided by nursing hospitals should be different from the care provided by the integrated nursing and caregiving services currently underway in acute hospitals.

“If the main role of caregivers in hospitals treating acute patients is to care for patients after surgery, nursing hospitals are different because they often have to care for patients who are bedridden for a long time,” Yoo said. “The nursing and care integration service is focused on nurses, but the reimbursed care is also different in that caregivers are primary players.”

“Considering these points, we need to prepare caregiver qualification standards, care service standards, and others, and discuss them in conjunction with related departments such as nursing and medical institution policy,” he said. “There is no timeline for when we will make care reimbursable, but since it is a major pledge (of President Lee Jae Myung), we will make and discuss an implementation plan to make it a good policy, not just words.”