Current Issues in Physician Payment in the United States and the Republic of South Korea

Abstract

onfronting Korea and the United States. In both countries health insurance generally subsidizes physician services, on the basis of fees for services provided. In the presence of widespread insurance, there is no market-based customary or prevailing fee which insurers can use to set fees. Alternative methods of setting fees are controversial. Further, fee for service payment creates incentives for unnecessary, costly, and sometimes damaging care. The paper examines the fifty year U.S. history testing many approaches to setting fees for physician services provided to insured patients. Thus far, none has proven successful in keeping physician costs within general increases in GDP and inflation or in providing incentives for appropriate, quality care. In the past decade, conflicts between Korean physicians and the national health insurance system have twice resulted in national physician strikes. These conflicts involve many issues, including the separating of proscribing and providing drugs and telemedicine. This paper suggests that a persistent underlying concern of Korean doctors is that fees are inadequate and force doctors to provide excessive volume of service. Finally, the paper argues that both the United States and Korea would benefit from the adoption of alternatives to fee for service that promote more collaborative medical services.