The Korea Institute for Health and Social Affairs (KIHASA) has published July issue of Health and Welfare Policy Forum, No. 309, "Making a Meaningful Effort to Make Low-Cost Society."

Foreword: Making a Meaningful Effort to Make Low-Cost Society

Article I: "A Study on the Housing, Water and Electricity Expenditure Burden of Households in Korea and Eight European Countries," Kim Tae-Wan, KIHASA

In this article, we analyzed the burden of housing and water and electricity costs in European countries and Korea using the Household Income and Expenditure survey in Korea and the European Household Budget Survey (HBS). Our analysis found that the burden of housing, water, and electricity costs, as a share of consumption expenditure (11.2%) and of income (6.8%), was lower in Korea than in European countries. On the other hand, the burden was not any lower in Korea when only elderly single-person households were considered. Korea had a lower burden of housing, water and electricity costs than European countries for all income quintiles. However, in Korea, the jeonse rental system and state-controlled pricing of electricity and water seem to have had a certain impact. On the other hand, European countries have a systematic housing welfare system for the underprivileged, which can be seen as a major factor in lowering the burden of housing and water and electricity costs. For Korea, additional policy responses are needed as water and electricity costs turned unstable lately due to the increase in monthly rent and the fluctuating raw material prices.

Article II: "A Study on the Medicare Expenditure Burden of Households in Korea and Eight European Countries," Kim Ki-tae, KIHASA

We compared the levels of healthcare expenses burdened by households in Korea and eight European countries. For Korea, Household Income and Expenditure Survey data was used, and for European countries, the Household Budget Survey data was used. The healthcare expenses of Korean households accounted for 6.8% of total consumption expenditure, the second highest among the countries compared. In terms of single elderly households (14.9%) and households with four members (5.6%), Korea's healthcare expenses as a percentage of consumption expenditures were the highest among the countries compared. The burden of medical expenses as a share of consumption expenditure was relatively higher in Korea for all income quintiles. In particular, the level of healthcare expenditure burden (9.4%) for the lowest income quintile was found to be significantly higher in Korea compared to other countries. Based on this analysis, the following policy recommendations were suggested. First, it is necessary to continuously promote the reimbursement of non-reimbursable items that have increased the patient's out-of-pocket medical expense burden. Second, it is necessary to revise the copayment ceiling scheme to alleviate the burden of low-income households. Third, it is necessary to strengthen the function of primary medical institutions in Korea.

Article III: "A Study on the Education Expenditure Burden of Households in Korea and Eight European Countries," Yeo Eu-gene, KIHASA

Our comparative analysis showed that both the household education expenditure burden and the education expenditure gap between households of different economic levels were significantly larger in Korea than in the comparable countries. Education expenditure as a share of total consumption expenditure was 11.1% for all households and 16.2% for four-person households in Korea, significantly higher than for households in Southern European and British countries (2~8.5%) as well as in Nordic and European continental countries (around 1%). Our Gini decomposition analysis found that the relative contribution of education expenditure to total consumption expenditure inequality was higher in Korea (17.1% for all households and 19.2% for four-person households) than in the other countries. This high education cost burden and differences in education investment by household economic status result in inefficiency at the state and individual levels, a high rate of elderly poverty, low child happiness and low birth rate, and fundamentally erode the welfare state’s solidarity value.

Article IV: "A Study on the Transportation and Communication Expenditure Burden of Households in Korea and Eight European Countries," Kim Ju-mi, KIHASA

This study compared the transportation and communication expenses of Korea and 8 European welfare states using the Korea’s Household Income and Expenditure Survey and the European Union’s Household Budget Survey in 2015. From its findings, this study derives a plan to reduce the household burden of transportation and communication costs. The transportation cost burden as a share of consumption expenditure for all households was in the 12 to 17% range in all countries compared, including Korea. The higher the income quintile, the higher the level of transportation cost burden was as a percentage of consumption expenditure. The household telecommunications cost burden as a share of consumption expenditure was higher in Korea (at 5.7%) than in any other country examined in this study. The lower the income quintile, the higher the transportation cost burden was as a share of consumption expenditure. Based on the results of this analysis, we proposed a policy to alleviate the burden of transportation and communication costs.

Article V: "A Study on the Core Expenditure Burden of Households in Korea and Eight European Countries," Kim Ki-tae & Lee Ju-mi, KIHASA

In this study, we defined ‘essential expenditure’ as the sum of spending on such essential household items as housing, water, energy, healthcare, education, transportation, and telecommunications. We then compared the level of essential expenditure in Korea and eight European countries. For Korea, Household Income and Expenditure Survey data was used. For European countries, the Household Budget Survey data was used. Essential expenditure as a share of total household consumption expenditure was higher in Korea (47.2%) than in any other country examined. Although Korean households were found to spend only half as much on housing, water, energy (11.2%) as households in the other countries, expenditures on education (11.1%), telecommunications (5.7%), and healthcare (6.8%) were higher in Korea than in any other country in comparison. In particular, the fact that Korea's education cost is about 10%p higher than those of other countries has pressed the burden of spending on Korean households. In order to help reduce the essential living expenses for Korean households, we emphasize the need for strengthening the public aspect of housing, water, energy, healthcare, education, transportation and telecommunications.