Hospital Fees and Medicine Price Decline for First Time in Three Years

Medical and public health related expense, including hospital fees and medicine prices, during the first quarter (January–March) of this year declined for the first time in approximately three years. It was analyzed that this phenomenon was caused by people not seeking hospitals and pharmacies as much as possible unless there was a serious illness as the economic stagnation prolonged.

According to the national income statistics proposed by the Bank of Korea on May 27, real medical and public health expense of households during the first quarter this year was reduced by 0.7 percent compared to the same period last year.

It was the first time since the 6.9 percent reduction during the second quarter (April-June) in 2001 that medical and public health expense declined compared to the same period in the previous year.

The range of increase in medical and public health expenditure that increased by 16.6~24.1 percent in 2002, classified by quarter and compared to the previous year, significantly slowed down last year when economic stagnation became regularized. Broken down by quarter, the rate of increase of expenditure last year was: 5.5 percent in the first quarter, three percent in the second, 5.7 percent in the third (July-September), and 1.9 percent in the fourth (October-December).

Medical and public health expense during the first quarter this year added up to 3.3368 trillion won, remaining at the same level as in 1995~97.

Putting the first quarter as the basis, medical and public health expense reached 3.4735 trillion won in 1995, 3.3862 trillion won in 1996, and 3.5369 trillion won in 1997.

However, in 1998, the peak of the foreign exchange crisis, it experienced a sudden drop to 2.9623 trillion won and remained at the two trillion won level for three years until it reached 3.1864 trillion won in 2002 and continued to remain in the three trillion won level.

Assistant Director Park Jin-ook of the National Income team at the Bank of Korea stated, “The reason seems to lie in the fact that people endure trivial illnesses amidst the continuation of economic stagnation and in uncertain situations of predicting the period of recovery.”

Joong-Hyun Park sanjuck@donga.com