# The bill of aging: fiscal projections of demographic changes on South Korea’s national health insurance, 2023–2042

## TL;DR

This study projects how aging and low birth rates in South Korea will strain the national health insurance system, showing deficits starting in 2025 and urging policy reforms to ensure sustainability.

## Contribution

The novel contribution is a hybrid forecasting framework to jointly model NHI revenues and expenditures, quantifying the fiscal impact of demographic changes over 20 years.

## Key findings

- NHI expenditures are projected to exceed revenues starting in 2025, with a significant deficit by 2042.
- Demographic changes are expected to increase fiscal burdens by 39.4 trillion KRW in 2032 and 152.5 trillion KRW in 2042.
- Accumulated reserves are projected to be depleted by 2030, highlighting the urgent need for policy reforms.

## Abstract

Demographic shifts driven by declining birth rates and rising life expectancies pose significant challenges to healthcare systems globally, particularly in terms of financial sustainability. We projected fiscal trajectories for Korean National Health Insurance (NHI) by jointly forecasting revenues and expenditures for 2023–2042 and by quantifying the incremental fiscal effects of demographic change.

The study employed a hybrid forecasting framework combining component-based projections with time-series econometric models. NHI revenues were projected by categorizing them into contributions, government subsidies, and other revenue. Expenditures were projected into medical benefits, non-medical benefits, and administrative costs. The impact of demographic changes was assessed by comparing the baseline scenario with a hypothetical scenario where the population structure remained constant at 2023 levels.

Projections indicate that NHI expenditures will surpass revenues starting in 2025, with revenues reaching 314.2 trillion KRW and expenditures 437.5 trillion KRW by 2042. Accumulated reserves are expected to be depleted by 2030, with annual deficits growing from 21.8 trillion KRW in 2032 to 123.3 trillion KRW in 2042. Compared to a scenario where population structure remains at 2023 levels, demographic shifts are projected to decrease revenues by 8.5 trillion KRW (4.5%) and increase expenditures by 30.8 trillion KRW (17.8%) in 2032, and by 42.7 trillion KRW (12.0%) and 109.7 trillion KRW (33.5%) respectively by 2042. Consequently, the annual fiscal burden attributable to demographic changes is estimated at 39.4 trillion KRW in 2032 (19.3% of total expenditures) and 152.5 trillion KRW in 2042 (34.8% of total expenditures).

This study highlights the urgent need for policy reforms to address the “bill of aging” and ensure the long-term sustainability of South Korea’s NHI system. Policy responses must address this imbalance through integrated health expenditures monitoring, system efficiency improvements, sustainable financing including contribution rate reform and revenue diversification, community-based care infrastructure for aging populations, and maintained health equity. These findings offer valuable guidance for policymakers worldwide confronting the financial challenges of aging populations, emphasizing the need for comprehensive policy interventions to maintain financially sustainable healthcare systems for future generations.

The online version contains supplementary material available at 10.1186/s13561-025-00690-z.