MACROECONOMIC EFFECTS OF EXPANSION OF UNIVERSAL HEALTH CARE: THE CASE OF SOUTH KOREA

Using a general equilibrium model, we analyze the implications of Universal Health Care (UHC) expansion in Korea. We find that when UHC is expanded, UHC premium rate for workers is raised to finance the increased budget, which distorts the households' incentive to work and leads to a decrease in aggregate labor. Moreover, the reduced volatility of disposable income weakens the households' savings motive, thereby resulting in a decrease in aggregate capital. While the decreases in production factors lead to a significant drop in aggregate output, the binary voting simulation shows that the expansion of UHC is approved with near unanimous support.