[Opinion] Where Is the Birth Support Grant Being Absorbed?

In a contribution to IT Daily, Lim Hanjung, deputy director of the National Human Resources Management Institute, raised the issue of where birth support grants are being absorbed. The article said the purpose of childbearing and childcare support policies is to share the cost socially and ease families' financial burden, and noted that their goal is to provide continued support for childbirth and childcare. It also said policy performance should be assessed based on the degree to which it reduces the burden on families with newborns, rather than the size of the payout.

The article then cited the government's announcement that it will reform the system starting in 2027. The measures to be restructured are the First Meeting Voucher, Parental Allowance, and Child Allowance, and the new names after the overhaul will be I-Meets Support Grant and Child Basic Allowance. The reform also includes a plan to expand the scale of support.

Deputy Director Lim noted that under the existing system, applicants had to separately search for and apply to several support programs operated by different entities. He said the simplification of complex systems and improved ease of receiving benefits, which were cited as the purpose of the latest reform, could reduce that burden. He positively assessed those changes and said they are expected to improve policy accessibility.

There is concern that the policy's purpose may not be achieved through simplification and larger benefits alone. Accordingly, the need to review the effectiveness of birth support grants has been raised, and because the funding comes from taxpayers, the actual beneficiaries of the grants and their effects have emerged as key questions.

A case that illustrates these questions is postpartum care center costs. According to one media report, the average 2-week fee at private postpartum care centers rose from KRW 2.76 million in 2020 to KRW 3.84 million in 2025, a 39.1% increase, while inflation over the same period was 16.6%. The average fee for postpartum care centers in Seoul in 2025 was KRW 5.1 million. Since the First Meeting Voucher is spent in substantial amounts at postpartum care centers, the relationship between birth support grants and postpartum care center prices cannot be ignored, making it necessary to examine both actual beneficiaries and effects.

That said, it cannot be concluded that the subsidy caused the rise in postpartum care center prices. Postpartum care centers provide 24-hour care for newborns and are also labor-intensive services. Possible factors behind fee increases include rising labor costs, rent, and facility maintenance costs. If costs have risen, there may be a rational basis for higher fees, and price increases alone cannot be used to infer excessive profits by operators.

An explanation that costs have risen does not end the policy review; it is necessary to examine the actual scale of cost increases, whether fee hikes are proportionate to higher costs and service improvements, the degree to which government support reduces mothers' out-of-pocket burden, and data on price changes after the subsidy was introduced. When the government provides grants to families with newborns, service prices may rise as well, and as a result the burden felt by mothers may decrease only marginally. Such data should be used to distinguish cost increases from market changes and to determine whether the policy achieved its intended effect.

The core question in this review is whether the benefits of public finances are actually returning to the intended policy recipients. If it is confirmed that subsidies are being absorbed by price increases, then it is necessary to review whether it is best to continue injecting the same budget. This is not meant to criticize providers across the board, nor is it an argument for reducing subsidies.

The support needs of each family with a newborn are different. For some households, medical expenses and diaper and formula costs are urgent needs; for others, postpartum care helpers and caregiving services are needed. In that sense, the advantage of universal support is clear in that everyone can easily access assistance, but whether giving the same amount to every household is an efficient use of resources requires separate review. Accordingly, while preserving the benefits of universal support, a design is needed that ensures sufficient assistance reaches families that require additional support.

Welfare policy is not completed by cash payments alone. In policy reviews, it is necessary to examine where the grants are used, changes in actual household burdens, price and supply changes in related services, and whether there are households that still cannot access the services they need even after receiving support. Such evaluation helps strengthen policies whose effectiveness has been confirmed, supplement those with low effectiveness, and address policies that produced unexpected side effects.

Assuming there is no disagreement on the goals of encouraging childbirth and easing childcare burdens, there is also a call for agreement on the standards used to evaluate policy. Expanding the size of support alone is insufficient to demonstrate results; what is needed is evidence of which problems public spending actually solved. It is also emphasized that not only higher spending but also appropriate spending matters.

The state's responsibility for using tax money does not end with the payment itself, and taxpayers' money remains public funds even at the moment a subsidy is paid out. Accordingly, it is necessary to verify whether the support reached where it was intended to go and whether it actually eased the burdens that needed relief. The article says the scope of policy responsibility includes confirming effects after payment as well.

Source: IT DAILY · Han Jeong-seon
Original: https://www.itdaily.kr/news/articleView.html?idxno=242241

References

• https://www.itdaily.kr/news/articleView.html?idxno=242241