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Background: Universal health coverage (UHC) ensures affordability of a variety of essential health services for the general population. Although UHC could mitigate the harmful effects of coronavirus disease 2019 (COVID-19) on patients and their socioeconomic position, the debate on UHC's scope and ability to improve health outcomes is ongoing. This study aimed to identify the impact of UHC policy withdrawal on the health outcomes of South Korea's severely ill COVID-19 patients. Methods: We used a propensity score matching (PSM) and difference-in-differences combined model. This study's subjects were 44,552 hospitalized COVID-19 patients contributing towards health insurance claims data, COVID-19 notifications and vaccination data extracted from the National Health Information Database and the Korea Disease Control and Prevention Agency from 1 December 2020 to 30 April 2022. After PSM, 2460 patients were included. This study's exposures were severity of illness and UHC policy change. The primary outcome was the case fatality rate (CFR) for COVID-19, which was defined as death within 30 days of a COVID-19 diagnosis. There were four secondary outcomes, including time interval between diagnosis and hospitalization (days), length of stay (days), total medical expenses (USD) and the time interval between diagnosis and death (days). Results: After the UHC policy's withdrawal, the severely ill patients' CFR increased to 284 per 1000 patients [95% confidence interval (CI) 229.1–338.4], hospitalization days decreased to 9.61 days (95% CI −11.20 to −8.03) and total medical expenses decreased to 5702.73 USD (95% CI −7128.41 to −4202.01) compared with those who were not severely ill. Conclusions: During the pandemic, UHC may have saved the lives of severely ill COVID-19 patients; therefore, expanding services and financial coverage could be a crucial strategy during public health crises. [ABSTRACT FROM AUTHOR]