Taiwan Today

Taiwanese are not permitted to opt out of Taiwan's government-sponsored health insurance program. Fortunately, coverage is very affordable. About 99 percent of Taiwan's 23 million people carry a health insurance card with them that they can use to obtain medical services at the clinic or hospital of their choice. For people who have fallen off the grid and thus have no coverage, services are made available first and questions are asked later.

In 1995, the government launched the National Health Insurance (NHI) program to provide universal healthcare coverage. The program incorporated 13 existing public health insurance plans--including separate plans for civil servants, private enterprise employees, fishermen and farmers--that provided coverage for less than 60 percent of the population. Those who were uninsured, mainly the elderly, children, students and the unemployed, were brought into the new system. Despite some complaints and funding shortfalls, on balance the program is a successful example of universal health care.

In many private health insurance plans in other parts of the world, the insured can only visit certain doctors and certain hospitals. In Taiwan, anyone carrying an NHI card, which is embedded with an integrated circuit chip that stores the insured's medical and personal data, can walk into any clinic or hospital, pay a nominal user fee and obtain access to needed services. A copayment, to offset about 10 percent of the cost of treatment, is collected after the examination and any required treatment. Monthly salary serves as the basis for calculating insurance premiums. A total of 4.55 percent of the insured person's salary is paid into the program. This amount is shared by the insured person, the employer--if any--and the government. People who are unemployed pay 60 percent of the average premium, currently around NT$1,000 (US$30) per month, and the remainder is subsidized by the government.

The National Health Insurance Act makes the NHI program mandatory for all Taiwan citizens who have resided in the country for more than four months. Foreign residents of Taiwan with valid Alien Resident Certificates must also participate.

Those who have not been enrolled in the program by their employers, or unemployed people who have not enrolled themselves, can receive emergency medical services, but authorities follow up and may issue a fine and order payment of retroactive premiums for up to five years. This is handled on a case-by-case basis. For example, a family subsisting on income that is just above the poverty line may not have been able to afford premiums. Once authorities establish details of their situation, they may avoid the fine and retroactive payments, and their case may be referred to a social worker.

Comprehensive Coverage

The NHI system covers all major types of medical services. Ninety-two percent of Taiwan's more than 19,000 medical institutions have entered the NHI system, including hospitals and clinics in the Western medical tradition and those specializing in Chinese medicine, as well as dental clinics. In addition, thousands of community pharmacies, medical labs, nursing homes and local rehabilitation centers for psychiatric patients around the country provide services under the program.

"In addition to easy access to a great range of medical services that people can freely choose from, the NHI program offers equal opportunities for disadvantaged groups to receive quality healthcare," says Chu Tzer-ming, president of the Bureau of National Health Insurance (BNHI). Premiums are waived for people such as those who come from low-income households. The bureau also contracts with large hospitals to regularly dispatch doctors to offshore islands and to mountainous areas on buses equipped with medication and medical equipment to supplement local medical resources. Chu explains that these mobile clinics address previous criticism that residents of isolated places were paying for medical insurance, but had inadequate access to medical services. Chu says the program is worthwhile even though "it's a costly project, and sometimes we pay NT$10,000 per day to a doctor who examines only a handful of people, but life is priceless."

The NHI system has a built-in preventative care function. While medical checkups for younger people are not covered, basic checkups that include blood tests and urinalysis are covered, with the copayment waived, for people 40 years of age and older--once every three years for the middle-aged and once annually for those 65 and older. Moreover, the copayment is waived for children under five receiving dental care and pregnant women receiving prenatal care.

Nicole Huang, an associate professor in the Department of Public Health at National Yang Ming University (NYMU), says that the NHI system is not completely reliant on government funding. Indeed, only about 25 percent of the NHI's budget comes from national and local governments. Taiwan's NHI program is comparable to the national health insurance system in South Korea, but in Taiwan copayments are much lower. The government does take on a heavier load for some patients. Copayments are waived for cancer patients, hemophiliacs, people who require regular dialysis and those with psychiatric disorders. Combined, these patients account for around 2 percent of the insured population, but claim more than 15 percent of total healthcare expenditures. "Our research shows that poorer people do benefit more from the NHI program than richer people," Huang says. "Its cross-subsidization or wealth-redistribution effect among different social groups is evident."

In this respect, Taiwan's record is better than that of the United States, according to Lee Ming-been, president of Taiwan Medical Association (TMA) and a professor of psychiatry at National Taiwan University. A survey published last December by the Centers for Disease Control and Prevention in the United States shows that despite increased life expectancy and decreases in deaths from leading killers such as heart disease and cancer, nearly one in five US adults, or more than 40 million people, report they cannot afford and do not have adequate access to the healthcare services they need, including medical care, prescription medicines, mental healthcare and dental care. All these are covered under Taiwan's NHI program.

Patient Satisfaction

In annual surveys, the NHI system usually merits at least a 60 percent user satisfaction rate, which is higher than results of similar surveys in most other countries. The NHI program accounts for about 55 percent of health expenditures in Taiwan. In 2005, overall healthcare expenses accounted for 6 percent of GDP. This compares favorably with most developed countries (chart on page 23). In the United States, for example, despite vigorous cost-cutting by private health insurance companies, healthcare spending accounts for 15 percent of GDP. Correspondingly, per-capita annual health expenditures are much lower--less than US$1,000 in Taiwan compared with more than US$6,000 in the United States in 2005. "These figures show the relatively strong performance of our NHI program in the effective control of medical expenditures," Lee says.

The BNHI allocates budgets to four categories of medical institutions: For Western medicine, there are two categories, clinics and hospitals; clinics and hospitals specializing in Chinese medicine comprise another category and dental care is the fourth. In order to control medical spending increases, the BNHI capped the level of growth allowed for dental care in 1998. Thereafter, it extended the caps to the other categories. Since July 2002, this policy has been in effect throughout the NHI system, with budgets increasing by 4.5 percent per year on average. "The rate is usually a bit higher than the rate of economic growth," BNHI's Chu says. "I think it's a reasonable rate because, after all, the medical component should not consume too large a share of economic development."

Balancing Act

In addition to reining in NHI expenditures, which increased by more than 10 percent per year before the budget cap system went into effect, the BNHI also seeks to ensure balanced and optimal use of medical resources with its amended financial policy. After the budget is distributed among the four categories of institutions, which involves lengthy negotiations between the NHI and medical services providers, budgets are allocated to individual clinics and hospitals. Management at each provider determines how these funds are spent. In response to complaints among healthcare providers, Chu calls the caps and other financial controls a necessary evil.

"The BNHI pays only 80 cents for each dollar of medical service for the insured," TMA's Lee says. "As we shed tears, we have no choice but to accept the current situation. We're on the horns of a dilemma; either we uphold professional ethics or ignore patients' rights." Lee thinks the government should provide a subsidy to hospitals to make up for inadequate NHI financing.

Payments for drugs account for about a quarter of the NHI program's current NT$470 billion (US$14.5 billion) budget. The BNHI has managed to control spending on drugs through market price surveys to establish reference prices. To give medical institutions an incentive to negotiate lower prices for drugs with pharmaceutical suppliers, the bureau pays hospitals the reference price for a medication rather than the actual transaction price. Chu says profits the hospitals make in this way are plowed into other areas of operations, especially those that are under-funded by the budget cap policy. This is how hospitals balance their budgets, he says, shrugging off recurring accusations that the profits made by hospitals on medication procurement are not properly accounted for.

Rising Costs

An aging society and constantly improving medical technologies are pushing up medical expenditures in many countries, and Taiwan is no exception. Chu says that since March last year, the NHI system began showing a deficit averaging NT$1 billion (US$30 million) per month. One way of making up the deficit would be to increase NHI premiums, a measure that was last taken in 2002, when the rate was raised from 4.25 to 4.55 percent. Even if the BNHI were considering another such move, it would not have been advisable this past year, since raising NHI premiums would have been politically dangerous in view of looming legislative and presidential elections. A hike may be imminent once next month's presidential election is over, but Chu notes there are other ways of increasing money collected from the insured. Before raising the premium again, his bureau plans to change how premiums are calculated to include capital gains income in the formula.

Another way to better finance the NHI program would be to tweak the copayment system. Copayments were introduced in 1999 and increased in 2005. While hiking copayments somewhat shifts the burden of healthcare costs to patients, the main savings come from reduced hospital visits; the cost-conscious will have second thoughts about seeing a doctor for a minor cough or headache once the price becomes prohibitive. Furthermore, the BNHI sets copayments higher for teaching hospitals and other larger hospitals (for non-referral visits) than for smaller hospitals and clinics. This policy is meant to free bigger hospitals from some of the burdens of running clinics so they can concentrate on treatment of major illnesses and on medical research.

Chu stresses that allowing a government-run system to collapse is simply not an option. A short-term deficit is tolerable, he says, on the condition that subtle adjustments are continuously made. Nicole Huang of NYMU says, "The NHI is still a system in flux, struggling along with Taiwan's changing culture and social conditions." Indeed, the need for adjustments to a system that has only been in place for a dozen years seems inevitable.

At any rate, the NHI program has already transformed Taiwan's healthcare environment. So one could say the converse of Huang's observation also holds: The NHI system is helping to change Taiwan's culture and society--for the better.

Write to Pat Gao at pat@mail.gio.gov.tw