Debate has raged for almost a decade over the design of Taiwan’s second-generation National Health Insurance System. The seemingly endless rounds of consultations and negotiations pushed the patience of private and public sector participants to the limit, but their efforts paid handsome dividends Jan. 4 after amendments to the NHI Act passed muster in the Legislature.
Despite some lingering concerns, experts believe the 2G NHI is a fairer, more efficient and financially healthier system.
Launched in 1995, NHI is compulsory social insurance covering more than 99 percent of the nation’s 23 million population. Premium payments are shared by the government, the insured and employers.
Under the amended act, the NHI premium rate for individuals is set at 4.91 percent of their monthly salaries, down from 5.17 percent. A new supplementary premium system will also be in place, charging 2 percent on additional earnings over NT$2,000 (US$69), including interest, professional practice income, rent, stock dividends and bonuses exceeding the equivalent of four months’ wages.
According to former Minister of Health Yaung Chih-liang, the altered premium system will enhance NHI’s finances via the expanded premium base. This approach will also reinforce the ability-to-pay principle and relieve the financial burden on salaried employees, who usually receive little additional income.
“Around 83 percent of the population will pay less,” Yaung said. “Only 17 percent will have increased premiums resulting from extra sources of income.”
“The new plan will generate NT$508.6 billion in health insurance premiums per year, balancing the financial shortfall of the current system in five years,” said Tai Kuei-ying, director-general of the Bureau of National Health Insurance. She added that supplementary payments are estimated to bring in NT$20.8 billion annually.
The system is now in the red for over NT$60 billion, according to the BNHI.
Fu Li-yeh, director of National Yang-Ming University’s Institute of Health and Welfare Policy, described the supplementary premiums as a positive change, though not a perfect solution.
The extra premiums will help realize the core objective of the system’s reform—that those who earn more also pay more, thus making the system fairer from a social standpoint, said Fu, a minister without portfolio from 2004 to 2006.
Responsible for the 2G plan originally submitted to the Legislature, Fu pointed out that as a result of economic development since NHI was implemented, people have more and more supplementary income beyond salaries and wages. “This is especially true for wealthier people.”
She also expressed approval of the integration of the NHI Supervisory Committee and Medical Expenditure Negotiation Committee to form the new NHI Supervisory Commission, a move designed to bring revenues and expenditures more in line.
This body, composed of representatives of the insured, employers, medical service providers, experts in related fields and health care authorities, will be tasked with reviewing issues such as premium rates, the scope of benefits and total yearly payments to contracted medical facilities, the BNHI said.
This change will improve NHI’s financial management, Fu said.
The amended act also stipulates that the commission’s meeting records be made available to the public, and that public opinion be consulted before the government decides on major policies.
“This is an encouraging initiative that will keep information transparent and expand citizen participation,” said Chiang Tung-liang, dean of National Taiwan University’s College of Public Health.
Another improvement with regard to information transparency is the requirement for the public release of NHI financial reports, medical quality ratings of contracted hospitals and major violations by medical facilities.
To ensure quality health care for the entire population, the 2G NHI protects the rights of the disadvantaged via continuous coverage and reduced co-payments, and incorporates convicts into the system.
Meanwhile, the government will cover at least 36 percent of annual premiums, up from 34 percent. “The 2-percent increase is expected to require roughly NT$30 billion in government contributions during the first year of implementing the new system,” the BNHI said.
To prevent abuse of the system, the penalty for fraudulent insurance claims and medical expenses will be increased to up to 20 times the amount illegally received. The current fine is set at twice the illicit gain.
These revisions have received a thumbs up from the Taiwan Healthcare Reform Foundation, an independent, nongovernmental organization promoting the country’s health care quality and patient rights. “We believe they are conducive to a sustainable system, and will unveil a new era for NHI,” the foundation said.
Moreover, the new program will adopt diversified methods of benefit payment to promote illness prevention and the efficient use of resources. These include equal payments for similar diseases or medical treatments, and a capitation fee system.
“Implementation of capitation payment will push physicians to become more proactive in helping people prevent illness, rather than just passively providing medical care to patients,” Fu commented.
Another major amendment to the act requires citizens living overseas for long periods to have been enrolled in NHI over the last two years or to have maintained legal household registration in Taiwan for at least six months before they can enjoy medical care covered by the insurance. In the past, immediate access was granted to those with previous NHI registration or four months of household registration.
“The stricter regulations aim to enhance the system’s fairness,” the BNHI said.
Despite these improvements, the amended act still faces some criticisms, mostly over the new premium base and the unchanged separation of the insured into six categories by occupation, providing the basis for differential premium subsidies from the government.
“The supplementary premiums, which depend mostly on capital gains, seem a less stable source of NHI revenue,” Chiang said. “The amount will go up when the economy is heated and plummet during economic recessions.”
Chu Tzer-ming, former president and chief executive officer of the BNHI, said the six-category structure is a flawed, unfair policy that should be abandoned. “People with the same total income are charged different premiums because they are placed under different categories according to their jobs and vocational status.”
In addition, the policy is inefficient, Fu said. As the categories are based on occupations, when people change careers they may have to drop the insurance and then re-register under a different classification.
“This procedure is unnecessary since these people remain in the same insurance program,” she said.
Fu added that resolving these problems was the major reason for one of the initial 2G NHI proposals—calculating an individual’s insurance fee based on total household income. But this tax-like scheme was roundly rejected in the Legislature due to questions about the rates for the unemployed and those with no income.
Although the outcome is regrettable, Fu said she is still optimistic about the revised act.
“If the supplementary premium system works well, it will encourage future implementation of premium calculations based on household income,” she said.
Cheng Shou-hsia, former director-general of the BNHI, said although the amended bill is not 100-percent perfect, one thing for sure is that the 2G NHI is better than its predecessor. “This should be acknowledged.”
Despite its problems, Taiwan’s NHI is highly regarded by international experts, Fu said. “I look forward to ongoing improvements to our system.” (THN)
Write to Elaine Hou at elainehou@mail.gio.gov.tw