Taiwan Today

In February this year, a press conference in Taipei marked the publication of A Health Check of the National Health Insurance, a report based on a survey by the Control Yuan, the government’s highest watchdog authority. Control Yuan member Huang Huang-hsiung (黃煌雄) led a painstaking investigation involving visits to more than 200 medical institutions nationwide and talks with numerous medical experts, hospital operators, nongovernmental representatives and government officials over a period of one-and-a-half years. The report is arguably the most comprehensive study ever made of the National Health Insurance (NHI) program, the government’s single-payer system launched in 1995 to provide universal health care for people in Taiwan.

Huang’s survey was released in January 2011 at around the same time amendments to the NHI Act—commonly referred to as the second-generation NHI reform—were passed in the Legislative Yuan. According to the report, the name “second-generation” implies passing the NHI system forward “from one generation to another” in a sustainable way. The NHI reforms, which include an expanded premium base among other things, are scheduled to take effect in 2013.

Indeed, the NHI program has enjoyed a relatively high user satisfaction rate. It is an integral part of the social security net, says Day Guey-ing (戴桂英), director-general of the Bureau of National Health Insurance (BNHI), which manages the NHI program under the Cabinet-level Department of Health (DOH). The health scheme has gained at least 60 percent public approval and often more than 80 percent in recent years, according to the bureau’s statistics.

More than 99 percent of Taiwan’s 23.23 million people are covered by the NHI system. Taiwanese citizens living overseas and prisoners are the notable exceptions, with the latter to be covered after the revised NHI law is enacted. Foreigners with valid residence certificates who have stayed in Taiwan for more than four months (six months when new rules take effect) or have regular employment must also participate.

The revisions also lengthen the waiting time required before Taiwanese nationals who have lived or still live abroad receive coverage under the scheme. In the past, any Taiwanese national who had made at least one premium payment at any time could use NHI services immediately upon their return to Taiwan. Such easy access to NHI services for those who have paid little into the scheme is widely seen as unfairly consuming NHI resources. Under the new rules, Taiwanese returning from an extended stay abroad must have made at least one payment within the previous two years in order to use the system.

A card with an embedded integrated circuit chip storing personal and medical data is issued to all insurees, who may use it to gain access to all major types of medical services at clinics or hospitals participating in the NHI scheme. Such facilities provide the overwhelming majority of medical services in Taiwan.

Making It Affordable

The NHI is funded by premiums paid by insurees, government subsidies and out-of-pocket charges to patients. Out-of-pocket expenses are usually quite low. A visit to a local clinic, for example, costs the patient NT$200 (US$6.70) on average, an amount that is made up of a NT$150 (US$5) “user fee” and a NT$50 (US$1.60) patient “copayment.” There is no charge to the patient for prescribed medicines if they cost less than NT$100 (US$3.30) per visit, which is common. Most drugs costing more than that amount are greatly subsidized by the NHI. The copayments for an outpatient consultation cost least at clinics, but increase sequentially as one moves to community hospitals, regional hospitals and eventually to big teaching hospitals, which currently require a copayment of around NT$360 (US$12) for a non-referred visit, or NT$210 (US$7) for a referred consultation, on top of a user fee. The staggered pricing system is meant to discourage people from frequenting large hospitals for minor illnesses, as larger facilities are intended to focus more on treatment of major diseases and medical research. Copayments for inpatient care are usually 5 to 10 percent of the cost of the room, doctor’s consultations and nursing. They are waived for those who receive medical care in remote regions, women giving birth and patients with chronic illnesses such as cancer, psychiatric disorders or kidney diseases that require regular dialysis. Disadvantaged citizens are also exempt from copayments, although all patients must pay for additional tests or certain forms of treatment. Such extras, however, are usually partially subsidized by the NHI.

NHI premium payments are generally considered affordable. Premiums are mandatory and calculated at 5.17 percent of the insuree’s monthly salary, a fee shared by the insured person, the employer—if any—and the government. An employee who earns NT$50,000 (US$1,670) per month, for example, pays less than NT$800 (US$27) as his or her share of the monthly premium. Insurees are also responsible for paying an equal amount per child or unemployed family member. The government covers the premiums of disadvantaged citizens including those from low-income households. “It’s here that the NHI system works like a proper social welfare program, although as an insurance program, it already operates in the spirit of people helping each other in need,” Day says.

The BNHI director-general notes that new amendments to the scheme include a requirement that the government provide a minimum of 36 percent of the funding for the total NHI budget. The amount excludes other sources of financing such as public welfare lotteries and health taxes imposed on cigarettes. The figure is higher than that provided by the state in recent years—in 2009 the amount was 33.8 percent—and is part of an ongoing effort by the government to address the problems of income inequality.

Health Safety Net

As the government raised the poverty line in July 2011, it now spends more to cover the NHI premiums for low-income households. “As part of the mechanism for the redistribution of wealth, the NHI program should better benefit poor people and should be funded more by the government,” says Liu Mei-chun (劉梅君), a professor in the Institute for Labour Research at National Chengchi University (NCCU) in Taipei. Liu is also the chairwoman of the Taiwan Healthcare Reform Foundation, a nongovernmental organization established in 2001 to help protect patients’ medical rights, monitor the quality of medical treatment and offer advice to patients in medical disputes.

As of the end of 2010, around 92 percent of Taiwan’s more than 21,000 medical institutions were part of the NHI system. These included all of the approximately 500 Western medical hospitals, as well as 9,276 Western medical clinics, 3,009 traditional Chinese medicine (TCM) clinics and 6,173 dental clinics. In addition, more than 4,700 community pharmacies and some 900 other medical institutions including medical labs, nursing homes and psychiatric rehabilitation centers across the country provide services under the NHI program.

Notably, while the Western medical sector accounted for nearly 85 percent of NHI expenditures in 2010, the inclusion of TCM treatments in the NHI system has made Taiwan a forerunner in incorporating traditional medicine into universal health care coverage. Day says that a new field of NHI payments is for TCM services combined with Western treatment such as those offered at the around 80 Western medical facilities with TCM departments. The treatment of cerebrovascular diseases, for example, is one area that includes such combined therapy, she says.

Since the NHI program started 17 years ago, its annual spending has increased from a little less than NT$200 billion (US$6.7 billion) to today’s some NT$450 billion (US$15 billion) and now accounts for slightly more than half of the total health expenditures in Taiwan. To be sure, the NHI program has shaped Taiwan’s health care environment, and by extension its culture and society, because medical aid is a very basic need of everyday life, says Chiang Tung-liang (江東亮), a professor at National Taiwan University’s Institute of Health Policy and Management. Chiang took part in designing the original NHI system. Before 1995, nearly half of Taiwan’s population—mainly children and the elderly—were not covered by any of the 13 existing public health insurance plans for jobholders. Those schemes were incorporated into the national scheme. Today, “only 15 percent of Taiwanese people don’t go to see a doctor in a year,” Chiang says. “The NHI program opens the door to various means of health protection available to people at all levels of society, who are viewed as a family.”

In his preface to A Health Check of the National Health Insurance, Yen Yun (閻雲), the president of Taipei Medical University, which co-published the report, praises the NHI system as worthy of international recognition. Yen notes that ABC News of the United States dubbed Taiwan a “health utopia” in 2003, largely due to the NHI’s cheap premiums, low administration costs and the world’s highest coverage rate. “The NHI program is our country’s most significant public health policy in recent years,” Yen notes. “It taps Taiwan’s first-class medical expertise and the cooperation of medical professionals.”

The university president points to Taiwan’s relatively low per-capita annual health expenditure—US$2,208 in 2009 calculated by purchasing power parity in comparison with the United States’ US$7,960, Canada’s US$4,363 and Germany’s US$4,218, for example. Moreover, in 2009 overall health care expenses accounted for 6.9 percent of GDP in Taiwan, a level far below that of most developed countries including 17.4 percent, 11.4 percent and 11.6 percent respectively for the above-mentioned countries. Such figures indicate the considerable effectiveness of the NHI program in controlling medical expenditures thanks to its system for managing budget growth. In 1998, the BNHI capped the spending growth level allowed for the dental sector, followed by caps for TCM, Western clinics and eventually Western hospitals in 2002. “Some other countries cap budgets from hospital to hospital, while our caps aim at [those] four major categories,” Day says. “The overall medical expense growth rate is determined annually by the Executive Yuan’s Council for Economic Planning and Development and it’s set at roughly GDP growth plus 2 percent.”

The need to rein in NHI expenditures reflects the system’s limited financial resources. In addition to Taiwan’s aging society, which brings with it the prospect of greater health problems per person, medical science and technology upgrades are increasing medical expenditures. “The growth of premiums hasn’t been able to keep up with the progress of medical science,” Day says, referring to the high cost of some of the treatments available to NHI beneficiaries, such as targeted therapies for cancer patients. In 1998, just three years after the NHI scheme began, the program started operating at a deficit, which had reached NT$58 billion (US$1.9 billion) by the end of 2009.

To make up for the accumulating debt, the government raised NHI premiums in 2002 from 4.25 to 4.55 percent and then again from 4.55 to 5.17 percent in April 2010. The move saw the deficit decrease to less than NT$40 billion (US$1.3 billion) by the end of 2010 and the system’s finances were projected to be balanced by February this year, according to Day.

The basic premium rate is expected to be lowered a bit when the other reforms take effect in July this year. To offset the revenue loss, a 2-percent “supplementary premium” will be levied on non-payroll income such as bonuses exceeding four months’ salary and professional practice earnings as well as gains from stocks, interest and rent. It is estimated that the supplementary premiums will generate around NT$20 billion (US$667 million) a year, Day says. The change is designed to shore up the system’s finances, while instituting a “fairer” payment scheme by collecting more money from those who can better afford it.

Chiang points out that the new amendments chiefly aim at the insurance program’s revenue stream. While this is a major issue for the NHI program, and one that needs to be addressed, further reform efforts must look at how the money is spent to ensure that resources are allocated effectively, the professor says. For instance, caring for the 3.5 percent of insured persons with chronic illnesses, or around 820,000 patients, accounts for nearly 30 percent of NHI expenditures. While this can be seen as an illustration of the NHI’s help to those in need, it also raises questions about the efficient use of medical resources.

Encouraging Better Care

Liu Mei-chun points to the management of kidney disease as an example. In 2009, Taiwan had the world’s fourth highest increase of dialysis patients per capita, or 347 more patients for every 1 million people per year, although the number had dropped from the global No. 1 position Taiwan had held for the previous eight years. Liu says one problem is that the BNHI does not account for the various levels of effectiveness of dialysis treatments among hospitals. Some hospitals, for example, are reluctant to upgrade their equipment, or else reuse consumable dialysis items like plastic tubing, a practice that can result in poorer treatment outcomes and a greater risk of infection, the NCCU professor says. The BNHI reimburses all hospitals at the same rate, however, and with an amount that covers the cost of new items for each treatment. She suggests that the DOH’s medical affairs unit should work more actively to encourage all hospitals to invest in the latest medical equipment and use only new medical supplies, which would lead to better care for patients.

Liu says that the present NHI reform responds more to immediate rather than overall structural problems, such as the current environment that favors the development of bigger hospitals. Institutions operated by the Chang Gung Medical Foundation, which comprise eight major hospitals and three care facilities, for instance, often make up one-tenth of total NHI spending. “Medical institutions should develop on all levels—local clinics, regional hospitals and teaching medical centers all have a role to play,” Liu says. “If smaller hospitals or clinics in a community [close down], then it will cost more for local people to seek medical services.”

The NCCU professor also points out the problem of younger doctors turning away from the four major disciplines of internal medicine, surgery, obstetrics and pediatrics in favor of “easier” practices in dermatology, ophthalmology or otolaryngology. The BNHI divides payments evenly among the medical branches despite the fact that practitioners in the various fields face very different workloads and professional risks, Liu says.

Reform is a long road, however, and never leads to a “perfect” state in any institution, Chiang says. Still, improvements can always be made to an existing system. The 2011 report by the Control Yuan’s Huang Huang-hsiung called for returning doctors to the four mainstream medical disciplines, safeguarding community hospitals in remote regions and reducing the inefficient use of resources. To improve resource allocation, the second-generation NHI program imposes heavier penalties for fraudulent claims from hospitals and offers counseling to patients who make “too many” visits to hospitals. More than 30,000 people recorded more than 100 medical consultations last year.

“The core of the NHI system lies in its communitarian aspect instead of fierce competition between different medical sectors,” Chiang says. “In the future we must envision a return to the value of social solidarity that is inherent in the NHI.”

Write to Pat Gao at kotsijin@gmail.com