Taiwan’s National Healthcare Insurance: Reform or Bust?

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Taiwan boasts one of the most sophisticated and comprehensive public health systems in Asia. However, mounting costs and the pressures of a rapidly ageing population mean that the National Health Insurance (NHI) system may run out of money within the next two years without significant reform.

 

NHI expenditures have exceeded revenues for the past two years, with a reserve fund currently keeping the system afloat

The NHI offers a comprehensive and affordable set of services, including outpatient visits, hospitalization, Western and Chinese medication, and dental treatment to all Taiwanese citizens. The system is largely popular among the island’s population, with an approval rating of around 87 percent according to the National Health Insurance Administration (NHIA).

However, NHI expenditures have exceeded revenues for the past two years, with a reserve fund currently keeping the system afloat. Some experts are predicting that this situation, if left untouched, will reach a head when the fund drains dry within the next two years. At that juncture, the Taiwanese government will face the politically unpopular prospect of raising healthcare premiums and may need to completely overhaul the system to ensure its sustainability.

 

Problems: Doing Too Much

Jane Rickards, writing for the American Chamber of Commerce in Taipei’s Taiwan Business TOPICS site, notes two significant cost-generating problems within Taiwanese healthcare. The first is doctors’ workloads, Rickards noting that, “In Taiwan, a clinic is allowed to accept 100 patients for each session, whereas doctors in Western countries may see just five or ten patients in the same time period. According to the NHI Annual Report for 2017, the average number of outpatient visits per person per year reached 15.1.” As doctors are compensated per patient treated and access to doctors is extremely easy, Taiwanese patients are encouraged to visit the doctor for even trivial ailments rather than relying on self-treatment. This wastes a significant amount of resources.

The second issue is that “There’s an incentive for the physician to provide more medicine and tests than necessary,” states Lee Yue-chune, a professor with National Yang Ming University’s Institute of Health and Welfare Policy and a former deputy minister of health and welfare. Several Taiwanese hospitals are performing potentially unnecessary tests on patients to take advantage of profitable reimbursements. NHIA Director General Lee Po-chang adds that when a patient comes in with a mild ailment, “they may be told ‘You have to do a check as to whether it is lung cancer or tuberculosis and we have to do a CT scan.’” These kinds of expensive tests are not covered by co-payments.

 

Solutions: More Holistic, More Digital

In terms of finding solutions to Taiwanese healthcare’s problem of overspending, alternative options in the way that medical providers are compensated have been introduced but – as of yet – not been broadly adopted. The “pay for performance” approach to disease management, for example, promotes a holistic approach in which the quality and effectiveness – rather than cost alone – of a treatment are used as the basis for reimbursement. This program covers conditions ranging from tuberculosis to schizophrenia.

However, the NHIA’s main strategy for controlling inefficiencies has been through greater uptake of digital solutions. The digitalization of medical reports creates databases that can identify wastage and guide the direction of government policies by offering insights into population health, region by region.

 

Change on the Way?

With Taiwan set to become a ‘super-aged’ society – where more than one in five of the population is 65 or older – by 2026, medical costs are poised to soar. With NHI’s finances in jeopardy, Taiwan may have to roll out wide-ranging third-generation reforms, but as the NHIA’s Lee notes, “so far there is no formal discussion of a 3G NHI system.”

Lee does admit that premiums, raised just twice since NHI’s inception in 1995, will most likely be raised by 2020, adding that, “If we cannot control this condition, a premium rise is the next step.” Lee also downplayed the likelihood of any cuts to services, while raising the possibility that patients may need to pay out of pocket for more drugs, either in whole or in part. NHI expenditures in 2017 already accounted for only 53 percent of Taiwan’s total healthcare spending of TWD 1,127 billion (USD 36 billion), showing that Taiwanese still pay for much of their medical care out of pocket or through private health insurance.

However, with a presidential election scheduled for January 2020, no significant changes are being predicted in the near future. Beyond that point, the NHI may have to carry out serious reform if one of Asia’s premier healthcare systems is to survive.

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