Tue, Nov 26, 2002 - Page 8 News List

Insurance a burden on employed

By Chao Yang-Ching 趙揚清

Criticism has once again fallen upon the financial black hole that is the National Health Insurance system. Actually, all measures proposed, which include second-generation reforms of the system; the raising of premiums to reflect costs and controlling waste by raising the proportion of the fee paid at the point of delivery by outpatients, share a common desire to make the insurance system viable for the long term. The problem of these policy discussions is that the proper role of the National Health Insurance Bureau and the costs related to its upkeep have been ignored.

First, the NHIB is still a state-owned enterprise. Is it appropriate for its employees to be remunerated as though they were part of the financial and insurance industries?

Under Article 4 of the Budget Law (預算法), state-owned enterprises have "operating funds" reserved from annual income for use in operational cycles. In fact, however, the bureau is responsible for implementing the insurance plan. The bureau is not a general fund for carrying out government affairs. Nor is it under pressure to turn a profit as operating funds do. It is best classified as a revolving fund. It has drawn criticism because its employee remuneration system has been set in accordance with insurance industry pay standards.

This situation has its roots in the time when the Civil Servant's Insurance program was subordinate to the Central Trust of China -- before the National Health Insurance program was established. But, given the nature of the bureau's operations, it should be classified differently from insurance industry businesses. It bears none of the pressure associated with operating profits. Where did performance bonuses worth 4.6 months' salary come from?

The 2003 budget proposal reveals that aggregate salary expenses over the entire year at the bureau amount to over NT$2 billion. There are 2,980 emplo-yees, giving each an average annual salary of NT$709,000. This amounts to an average monthly salary of nearly NT$60,000. More-over, after consecutive years of a budget deficits, they still receive year-end bonuses of 4.6 months' pay. In addition, because the bureau is classified as a business, its employees are entitled by law to collect employee benefits equal to between 0.05 percent and 0.15 percent of total revenue.

On the basis of an annual aggregate operating income of NT$349.3 billion (of which income from insurance premiums constitutes 97.56 percent), even if benefits are collected only at the minimum level of 0.05 percent, they will still total nearly NT$175 million. Although these bonuses and benefits are a legally approved part of the budget, they are paid for by taxes and fees collected from taxpayers. That they should be listed as "expenses" at all is open to debate.

Second, the fact that drug prices are not publicized has long been criticized. Since medical expenses are paid by the bureau and not by patients, medical personnel may adopt unnecessary measures and persuade patients to accept treatments that will enable them to claim reimbursement from the bureau at higher levels than would otherwise be the case. They may even replace some drugs with cheaper substitutes and pocket the profit themselves.

By bureau estimates, inappropriate profits of this kind exceeds NT$10 billion a year. Some scholars even estimate the figure at over NT$20 billion and consider it the primary reason for inappropriate expenses at in the insurance program.

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