The uproar over health insurance reimbursement regulations has recently produced intense social unrest. Much of this is due to the wishy-washyness of the government, which has switched from the Excellence Program -- under which medical institutes must treat outpatients and inpatient at a 45:55 reimbursement ratio in order to receive extra funding -- to a citizen panel, which is hoped to achieve better control of medical resources and upgrade health services.
The recent adjustment of the base rate for national health insurance premiums closely affects people's cash flow, and demonstrates the limitations of legislative power. During this chaotic period, thorough discussions on how to increase revenue and maintain our universal health insurance system are needed.
Government-funded universal healthcare systems can be classified into two broad types. One is the Beveridge system (also called compulsory social insurance) seen in countries such as the UK and in northern Europe. This type of healthcare provision is funded through central taxation. To be precise, it's paid for by a government's general funds without setting up an additional levy category.
The other type is the Bismarckian system (also called social insurance) widely used in Germany, other European countries and Japan. The funding source for this type of system is kept separate from the government's budget. This system levies on individuals a premium, also called a payroll tax because most countries levy the tax based on income.
The base rate for health insurance premiums is primarily derived from salary, which isn't as fair as taking it from the base rate of income tax. In fact, income tax is a more recent form of taxation.
Take Germany, the originator of social insurance, as an example. Its health insurance system was put into effect in 1883, but its income tax was not included as national tax until after 1920. How come the former health insurance payment -- a more primitive form of salary tax -- is still used by Germany?
The real reason could be that Germany's initial health insurance system primarily targeted blue-collar workers (similar to Taiwan's labor insurance plan), and principally provided benefits in cash to compensate their income losses due to illnesses and ensure the survival of their families. As to in-kind medical benefits, they only served as a supplement to speed up laborers' recovery processes and help them return to their jobs in a timely fashion.
Also, the less sophisticated medical science of the past meant that medical costs did not account for the largest amount of health insurance expenditure. Only when cash benefits and income levels are linked can a person maintain their original standard of living.
Paying premiums based on job income, and receiving benefits in accord with these premiums meets the public's psychological expectations; this is also the essence of the "insurance" in the social insurance system.
Today cash benefits in Germany's health insurance system are not as important as in the past, and have been replaced by pension insurance plans and insurance coverage for the elderly. The five basic categories of social insurance coverage (healthcare, occupational health, pension, unemployment and long-term care) interconnect and coordinate with one another and share the same rate base of taxation. This facilitates a more efficient administration, and weaves a better, more comprehensive network of social protection.
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