Tue, Jan 11, 2005 - Page 8 News List

Allow the market to set health premiums

By Kuo Cheng-deng郭正典

Lin Yuan Group and Shin Kong Group have achieved enormous success in Taiwan's insurance sector.

Conversely, the government-funded national health insurance program has been operating listlessly on the verge of bankruptcy.

The program is very likely to collapse completely unless premiums are increased drastically.

If private firms such as Lin Yuan and Shin Kong can achieve such great profits, why is the National Health Insurance program, which is supported by the government and mandated by legislation, suffering from financial difficulties?

It is a common-sense rule of insurance that if a person keeps having accidents, their insurance premiums will increase, or the company will simply refuse to insure them.

If the government prohibits an insurer from raising its premiums or refusing to issue coverage, the insurer is bound to go bankrupt.

This is what has happened in Taiwan.

Expenditures for the national health insurance program have increased as a consequence of the aging population, the introduction of modern medical technology and a greater number of seriously ill patients.

The government, together with the general public, has obstructed premium adjustments on the grounds that low-income households will be unable to pay higher premiums, and that people simply cannot bear the financial burden of such an increase.

The national health insurance program's incessant financial crises come from the fact that it is being run as if it were a social-welfare program.

No wonder that the program is doomed to failure in the way that most welfare programs have been over the years.

Two years ago, Lee Ming-liang (李明亮), former director-general of the Department of Health (DOH), at the risk of his career, enforced a policy that aimed to raise health insurance premiums and fees for hospital outpatient treatment.

He met resistance from opposition parties and a number of civil groups. The policy, however, at least helped the national insurance program to carry on for another two years.

The financial circumstances of the program are now, once again, approaching crisis. The government is again planning to hike premiums.

No matter how hard we work to make the national insurance program perform well, all the remedies we take will prove futile if it continues to be conducted as a welfare program.

The root of this program's financial woes is that we have paid too much attention to the welfare aspect of it.

However affluent a society is, there are still people who cannot afford to pay their premiums and other related expenses.

It is part of social welfare for a government to take care of the financially disadvantaged.

However, this country's health insurance program will never be able to shake off its financial difficulties if we insist on taking the financially disadvantaged hostage to force the program to ignore market mechanisms and assume total financial liability.

If we want to see the healthcare system prevail in the long-term, we should separate the health insurance program from social welfare and let the market decide premiums.

If we fail to do this, we should at least make sure that health insurance does not lean too obviously toward social welfare.

Kuo Cheng-deng is an Associate Professor at the School of Medicine of National Yang Ming University.

TRANSLATED BY DANIEL CHENG

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