The most important task facing newly appointed Department of Health Minister Yaung Chih-liang (楊志良) will be finding a solution for the National Health Insurance (NHI) deficit. Since amending the law regarding NHI contributions is a complicated matter, he must first raise premiums from 4.45 percent of income to 5.13 percent.
Clearly there were problems in the way the system was devised right from the beginning. The government is now planning, with great fanfare, to set up a long-term care insurance scheme, but the NHI situation should serve as a warning that care insurance will flounder if it is launched without comprehensive financial planning.
The NHI contribution system has been criticized as unfair. The insured are divided into six categories and 14 subcategories, with different levels of government subsidy for the various categories.
Now, in its initial plans for the long-term care insurance program, the Council for Economic Planning and Development has proposed three possible schemes. The first is to share premium payments among employers, employees and the government in the same proportions as for the NHI. The second option is to reduce the share paid by employers from 60 percent to 40 percent and raise the government subsidy from 10 percent to 30 percent. The third possibility is to avoid different levels of subsidy for various professions and to make government contribution a uniform 40 percent while cutting the burden on employers to 30 percent.
This last proposal, in which the government would no longer provide different subsidies to different people based on their status or profession, is of course more equitable in the way it distributes resources, but it still cannot overcome the differences in contributions from people in different professions outlined in the NHI regulations. The rules include several standards for levying health insurance premiums according to regular salary, business dividends or by fixed sum, among others. Since contributions are not determined based on total income, the system is still inequitable.
Most importantly, where NHI contributions are calculated according to an individual’s salary, they are also calculated according to the number of dependents, so that households whose members have the same salary income but more dependents than others have to pay more contributions. This is contrary to the principle of spreading the burden of social insurance payments according to ability to pay. Therefore, in planning contribution rates for long-term care insurance, the authorities should pay heed to the failings of the existing NHI system’s financial structure. Distinctions between different professions should be discarded, taking the individual as the insurance unit. The revenue base must be expanded by basing contributions on total household income, including interest, profit, share dividends, property transactions and other income as well as individual salary.
The NHI deficit has reached NT$30 billion (US$910.37 million) and this negative precedent makes financial planning the foremost concern in developing the long-term care insurance program. For government departments responsible for economic development, the priority is how to reduce expenditure, which means cutting services. They may lose sight of the purpose of a long-term care insurance program, which is to resolve and satisfy people’s need for care in case of long-term illness or disability.
When Nobel Prize-winning economist Paul Krugman lectured in Taiwan in May, a government official asked his advice on how to fund health insurance. Krugman’s prescription: expand the revenue base.
Wang Yu-ling is secretary-general of the League of Welfare Organizations for the Disabled.
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