Wed, Dec 08, 2010 - Page 8 News List

EDITORIAL: Insurance reform requires resolve

An overhaul of a health insurance system is a major undertaking in any country. This is because national health insurance systems involve the welfare of every citizen — present and future. As all eyes focus on the legislative review of the hotly debated amendments to the National Health Insurance Act (全民健保法), Department of Health Minister Yaung Chih-liang (楊志良) is trying to get the second-generation health insurance through, despite the obstacles that remain.

The reforms need to address several major issues, such as the fee base, a new insurance premium system, varying levels of payment and the black hole caused by the price of medication. However, the Cabinet-approved draft only addresses the expansion of the fee base and proposes that single people and DINKs (double income, no kids) pay more. In addition, the plan makes no mention of how to reduce the waste of resources. No wonder Democratic Progressive Party legislators have objected to it. What’s more, the draft hasn’t even garnered the full support of Chinese Nationalist Party (KMT) lawmakers.

Even if the draft passes, the reform efforts would be a failure because several crucial issues would remain unresolved.

The first issue is fairness. The premium would be based on household income, not population, in order to expand the fee base. Everyone with an income is liable, but the new system would only take into account income from salaries, interest and dividends, but not from capital gains, property and stock speculation, pensions or overseas income. In what way is this fair, reasonable or just?

The second issue is whether these reforms even make sense. Premiums would no longer be calculated on the number of dependents in a household, and would instead be based on total household income. The correct way to calculate the health insurance premium is simply related to how much will be paid on settling claims, and has nothing to do with one’s income, job, marital status or the number of kids.

The two major criteria that affect how much is to be paid are the rate of usage of medical treatment and inflation. The latter is beyond the control of health insurance policy or legislators and depends on the rate of economic growth and commodity prices. The usage rate, however, which is strongly related to the rate of premiums, can be controlled by the cost of treatment provided. The Bureau of National Health Insurance has allowed the waste of medical resources to spiral.

The third issue is distributing the burden. The provision of medical treatment has direct implications for patients’ health, recovery prospects and prognosis, and people should be able to pay however much they want. Not all prescription drugs cost the same. The basic principle is that patients who use branded prescription drugs pay a little more, while those using generic drugs pay less. However, this is not the main point: The department has not addressed the main issue. While it is fine to give patients the option of paying more for different levels of medical treatment, the same thing should not apply to prescription drugs. This is clearly a retrogressive compromise that flies in the face of expert opinion.

Finally, there is the financial black hole. Expenditures on prescription drugs takes up a quarter of total annual costs, with more than NT$120 billion (US$4 billion) spent on drugs every year. This is hospitals profiting through the abuse of premiums. If this problem isn’t addressed, the waste will continue.

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