Sat, Jan 08, 2011 - Page 8 News List

Fairness key to health reform

By Yeh Ching-chuan 葉金川

The second-generation National Health Insurance (NHI) plan proposed by the Department of Health addresses more than just the problem of funding the NHI: It is concerned with the entire NHI system, including its structure, the reform of medical care, revenue resources, balancing revenues and expenditure and so on — seven major issues altogether — of which the financing of the system is just one. Nevertheless, the second-generation NHI plan has been bogged down over the single issue of funding.

In order to deal with the problem of inadequate funding sources, the planned second-generation NHI will change the basis for calculating premiums from salary to income. Additionally, the concept of household income is adopted by the plan as a means of resolving the problem of the unequal burden borne by the six different categories of insured people.

The idea of changing the premium calculation from salary to income seems to be acceptable to the general public and to political commentators. Everyone seems to agree with the idea of making people who have non-salary income pay a little more in NHI premiums. However, when it comes to the details of the implementation, there have been endless arguments.

All the unfair aspects of income tax have been brought up for discussion in relation to the second-generation NHI. The nation’s healthcare reform has somehow become a matter of tax reform. However, the Bureau of National Health Insurance (BNHI) is not the National Tax Administration, so how can it be expected to take on the onerous task of tax reform? The health insurance bureau can only collect premiums according to income as defined in the Income Tax Act (所得稅法) and on the basis of data provided by the tax administration.

Let’s not forget that the NHI is a social insurance scheme with the purpose of sharing the risks associated with illness; it is not a welfare program. In theory, everyone should pay health insurance premiums, but because this is a social insurance scheme, it incorporates the concept of paying according to one’s financial capacity.

The idea of basing the NHI plan on household income is grounded in an ideal, but it is certain to run up against questions of wealth distribution — and redistribution of wealth is a matter of tax reform. The health insurance bureau is not able to take on such an onerous responsibility and it is in no way obliged to do so.

If total household income is taken as the basis for calculating insurance premiums, people will get the impression that it is a tax. In a taxation system, those who have no income do not have to pay tax, even though many people who appear to have no income actually do have money coming in — it’s just that they get their income through the underground economy, so there is no record of it.

In an insurance system, on the other hand, the user pays. Even those who have no income have to pay insurance premiums. If the notion that those who have no income do not have to pay tax were applied to the NHI, the health insurance bureau would lose NT$1.5 trillion (US$51.5 billion) a year in premiums according to estimates of the amount of premiums paid by people with no income.

If this shortfall in contributions had to be made up for entirely by people with incomes, 75 percent of it would be borne by salary earners — and the fairness of this would be debatable. That is why the Department of Health plans to collect a minimum premium. However, the idea of a minimum -premium has been sullied by the notion of a “virtual income.” A system of contributions based on household incomes has to be accompanied by one of minimum premiums in order prevent salary earners from suffering negatively.

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