Facing up to long-term care woes

By Wang Pin 王品  / 

Fri, Feb 08, 2013 - Page 8

In the face of annually decreasing government revenue, the Ministry of Finance has always done everything it can to protect its sources of tax revenue. However, not long ago, the ministry could finally hold on no longer and admitted for the first time that apart from the current itemized deductions on insurance premiums worth NT$24,000, it is also considering listing expenditure on individually purchased private long-term care (LTC) insurance as an item eligible for deductions from consolidated income tax.

This proposal is very worrying. Apart from the problems the public keeps criticizing the government for — such as decreases in government revenue, the increasing gap between the rich and poor and the way the government keeps shirking its responsibility to introduce public LTC insurance — there are three other problems here worthy of closer exploration.

The first problem is that Taiwan has a welfare system that utilizes measures such as the National Health Insurance (NHI) and the Catastrophic Illness Card to minimize the financial cost people may incur as a result of medical treatment and hospitalization. Thus, most forms of private medical insurance have two characteristics that aim to lower the financial burdens of policyholders. The first one is making up the gap between that which is covered by the NHI and that which patients must pay for by themselves, with the second being offering policyholders reimbursements for any medical expenses that exceed their maximum level of coverage.

However, by doing all they can to promote private LTC insurance before the government implements its public LTC insurance means that private insurance policyholders cannot be sure whether their financial burdens are really being minimized because it is not clear how much of a gap there will be between their current private insurance and public insurance once it is introduced. Also, private LTC insurance lacks options similar to the abovementioned reimbursement scheme.

If we factor in trends such as inflation and decreasing salary levels, will fixed benefit schemes really be able to guarantee buyers of private insurance that they will be able to afford the services they need in the future? Or will people only be getting half of the care that they are paying for?

The second problem is that the abovementioned expenditure on private medical insurance premiums are already tax deductible as a form of life insurance with an upper limit of NT$24,000. Also, after deducting what insurance companies pay, the total amount of real healthcare expenditure can be listed as itemized deductions from income tax to which no upper limit is imposed.

In addition, the Council of Grand Justices’ Constitutional Interpretation No. 701 last year emphasized that the medical expenses referred to in this regard include medical expenses incurred from LTC in any legal hospital or healthcare center and that this is not limited to hospitals that have contracts with the NHI.

Insurance companies have recently been lobbying the government to list private LTC insurance as a tax-deductible item. The logic behind this is that LTC insurance is not a part of life insurance and its costs are different from medical expenses. If this idea is accepted, it will highlight the need for Taiwan to offer public LTC insurance. However, it will not prove that there is a need to increase the amount eligible for income tax deductions.

The third problem stems from the fact that services may not be available as needs arise even if one does purchase insurance. A list of services provided by the Life Insurance Association of the Republic of China mentions three types of care services and their prices. The first is home healthcare, which includes care given by foreign and Taiwanese nursing aides. The second type is community-based services, such as daycare centers, and the third is services offered by special care facilities. What the association does not tell consumers is where they can receive these services after they buy insurance. This is an issue related to the popularization or accessibility of these services, affordability and quality.

The truth of the matter is this: First, last year there were fewer than 10,000 Taiwanese nursing aides or homecare attendants providing services to fewer than 40,000 people. The average age of these aides was almost 50. Second, as of last year, there were fewer than 100 daycare centers nationwide for people with mild disabilities or dementia, offering services to fewer than 2,000 people. Eight cities and counties do not even have one daycare center. Third, as of last year there were a total of 1,057 special care facilities nationwide, but fewer than 50,000 people used these services, giving these facilities a utilization rate of only slightly more than 70 percent.

In terms of quality, for senior citizens’ welfare institutions inspected and assessed by the government between 2009 and 2011, we see that in Taipei, only 64 percent of 121 facilities scored an “A” rating, while only 52 percent of Kaohsiung City’s 128 facilities achieved this grade. Out of the 38 districts of the new Greater Kaohsiung municipality, a total of 14 did not even have one special care facility for elderly people. With Taiwan’s two oldest and richest special municipalities in such a bad state, what can be expected for other cities and counties?

Foreign aides are the largest providers of LTC services. Last year, there were more than 200,000 such aides, of whom 150,000 came from Indonesia. However, Indonesia has said it will stop exporting workers by 2017. So, if Taiwan does not establish LTC services soon and train more care workers, fails to carefully plan public LTC insurance and only provides tax deductions for such care, how can we expect to minimize the risks LTC will face in the future?

Wang Pin is an assistant professor of social work at National Taipei University.

Translated by Drew Cameron