Making the NHI system sustainable

By Yang Cheming 楊哲銘  / 

Wed, Jan 11, 2017 - Page 8

US president-elect Donald Trump is set to take office on Friday next week. Since his victory at the polls, a Trump craze has swept the world. As well as delivering a strong message about global political and economic transformation, Trump’s election win offers an opportunity to reflect on how to reform health insurance.

During Trump’s election campaign, one of his main platforms was to dismantle the US’ universal health insurance system, known as “Obamacare,” which is one of US President Barack Obama’s major political achievements and one of the policies that the Republican Party most strongly opposes.

The essence of Obamacare is that every citizen must buy health insurance and that those who do not buy it have to pay a fee when they file their taxes.

The Republican Party thinks that citizens should not be forced to buy health insurance, because this kind of compulsion restricts their freedom. Trump favors encouragement instead of force and penalties.

His policy proposals include giving people an incentive to buy health insurance by making all medical insurance premiums deductible from income tax. He also wants to institute health savings accounts similar to Singapore’s Medicare system, which works a bit like the individual account setup in Taiwan’s labor pension scheme.

In the Singaporean healthcare system, each person’s insurance contribution is a kind of saving that is supplemented by government subsidies and employer contributions. People can decide how to use the money in their account, as long as it is used to pay medical expenses.

When all the money in someone’s account has been spent, they have to pay for any further medical expenses themselves. The advantage of this kind of system is that patients keep an eye on how much money they have in their health savings account and are more likely to use it sparingly instead of wasting money by going from hospital to hospital to get treatment.

Trump has announced that he is to appoint Republican Representative Tom Price, a former orthopedic surgeon, as US secretary of health and human services.

Over the past few years, Price has repeatedly proposed a bill to abolish Obamacare. His bill, which is called the empowering patients first act, largely reflects Trump’s political views, namely using encouragement instead of force, and it aims to strengthen patients’ self-control and their sense of responsibility for their medical spending.

Taiwan’s National Health Insurance (NHI) system is a form of government insurance with mandatory participation. As such, it is different in nature from Obamacare, which is also mandatory, but stresses market mechanisms.

Nonetheless, Taiwanese should still take note of Trump’s proposed reforms when thinking about how to fix the NHI, because patients’ sense of responsibility for and control over their medical spending are precisely what is missing in this nation’s system.

The NHI has achieved great successes, but its all-you-can-eat provisions lead to waste and with all the funding coming from a central source there are problems about how it is allocated. Consequently, the second-generation NHI added a lot of scope for collecting self-payments through double billing.

It has also been getting harder to get NHI coverage for new medicines and technologies.

One example is last year’s controversy about whether new drugs for hepatitis C should be paid for by the NHI.

Just after the end of the Lunar New Year holiday, a governance platform formed by Taoyuan and Hsinchu cities and Hsinchu and Miaoli counties announced that it had obtained a change in the formula for allocations from the total NHI budget.

The group pointed out that while the regions have the nation’s fastest-growing populations, over the past four years there has been a shortfall of NT$17.2 billion (US$538 million) in NHI payments to hospitals in those areas — an annual average shortfall of NT$4.3 billion.

This shortfall has now been corrected.

The NHI system has for a long time been running a financial deficit. If the insured are not encouraged to use the system sparingly, in the long run the scheme might reach a situation where petty illnesses are covered, but serious ones are not, with people losing more than they gain.

Amendments to the system should take Trump’s ideas into consideration by adopting the concept of health savings accounts that to some extent allow people to plan how to use their own money.

These measures would help make the NHI sustainable.

Yang Cheming is a professor at Taipei Medical University’s School of Healthcare Administration.

Translated by Julian Clegg