Launching a National Health Insurance (NHI) scheme has been a great achievement in the history of Taiwan’s public health provision. However, since its inception in 1995, the NHI scheme has been plagued by one controversy after another. Over the past 15 years, incalculable amounts of time, energy and resources have been put into trying to resolve the NHI’s problems. Now would be a good time for Taiwanese to ponder the problem on a broader and deeper level.
It is important to consider that the NHI was established on top of Taiwan’s existing medical industry, and this industry operates according to an extremely commodified and marketized logic. When investing capital in the healthcare market, a company’s primary purpose is to earn profits from the provision of medical commodities. According to the general laws of motion of capital, healthcare providers, under the pressure of intense competition, are bound to use all means available to attract patients and to stimulate and create demand for healthcare. Only then can they derive the greatest possible profit from it, and continually accumulate and expand their capital.
The difference between medical commodities and other goods, such as shoes or computers, is that they have a direct bearing on the health, life and death of the consumer. For that reason, demand for healthcare is naturally more urgent than demand for other kinds of products, and it is a demand that can never be fully satisfied. This feature presents medical capital with a matchless demand that can keep on growing without limit. This has allowed Taiwan’s medical industry to enjoy a high rate of profit, and consequently the sector has attracted a great and unceasing inflow of capital.
As a result, Taiwan’s healthcare industry has expanded rapidly over the past several decades. This is illustrated by the total number of hospital beds, which grew from a little under 40,000 in 1980 to more than 150,000 in 2008. Over the same period, Taiwan’s total healthcare spending shot up from NT$50.7 billion (US$1.59 billion) to NT$788.5 billion. Of course somebody has to foot the bill, and so the proportion of income that a Taiwanese household spends on their health insurance has ballooned from 4.2 percent to 14.6 percent.
The main sources of funding for the NHI are contributions paid by the public (the insured), employers (group insurance units) and the government. Because participation in the NHI scheme is mandatory, total annual contributions add up to a very considerable amount, and it keeps growing year after year. The Bureau of National Health Insurance uses the enormous amount of contributions it collects each year to buy from the healthcare industry the medical commodities needed by the public. This huge sum of insurance premiums provides Taiwan’s highly commodified and marketized healthcare industry with steady demand, guaranteeing its profitability. No wonder, then, that capital keeps pouring into Taiwan’s healthcare market.
This can be seen from the growth in new investment in hospitals and clinics, from an annual average of NT$11 billion before the NHI was launched to NT$22.8 billion afterward. The numbers of personnel employed and beds provided by the healthcare industry have both grown rapidly, and the sector has profited greatly from the NHI. The NHI’s payments to hospitals and clinics have increased quickly, soaring from NT$228.4 billion in 1996 to NT$422.1 billion in 2008.
As a result, the NHI’s income from contributions has been nowhere near being able to keep up with the growth in spending. By the fourth year of its operation, the NHI’s income was already insufficient to cover its expenditure. This is what people in Taiwan call “the NHI loss,” and it is the main cause of controversy about the NHI scheme.
The Bureau of National Health Insurance’s strategy for resolving this NHI loss has been to tackle it from two directions — increasing the NHI’s income and containing spending of NHI money by hospitals and clinics. The former is mainly a matter of raising premium rates and adjusting payment brackets, which increases the public’s share of the payment burden. However this is not enough, so the government has used a large proportion of the health and welfare surcharge on tobacco products, which was originally intended for funding preventive public health or taking care of disadvantaged groups, to substitute for losses incurred by the NHI. Nevertheless, these methods of increasing the NHI’s income are clearly not enough to solve the crisis of the failure to balance NHI income and spending.
The other approach to resolving the NHI loss consists of various strategies to rein in the amount the NHI has to spend on payouts to hospitals and clinics, through such measures as per-case remuneration, the global budget system, restricting patient registrations to a reasonable number, more vigorous verification of declared medical expenditure and so on.
However, those who fully understand the logic of capital operations will also understand that commodified and marketized healthcare capital is bound to use all means at its disposal to respond to whatever changes are made in government policy. So, while these strategies for keeping the medical industry in check may be effective in the short term, in the long term they will be overcome by the natural tendency of capital to accumulate and expand. The current financial crisis of Taiwan’s NHI makes this quite clear.
Based on the above analysis, one may further foresee what will happen to the NHI in the future. The medical industry will continue to grow; healthcare capital will continue to accumulate; the Bureau of National Health’s spending on the NHI will continue to increase, and there will be continued arguments about who should bear the burden of NHI contributions. Unless Taiwan makes fundamental reforms to change the commodified and marketized nature of its healthcare industry, controversies over healthcare provision will come around again and again in future.
Chen Meei-shia is chair of the Taiwan Association for Promoting Public Health and a professor in the Department of Public Health at National Cheng Kung University.
TRANSLATED BY JULIAN CLEGG
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