Minister of Health Yaung Chih-liang (楊志良) had to threaten to resign to show that he was serious, but now President Ma Ying-jeou (馬英九) has finally lent his support to raising National Health Insurance (NHI) premiums and implementing a second-generation health insurance system. On Thursday, the Cabinet also approved a change to NHI regulations that could be a shot in the arm for Taiwan’s health insurance system, which has earned praise in Taiwan and abroad.
The question now is whether implementing the second generation of the NHI will guarantee a sound system. Given the current situation, there is little reason to be optimistic.
The current plan focuses on improving the NHI’s finances by raising premiums and by calculating premiums based on annual household income instead of registered insurance subscriptions — roughly equivalent to an employee’s monthly salary.
Although the Cabinet stresses that premiums will not rise for 60 percent of those insured, premiums will rise for many to pay for the huge and constantly increasing NHI deficit.
Most people are unlikely to complain if increasing their insurance premiums by a sum equivalent to the cost of a lunchbox will help maintain a sustainable health insurance system. If they think implementing the second-generation NHI system will resolve the deficit problem, however, they are naive.
The second-generation system aims to raise premiums and increase revenues to solve the most urgent problem, but to this day, the Department of Health (DOH) hasn’t offered any concrete suggestions on how to cut expenditures. In only 13 years, from 1996 to last year, the NHI’s medical expenditures more than doubled from NT$224.8 billion (US$7.13 billion) to NT$470 billion, and it is expected to keep rising between 3 percent and 5 percent annually.
If the government doesn’t fix all the leaks, these increases will cause the deficit to skyrocket in just a few years.
The problem with health insurance expenditures is an open secret. Hospitals and clinics report an exaggerated number of patients, and doctors exaggerate their NHI expenses by extending treatments and making unnecessary examinations and operations. In addition, hospitals negotiate prices with drug companies annually to cut costs, but then report inflated prices to the Bureau of National Health Insurance. The bureau reimburses the hospitals, which pocket the difference between actual and reported prices.
These irregularities are common knowledge, so why doesn’t the second-generation NHI address these practices? Because this is a matter of shared interests. Many of the DOH’s public health policies require the cooperation of hospitals, so as long as hospitals are not too out of line, the DOH will not interfere too much with the practical aspects of their business.
Doctors and pharmaceutical companies are two of the most privileged pressure groups, and many political contributions in Taiwan’s elections come from the latter group. As soon as the debate turns toward health insurance reform, vested interests in the pharmaceutical industry that stand to lose pressure the Cabinet and legislators. Reform measures aimed at eliminating irregularities quickly fade away and debate about health insurance reform is forever doomed to address only one half of the problem — the revenue side.
As the government implements the second generation of the NHI, it should not ask the public for money while closing its eyes to the pharmaceutical industry’s behavior and allowing irregularities to continue. The government must make concrete reforms to cut expenditures — if it continues to direct reforms at only half the problem, the second-generation NHI system is doomed to failure.
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