Mon, Jun 14, 2010 page8

• Healthcare system lets many down

  • By Chiang Sheng 江盛
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  Ever since universal health insurance coverage was introduced in March 1993, it has been the subject of considerable pride for people in Taiwan. Unfortunately, the system has always been beset with financial woes.

  The Bureau of National Health Insurance (BNHI) has become the medical industry’s sole high volume provider and client, collecting insurance fees and planning and financing all medical services provided by medical institutions nationwide. This has allowed the government to reduce the financial burden and risk of running state hospitals. In the past 15 years, health insurance has had a massive influence on how medical care is provided in Taiwan, the most conspicuous of which has been the trend for hospitals to expand.

  The number of non-profit proprietary hospitals has shot up as a result not only of health insurance spending and hospital accreditation, but also because of cost savings resulting from rent and tax breaks. This has seen a corresponding reduction in the amount of smaller-scale private hospitals, which are now gradually withdrawing from the market.

  In terms of the number of hospital beds, just over 10 large proprietary hospitals, the majority — 24 percent being state-run — enjoy about 40 percent market share. Of these state-run institutions, the largest share, 10 percent, belong to those run by the Veterans Affairs Commission, followed by the Department of Health General Hospitals at 8 percent, the military hospitals at 4 percent and National Taiwan University Hospital at 2 percent.

  The reason why state-run hospitals have the largest share are both historical and political in nature. The nation inherited, for example, the public hospitals’ real estate left behind by the Japanese, and the Chinese Nationalist Party (KMT) built hospitals to accommodate military and administrative staff when it came over from China after the Chinese Civil War.

  With a 6 percent market share, the largest of the non-profit proprietaries are the Chang Gung Memorial hospitals. Many years ago, their founder, Wang Yung-ching (王永慶), proposed to the government that if it gave the money spent on annual subsidies for the National Taiwan University Hospital and the Veterans’ General Hospital to Chang Gung, the public could get free medical care. This offer laid the foundation for close to 34 years of growth for Chang Gung, and in the last few years annual health insurance has provided as much as NT$30 billion (US$927 million).

  Of the other non-profit hospitals, Mackay Memorial, Tzuchi and Show Chwan Memorial, each have about 2 percent of the market. Cathay General, Changhua Christian and Chimei have about 1 percent each.

  The private hospitals were relatively quick off the mark in dealing with complicated changes in the health insurance expenditure system. They instigated, for example, a global budget system, defined what was “a reasonable load for outpatient services,” improved verification of medical cost declarations and set up the diagnostic related groups system to determine how much the hospital was owed for services rendered. Their added-value service gave them the competitive edge needed to survive in the market: They were in fact more effective than the state hospitals that received government subsidies.

  There has never been a patient referral system in place and people are now used to choosing whichever hospital they prefer. Because the BNHI is the sole customer, there is little price competition between hospitals. Even with items that individual hospitals do have some control over, such as the fee charged for making appointments, there is little difference from one hospital to another. This means hospitals tend to compete with the equipment and software they use, the personnel they are able to attract and the high-tech medical procedures they use. This has the advantage of increasing demand for medical treatments, which means they are able to charge more.

  Guaranteed health insurance fees also constitute an economic inducement for hospitals to expand, open up annexes off site or take advantage of economies of scale by entering into strategic alliances with other hospitals. Expansion means more clout in the market. In addition, hospitals compete with each other by offering treatments not provided for under the health insurance system, such as skin care, plastic surgery, weight loss, artificial insemination, post-natal care and well-equipped health check centers for the well-heeled.

  In fact, studies have shown that the government only pays for 25 percent of medical care fees as part of the national health system, compared to 74 percent in the UK and 69 percent in Canada. In other words, health insurance in Taiwan has actually encouraged privatization in the medical care industry and the principle of survival of the fittest has also come into play, leading to significant reductions in the government’s financial burden.

  Of course, the provision of health insurance doesn’t come for free and politics sometimes gets in the way. The Taipei City Government, for example, has held back from paying what it owes, and given the black cloud looming over the legislature of late over the so-called “second generation” health insurance plans, it seems the system falls somewhat short of providing universal coverage. It is certainly not the social welfare system that so many people had hoped for or might wish to celebrate. There is still some way to go.

  Since President Ma Ying-jeou (馬英九) came into office, we have seen a string of measures to cut taxes and Ma is now contemplating increasing the amount of borrowing the government at all levels can take on. This is debt that will be passed on to our children and grandchildren. Politicians don’t seem to have considered the possibility of financing health insurance with income tax takings or tax reform, they would prefer to have a bloated tax collection agency, the BNHI. The people who are going to suffer from this are single people and hard-­working nine-to-fivers.

  Chiang Sheng is an attending physician in the Department of Obstetrics and Gynecology at Mackay Memorial Hospital.

  TRANSLATED BY PAUL COOPER
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