Objections must be raised to the legislature’s review of the Cabinet’s second-generation national health insurance (NHI) draft during next month’s extraordinary session. What purpose will this review serve beyond solving the Bureau of National Health Insurance’s (BNHI) immediate financial difficulties? What is worse, the amendment is likely to undermine the whole point of the system, which is to provide for national health and safety.
Bureau president Chu Tzer-ming (朱澤民) said last month that its expenditure is growing at a faster rate than people’s incomes, which are in turn rising faster than salaries. To reduce the gap between the growth in expenditure and salaries, it has been proposed that the premium be calculated based on total income, instead of salary alone. However, since there will still be a gap, Chu warned that the public should be prepared for possible premium hikes, albeit not in the immediate future. Clearly, this is just a temporary fix.
There are at least two reasons why the above reform is destined to fail. First, the strategic financial approach taken makes it inherently self-restricting. Second, there has been no sincere commitment to necessary social and economic structural reforms.
The main goals of the second-generation NHI reforms include fairness, administrative simplicity and balanced finances. Any assertion, however, that the new premiums are fairer because they are based on the insured party’s total income, incorporating both salary and non-salary income, is wishful thinking. Even the people proposing this amendment admit that high-income earners derive the majority of their wealth from sources other than their salaries. However, stock market, real estate deals and overseas investments are currently tax exempt. The Department of Health has said this is a tax reform issue, not a health insurance issue.
Non-salary income refers to any money gained by low salary earners above and beyond their regular salary, including non-regular earnings such as overtime pay, year-end and holiday bonuses, as well as employee performance and full attendance bonuses. It does not refer to non-wage capital gains from sources such as stocks, bonds, mutual funds and real estate.
Under Taiwan’s unfair tax system, regular salaried workers often come off worse. Whereas salaries are automatically recorded for tax purposes, it is easier for people with a non-salaried income not to claim their earnings. There are now a large number of people with annual incomes of more than NT$5 million (US$156,000) who do not pay tax, just as national tax revenues are falling.
Unfortunately, changes to the BNHI’s expenditure and the gap between salaries and income are simply the result of modern development. An aging population and more expensive technologies push up the BNHI’s expenditure, while finance capitalism fosters growing socioeconomic inequalities.
Today, the gap between non-salary income, especially capital gains, and money earned from labor is growing. Employment uncertainty serves as a disincentive for salary earners to have more children, just as high-income earners demand health care involving high-tech equipment and expensive treatments, leading to rocketing BHNI expenditure.
Finally, stagnating or even negative salary growth in recent years is the result of the break-up of the traditional career path from school to employment — established in the post-war period. There is no longer any guarantee that conventional choices offer a way out of poverty. As a consequence, people are disillusioned and disorientated, having lost confidence in the social system.
In March, the US Congress finally passed the healthcare reform bill proposed by US President Barack Obama, but only by a slim margin. One of the reasons it passed is because healthcare should be a social policy that protects against unforeseen events in one’s life. It is no longer an issue merely for the poor and disadvantaged.
The second-generation NHI reform ignores the uncertainties surrounding income and employment that are part of modern life. In the face of dire national finances resulting from falling salary-derived tax revenue and a shrinking labor force, the government has chosen to tweak the way insurance premiums are calculated.
If we want the NHI system to survive, we may have to accept that individuals are going to have to pay more for the privilege. We may also have to look into taking out private health insurance policies. We cannot let the system fail because of a reluctance to take responsibility for it. The consequences would a return to poverty and poor standards of health.
Carl Chang is a professor in the Department of Social Welfare at National Chung Cheng University.
TRANSLATED BY EDDY CHANG
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