This year has been a busy one for the medical care, pharmaceutical and public health sector — from the COVID-19 pandemic to the controversy over imports of pork containing ractopamine residues. The sensitive issue of raising National Health Insurance (NHI) premiums is also back in the spotlight.
Late last month, Minister of Health and Welfare Chen Shih-chung (陳時中) said that the NHI system would face a deficit of NT$67.6 billion (US$2.34 billion) by the end of this year, leaving only 1.88 months of reserve funds.
This is expected to shrink to 0.54 months by the end of next year — below the legally stipulated level — and thus, insurance premiums must be raised, he said, adding that the review process is to start next month.
The government should be praised for its determination to create a financially healthy NHI, but it should make sure that it does the right thing, and that it does it right. If premiums must be raised, the review process should be open and transparent, take the views of the medical and pharmaceutical sectors into consideration, and be clearly communicated to the public.
Even more important, it should muster the courage to use this as an opportunity to adjust the system. NHI reform must not be a knee-jerk reaction: If premiums are raised every time there is a financial shortfall — even if it helps ride out the immediate crisis — there would always be a next time.
Last year, NHI spending was NT$713.9 billion. The second-largest expenditure was on drugs — 27.2 percent, or NT$208.3 billion. Drug expenditure by other countries, such as the US, Japan, Germany and France, varies from 9 to 19 percent. The government needs to take a hard look at why it made up almost one-third of all expenses here.
What makes matters even worse is that total expenditure on medication and the proportion of overall spending have increased every year. In 2016, medication was 26 percent of overall expenditure, or NT$170.2 billion. In just four years, this increased by more than NT$30 billion. The problem is getting increasingly severe and can no longer be ignored.
Adjusting medication expenditure entails several key aspects. First, Article 61 of the National Health Insurance Act (全民健康保險法) should be implemented and drug expenses be itemized, and a careful financial estimate made of these expenses.
The issue of establishing a reasonable difference between what healthcare providers pay pharmaceutical firms for drugs and the amount they report to the National Health Insurance Bureau, and not including non-prescription drugs in the NHI, must also be addressed.
According to estimates by the Control Yuan, the bureau defines 15 percent as a reasonable price difference, but the actual difference obtained by hospitals and clinics can be as high as 27 to 42 percent. Based on this estimate, resolving this problem would mean cutting NHI expenses by NT$40.6 billion each year.
Japan, for example, defines 2 percent as a reasonable price difference, and in practice, it is between 6 and 9 percent. If Taiwan could achieve the same standard as Japan, the NHI could save between NT$61 billion and NT$67.6 billion every year, equal to the estimated shortfall this year.
Furthermore, implementing Article 51 of the NHI act according to which non-prescription drugs are not covered by the NHI, would save another NT$1.7 billion annually.
Raising premiums to increase NHI income is one way to look at the problem, but discussing the huge drug expenditure and working hard to cut it is more important.
Huang Jin-shun is president of the Federation of Taiwan Pharmacists Associations.
Translated by Perry Svensson
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