International Health Care Systems

Taiwan’s National Health Insurance System

In a recent edition of Health Affairs, health economist Tsung-Mei Cheng interviews Taiwan’s Health Minister Ching-Chuan Yeh, M.D. They discuss Taiwan’s adoption of a national health insurance (NHI) system in 1995.  Below are some highlights from the interview.

  • Health spending as a share of GDP was 4.79% in 1993 (prior to NHI) and 6.1% in 2007 (after NHI).
  • Administrative costs are 1.5% of total NHI spending.
  • Taiwanese patients pay very low premiums and copayments.  Over 98% of Taiwanese pay their premiums on time.
  • The government sets a uniform national fee schedule.  “Doctors and hospitals must achieve very high productivity to survive.”
  • There is complete freedom of choice of providers.  Competition between providers is based on quality, not cost.
  • “Taiwan only has private supplemental indemnity health insurance; it covers specific diseases such as cancer or disasters like injuries from traffic accidents.  It is a cash benefit, and the money is used to help pay for copayments, hire special nurses and buy nutritional foods—not for genuine inpatient medical services which are covered by the NHI.”
  • Expenditures have outpaced revenues by 2% since 1998.  To make up the difference, copayments and coninsurance rates have increased and the government instituted a tobacco tax.  There has been only one premium increase (4.25% to 4.55% of wages in 2002).
  • The government pays 100% of premiums for the poorest 1% of households.  The near-poor (the next 2%) can receive interest free loans to pay for NHI.
  • Physician payment: Currently, there is a fee-for-service system under a system of global budgets.  Bundled payment (i.e., DRG-style payments) is available only for 53 surgical procedures.
  • Patients use an IC Card (Smart Card) to access care.  All providers submit claims electronically.  Currently, however, there is no integrated form of electronic medical records, although most hospitals/providers have their own systems.
  • Screening rates for breast cancer, oral cancer, and colon cancer are low.
  • State-specific 5-year cancer survival rates are similar to those in OECD countries.
  • Taiwan has 4.5 nurses/1000 population compared to 9.6 nurses/1000 in wealthy OECD countries.
  • Like Japan and South Korea, Taiwanese patients have many physician visits of short duration.  The average Taiwanese has 12.4 visits/year, although many of these visits can last less than 5 minutes.
  • Taiwan lags behind the U.S. in: the pace of adoption of technology (new drugs reach the market 2 years faster in the U.S. than in Taiwan), the quality of the medical education (a top tier Taiwanese medical school is of the same quality as an average American medical school), and R&D.

Source: Tsung-Mei Cheng (2009) “Lessons From Taiwan’s Universal National Health Insurance: A Conversation With Taiwan’s Health Minister Ching-Chuan YehHealth Affairs, 28(4): 1035-1044.


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