Judith Liu

The National Health Insurance (NHI) is regarded as the most favored and successful social insurance program in Taiwan. It is a compulsory health insurance for all citizens and provides universal insurance coverage including almost all medical services.

Before the NHI was instituted in March 1995, there were three healthcare programs in Taiwan: Labor Insurance, Government Employee Insurance, and Farmers Insurance. However, 41% of the population, mostly children, the unemployed, and the elderly, did not have health insurance and faced financial barriers to access to health care. Lack of access created inequality between socioeconomic classes. In the 1980s, the government started to investigate how other developed countries organized their healthcare systems. At the end of the study, they adopted a single-payer system similar to the Canadian system. To keep healthcare spending under control, the NHI adopted the Global Budget Payment System.

With less than twenty-years of experience, the NHI has already achieved multiple successful outcomes. First, it reaches nearly 100% of the population and receives a high satisfaction rate. In 1995 when the NHI just started, the insured population increased sharply from 59% to 92%. By the end of 2004, the insured reached 99% of the total population.

This result is not merely because the NHI is a compulsory program, but because it provides financial protection to low-income households. According to the statistics, the public satisfaction rate has held steady at about 80% in the most recent five years. Second, the health expenditure per GDP in Taiwan has stably constituted around 6% of the GDP, which is much lower than that of the U.S. and many other OECD countries. Third, many health indicators show substantial improvement in the quality of medical care. For example, the infant mortality rate has decreased from 6.5% to 3.7% between 1995 and 2012, and the life expectancy has continually grown from below 75 years to above 79 years during the same period.

However, the NHI also faces some challenges and is in need of reform. One of the biggest problems is the shortage of doctors and nurses, and this can be viewed from two sides. On the patient side, the quality of care is declining due to shorter visits to doctors, using cheaper treatment and so forth. On the medical worker side, the doctors and nurses are overworked and underpaid. However, the medical workers have low bargaining power over their working time and wages since the total budget is controlled by the government. In addition, there exists a bias toward certain specialties and medical students are discouraged from choosing high-risk specialties. These reasons may contribute to the worsening of both the quality of care and the work environment for physicians. Another problem of the NHI is its fiscal difficulties. With population aging and an increase in chronic diseases, the overall health expenditures are increasing. In the meanwhile, the revenue base has remained constant because of the structure of the NHI payment system and the stagnation of regular salaries. Hence, the system isn’t paying for itself.

Under the NHI, the Taiwanese have more equal access to health care, efficient management of health spending, and notable improvements in quality of care. While the health insurance market usually suffers from inequality and market failures due to adverse selection, the NHI in Taiwan may be a good example of the single-payer system and a possible cure for ailing healthcare. However, no healthcare system is best at everything. Both the benefits and drawbacks of the NHI need to be thoroughly considered, and the efficacy of the healthcare system could be different due to a host of variables in other countries.