The Taiwan Public Health Association held its annual forum on National Health Insurance (NHI) policies, during which Lien Hsien-ming, Vice Dean of National Chengchi University’s International College of Innovation, pointed out that despite Taiwan’s strict controls on expenditure and slowing spending growth, roughly 35 percent of NHI expenditure is shouldered by out-of-pocket payments, which is relatively high and exceeds figures found in neighboring markets such as South Korea. In addition, the NHI since its establishment has only implemented two premium increases in the past 25 years, which is too infrequent. As the population continues to age amid prolonged delays to premium adjustments, the pace of premium increases required to maintain the system’s solvency will only become quicker, making future adjustments more difficult for the public to accept. Vice Dean Lien recommended regular adjustments on an annual or biannual basis.
According to the data from Lien Hsien-ming's keynote speech, the NHI has only increased premiums twice since its inception. The first time was when former Department of Health (the preceding organization to the Ministry of Health and Welfare) Minister Lee Ming-liang raised the premiums from 4.25 percent to 4.55 percent in 2002, with the second time being an increase from 4.55 percent to 5.17 percent in 2010 under former Department of Health Minister Yaung Chih-liang. Since then, NHI premiums have only been seen reductions, with the figure being lowered to 4.91 percent in 2013 and to 4.69 percent in in 2016. As a result, NHI finances have ended in the red for the past four consecutive years, with the shortfall expected to swell to NT$73.6 billion at the end of 2020, NT$41.7 billion higher compared to the previous year.
On why it is so difficult to increase NHI premiums, Vice Dean Lien Hsien-ming said that it is because such moves face tremendous political backlash, and often at the cost of the jobs of top health officials. Vice Dean Lien added that each premium adjust lowers the NHI’s satisfaction rate. As a result, the NHI is compelled to seek alternative funding sources from taxes on cigarettes and supplementary premiums. Meanwhile, the NHI has grown more dependent on the safety reserves it has built up in the past. As Taiwan’s population continue to age, the required premium adjustments will only become larger and more frequent. “The longer premium adjustments are delayed, the required increases will only become larger and therefore more difficult for the public to accept,” Vice Dean Lien said.
Vice Dean Lien suggested that NHI premiums should be adjusted on an annual basis to uphold the NHI mandate to maintain the system’s solvency as well as maintaining a legally required safety reserve equivalent to one month’s expenditures. If annual premium rate adjustments can be implemented, premiums will only need to be raised by 2.93 percent to 4.83 percent in 2021, before needing to be raised again by 14.17 percent to 5.51 percent in 2022. Following that, much milder adjustments between 3 and 3.5 percent should be sufficient in maintaining the system’s solvency from 2023 to 2031.
If premium adjustments are only implemented once every four years to coincide with presidential terms, the rate will be need to be raised by 15.42 percent to 5.41 percent in 2021, with another 17.98 percent increase to 6.39 percent will be required in 2025, which, are notably steep increases. Vice Dean Lien also estimated if premiums are adjusted on a biannual basis, the rate will only need to be raised to 5.17 percent in 2021 and 5.78 percent in 2023, with both adjustments at around 10 percent. Adjusting the rate on a biannual basis will also work well with the two-year term limit of National Health Insurance Committee (NHIC) members.
Apart from increasing premiums, copayments and changing the basis for the premiums to household income, Vice Dean Lien said that are few options that can help boost the NHI’s fiscal sustainability when it is impossible to raise the system’s income and lower its expenditure.
Vice Dean Lien said that there have been many studies on the effects of raising copayments in the past. From a theoretical point of view, increasing copayments will not be effective in curbing wastage of resources. At best, increasing copayments will only cut expenditure by two to three percent, falling short of anticipated savings. In addition, following the implementation of the supplemental premium scheme in the second-generation NHI, the premium calculation base already covers 95 to 96 percent of citizens’ incomes that can be accounted for, while a shift to base premiums on household income will add 4 to 5 percent to the premium calculation base.
Vice Dean Lien noted that if the government is truly looking to expand new income streams for the NHI, such as drawing premium payments from pensioners, then the current salary-based premium rate must be changed, as the number of wage-earning adults, who contribute the bulk of NHI income, continues to dwindle and presenting a thorny challenge.
The forum was also attended by NHI Administration (NHIA) Deputy Director General Tsai Shu-ling, who said that the decision on premium hikes requires the agreement of the National Health Insurance Committee (NHIC), followed by the final approval of the Ministry of Health and Welfare and the Cabinet. Deputy Director General Tsai noted that the NHIA is only tasked with provide background information to the NHIC members as reference and that it does not participate in NHIC meetings.
Vice Dean Lien Hsien-ming also recommend to allocate 0.01 percent of the NHI global budget to the NHIC to fund research so that NHIC members are able to make informed policy decisions.
[2020-10-28/United Daily news]
