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Taiwanese national health insurance
Paul Krugman, in a recent column, cited Taiwanese national health insurance as a success. I have been unable to form a clear picture of how the Taiwanese reforms are working (albeit using only Google). Nonetheless Tzuhao Huang, one of my Taiwanese Ph.d. students, sent me the following article:
Once the cornerstone of social development, Taiwan's National Health Insurance (NHI) will teeter on the brink of demise if public resistance to premium hikes continues, foreign health experts observed at an international symposium to celebrate the NHI's 10th anniversary in Taipei yesterday.
Although the rest of the world envies Taiwan for its success in providing easy, affordable and universal healthcare, Taiwan's NHI is suffering from a recurrent financial crisis that also besets other nations like the UK, US, Germany and South Korea. As in these countries, health insurance is a highly politicized issue in Taiwan.
"Taiwan NHI's financial problems stem from two factors: people's mindset and politicians' intervention," said William Hsiao, a professor of economics at Harvard University who helped design the NHI a decade ago.
In Hsiao's opinion, the government failed to incorporate public participation at the launch of the NHI a decade ago. Deprived of adequate information, Hsiao said, people soon developed "free-lunch syndrome" and go doctor-shopping. "Taiwanese people think that they don't need to pay more since they've got NHI. In fact, the rise of insurance rates is an inevitable trend as the society grows older, richer and demands more medical care," Hsiao said.
As Taiwan matures from a one-party state to a vibrant democracy, the insurance rate has increasingly become a bargaining chip in party politics, according to Hsiao. When the financing of the NHI was legislated under an authoritarian system, the executive branch was empowered to raise the premium rate whenever the program faces a deficit. But when faced with the opposition-dominated Legislative Yuan that now exists, the executive branch has lost its power and political conflicts flare up.
Here is information on the origins of the system. Uwe Reinhardt suggests that premium hikes will keep the system solvent, so file this under "Developing..." But keep in mind:
a) these strains are arising while Taiwanese health care is only 4.6 percent of gdp, and,
b) politicians are resisting necessary premium hikes
My worry is that U.S. national health insurance will be used to win votes, and not to correct micro-imperfections in the insurance market. Let's say that you are a left-wing blogger, and, for purposes of argument, that your entire critique of the Bush Administration is correct. Remember, this guy was re-elected. You are relying on these very same voters, and this very same "policy correction mechanism" to make politicians accountable for a well-functioning health care system. You should hear my in-laws or my mother complain about the Medicare prescription drug bill, and that was supposed to help them. Scary, no?
Comments are open, especially if you know more about Taiwan.
Posted by Tyler Cowen on November 17, 2005 at 07:09 AM in Medicine | Permalink
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Comments
You should hear my in-laws or my mother complain about the Medicare prescription drug bill, and that was supposed to help them. Scary, no?
Excuse me dude but the prescription drug bill was to gain votes for the idiot in chief. not to help seniors
Posted by: no one of concern at Nov 17, 2005 8:24:57 AM
A while back I mentioned in a comment on this site that society had already decided that health care was not going to be price rationed. As an example, I used the fact that hearts are not auctioned and thus there is no price quantity equilibria as you normally see in other markets. I then went on to mention that we have a one payer health system that is fairly popular, namely the military.
Having said all that, I guess I should mention that many of the problems that Prof Cowen writes about here in the Taiwanese case exist in the mil system as well. In particular, we found a very high rate of prescriptions which added a great deal of cost to the plan. Other research suggests that there are simple ways to cure this such as copays. And yes, the politicians do use the TRICARE system in a political way (they recently passed TRICARE for life and have been arguing Sen Clinton has been arguing to extend TRICARE to reservists).
Indeed, these are pitfalls, but none of them are insurmountable (for example, create a system that is outside of politics just like the Fed and can only be revisited every four years after an election) and none of them definitively argue against a single payer health plan.
I admit that I am not totally in the camp of a single payer health plan. But again, given where society has put us (NO MARKET SOLUTIONS PLEASE) and the popularity of TRICARE in the military, where do we go? I am not sure that subsidizing insurance is the answer.
Finally, a prediction. We will have a govt health care system in ten years and the political pressure will come not from the usual leftists but from business itself which is already now sending out signals that health care costs are killing them.
Posted by: Don B at Nov 17, 2005 9:37:54 AM
Tyler,
Sure Bush was re-elected, but that fact is going to work as useful corrective in the future (see current poll numbers and picture future political arguments peppered with the phrase - "you are being Bushian!") Electorally we have weathered a perfect storm:
1. A country lulled into believing that good governance was easy
2. A Sex scandal leading to impeachment
3. The supreme court choosing the candidate you got soundly beaten in the popular vote
4. 9/11 attack with an administration fully prepared to cynically use that for partisan purpose
There will be problems with Health care going forward, and we will have a good dose of stupid (and corrupt) politicians going forward, but the current occupant, and the current crop of congressional leaders, with the atrocious Prescription Drug bill being a prime example, is certainly our nadir.
If not, we will have much more serious problems than healthcare.
Posted by: theCoach at Nov 17, 2005 9:49:46 AM
Don B,
That has been the suprising thing up till now, hasn't it. I guess business, and especially the business lobby has a (misguided) conception of itself that makes the obvious self interest of single payer health care difficult to argue for. When they do get around to it, and I think you are right that they will, movement in healthcare will be very swift, I predict (perhaps too swift for the implementation of a more sound system). Another thing to think about; America periodically goes through progressive mini-revolutions, normally about every thirty years. We are either long overdue, the trend is not persistent, or you have to count a progressive-right move toward market-based solutions as being as a part (I think the effects are much too small to count). Could a big healthcare push bring about that next wave (Kevin Drumm points out in a post a long while back that the civil rights and related movements in the sixties were difficult to predicted until they were already upon us). Just a thought.
Posted by: theCoach at Nov 17, 2005 10:43:06 AM
Tyler,
I am Taiwanese, although I've been living abroad since before the inception of the NHI. My take on it is that people complain about the NHI incessantly, but that there is no way they would ditch it for a market-based solution. The latest cause for discontent was a change in the rules to make patients pay for cold-and-flu visits out of pocket. This is to prevent the free-lunch syndrome, and truth be told, the Taiwanese do have a reputation for being a nation of overmedicators. However, it does hit some vulnerable groups like parents of numerous young childeren, particularly hard. Recently, there was also anger that some breast cancer patients do not qualify for the more expensive, more potent drugs, until their cancer progressed to a certain degree -- which is insane because time is of the essence when it comes to fighting cancer.
People never seem to be happy about their NHI when I talk to them about it in Taiwan. Yet if you ask them if they would prefer doing away with Nationalized healthcare, they tend to look at you in a puzzled manner, as if you've just uttered a complete non-sequitor. Then they'd go straight back to where they left off before they were so irrelevantly interrupted.
Do you blame them? Taiwan's per capita GDP little more than half that of the U.S. They certainly spend much less on healthcare per person than the U.S. whichever way you want to cut it. Yet they have achieved something the U.S. has not -- the peace of mind of knowing that if you are Taiwanese, your primary healthcare is covered.
In short, the Taiwanese heathcare system is not perfect. It will probably never be perfect. People will always demand more services for less taxes. But when confronted with the alternative of going it alone in the health market, it's no wonder people treat any mention of scrapping the NIH as crazy talk.
Posted by: Battlepanda at Nov 17, 2005 10:48:13 AM
Just for fun I googled "Taiwan NHI". Holy mother of God, I got 31400 hits. So I just clicked on the first one http://content.healthaffairs.org/cgi/content/full/22/3/77 and got this abstract:
"This paper examines the performance of Taiwan’s National Health Insurance (NHI), a universal health insurance program, implemented in 1995, that covers comprehensive services. The authors address two key questions: Did the NHI cause Taiwanese health spending to escalate to an "unaffordable" level? What are the benefits of the NHI? They find that Taiwan’s single-payer NHI system enabled Taiwan to manage health spending inflation and that the resulting savings largely offset the incremental cost of covering the previously uninsured. Under the NHI, the Taiwanese have more equal access to health care, greater financial risk protection, and equity in health care financing. The NHI consistently receives a 70 percent public satisfaction rate."
Yeah, the Taiwanese probably whine about NHI, but a 70% public satisfaction rate is hard to beat. This is not absolute proof that Prof Cowen is wrong about our case (not all policies translate well across borders), but it does not seem to be the nightmare that Prof Cowen alludes to in this post.
I guess there is a lot more out there to look at. But I do have a job you know.
Posted by: Don B at Nov 17, 2005 11:04:42 AM
If the point is that Taiwan's NHI isn't perfect, that's irrelevant. The question that needs to be addressed is whether its better than the alternative.
Posted by: jwm22 at Nov 17, 2005 12:07:18 PM
Concerning the Taiwanese system:
Thanks to Patrick Sullivan (http://flyunderthebridge.blogspot.com/2005/11/chinese-taken-in.html)and taken from ait.org, American Institute in Taiwan, here are some highlights of the Taiwanese system:
"Visitors to hospitals in Taiwan find a veneer of similarity to hospitals back home. Beneath the surface, however, are big differences. In many hospitals it is expected that the patient's family will help provide routine hygiene chores frequently taken care of by licensed practical nursing staff in an American hospital. Indeed, many hospitals accommodate and expect at least one family member will sleep in the patient's room (even semi-private rooms). Some hospitals expect patients to bring their own bath towels, toilet tissue, soap and other toiletries. Often the floors, walls and medical equipment will appear much less clean than a typical American hospital.
....The vast majority of doctors have hospital-based practices and see patients in outpatient clinics which are either in the hospital or in ancillary buildings immediately adjacent to the hospital. Many are extraordinarily busy, seeing thousand of patients each day in the course of morning clinic, afternoon clinic, and evening clinic."
Posted by: Dan at Nov 17, 2005 1:26:57 PM
"Many are extraordinarily busy, seeing thousand of patients each day..."
That seems awfully hard to sqaure with a 70% satisfaction rating. Assuming a breakneck pace of one minute, and only a single thousand, my math tells me that the doctors are working at least 16 2/3 hours a day. That is extraordinarily busy. Is really plausible that satisfaction numbers would be that high given that kind of attentiveness?
Posted by: theCoach at Nov 17, 2005 1:35:29 PM
My sense, from what I have read, is that people were very satisfied at first, but this may be changing.
Posted by: Tyler Cowen at Nov 17, 2005 2:11:45 PM
Then, Tyler, it's safe to say that you're correct: Taiwan's situation is a "must watch for developments." :-) The question, indeed, isn't perfection. The question is best given resources, goals, and limiting circumstances.
Posted by: ralph at Nov 17, 2005 2:18:58 PM
Dan -- I assume this description of hospital care in Taiwan is current,
so the next question is how does this compare with the system before the change.
Does sullivan describe a system that has improved, or one that has gotten worse?
For a country that has roughly half the living standard of the US, and spends some 5% rather then 15% of GDP on healthcare I would not be surpised to find that many of the standards are far below US standards.
Posted by: spencer at Nov 17, 2005 4:00:33 PM
When healthcare is ran by the government, all decisions will be made for political reasons. It should be common sense that individuals are better at making health decisions for themselves, then politicians trying to maintain their power.
Basically compare cars made in the communist countries like the Yugo versus cars made by companies like Daimler and Toyota.
Having lived in Canada I can tell you my dogs got far better healthcare then my own family. My grandfather waited 18 months for surgery so he could walk without extreme pain from a hernia. My golden retriever waited less then 18 hours when he hurt his leg for surgery.
Posted by: aa2 at Nov 17, 2005 4:42:01 PM
Btw note the year when Taiwan put in universal healthcare, 1995. That is only a few short years after the country moved from a dictatorship to democracy. Democracy seems to be a one way road towards socialism.
Posted by: aa2 at Nov 17, 2005 4:45:06 PM
Btw note the year when Taiwan put in universal healthcare, 1995. That is only a few short years after the country moved from a dictatorship to democracy. Democracy seems to be a one way road towards socialism.
Posted by: aa2 at Nov 17, 2005 4:46:04 PM
Universal health care can be a great aspect to many. It is unfortunate to hear so many lack health insurance. We really need to improve our health care system. Health insurance is a major aspect to many and we should help everyone get covered.
Posted by: California Health Insurance at Nov 18, 2005 1:34:23 PM
Tyler, Do you find the "seeing thousand of patients each day[sic]" rate plausible?
It seems an order of magnitude too high to me.
Posted by: theCoach at Nov 18, 2005 2:18:39 PM
Here's more from the AIT (which is essentially an arm of the State Dept):
' The infrastructure for health care in Taiwan is dependent on National Health Insurance, which covers most of the island's 22 million people. As a result, doctors and hospital-based outpatient clinics are under enormous pressure to see large volumes of patients in relatively short periods of time. It isn't unusual to find doctors seeing as many as 30 patients an hour in the largest and busiest specialties. (Many of these patients are simply renewing prescriptions.) Expect to wait in crowded, uncomfortable waiting areas to see your clinic doctor.'
This morning I had a visitor from Canada, and I notice he was hobbling around my office. Turns out he'd fallen down some steps in icy weather and his ankle was swollen and black and blue. I asked him if'd had it X-rayed, since he has free health care?
His response: 'Are you kidding? I'm not going to wait in a clinic for 9 hours to get an appointment for an X-ray in a week.'
Posted by: Patrick R. Sullivan at Nov 18, 2005 6:13:03 PM
Another bit from the AIT article is a nice demonstration that the interesting things about economics happen on the MARGIN;
'...the ambulances resemble nothing more than a small van with emergency lights and a gurney in the back. Do not expect trained medical technicians to arrive with special medical equipment. Although the standard of care is changing, most do not even possess a simple defibrillator. Ambulance crews have not received advanced paramedic training. In many instances the driver has no training at all. Thus you cannot expect the kinds of advanced recussitative training associated with paramedics in the U.S. In cases that are less than extremely urgent, you may be better served by arranging private transportation.'
Posted by: Patrick R. Sullivan at Nov 18, 2005 6:24:29 PM
Canadian Wait Times:
http://www.fraserinstitute.ca/admin/books/chapterfiles/WYT2005pt1.pdf#
Oh, yeah, let's go their route.
What kind of military do they have again????
Posted by: Sandy P at Nov 19, 2005 4:04:51 AM
Sullivan
The guy made a rational choice. If he went to an emergency room he would see a nurse within sixty seconds who would tell him that since his ankle was obviously not broken he could wait nine hours for an appointment in a week for an x ray that would tell him that he had a sprain, which would have gotten better by then so that he wouldn't want to show up for the xray.
If he had a broken ankle he would be moved to the front of the queue because there weren't nine hours worth of people with broken bones waiting to schedule an appointment in a week for an exray so their broken bone could be set.
Otherwise the people of Canada would rise up, overthrow the government, institute a democracy, and vote to install socialized medecine.
Posted by: willis at Nov 19, 2005 6:13:51 AM
Speaking as a former basketball player, you can't always tell your ankle isn't broken, but merely badly sprained. The last time it happened to me, I dropped into the closest sports medicine clinic at 10:00PM, sat in a wheel chair amongst the soccer players similarly ailing, and quickly got x-rayed.
It wasn't free, but as my Canadian friend told me, 'You get what you pay for.'
Posted by: Patrick R. Sullivan at Nov 19, 2005 10:22:19 AM
Speaking of revolting Canadians, their Supreme Court says Quebec's health care system, at least, is violating human rights:
http://www.oma.org/Health/medicare/05quebec.asp
Holding that:
# There were widespread delays in the Quebec public health-care system.
# The Quebec government had failed to deliver health care in a "reasonable manner."
# In the case of certain procedures, the delays that are the necessary result of waiting lists increase the patient's risk of mortality or the risk that his or her injuries will become irreparable.
# Many patients on non-urgent waiting lists are in pain and cannot fully enjoy any real quality of life.
# Wait lists result in physical and psychological suffering.
# Most Quebecers cannot afford private health care without private health insurance.
# Private health care can provide health care faster than the public health system.
Posted by: Patrick R. Sullivan at Nov 19, 2005 10:25:23 AM
Patrick r.,
With all due respect, comparing the quality of hospitals in Taiwan with the quality of hospitals in a country like the United State is always going to be apples and oranges -- their GDP is roughly half of our. The point is, even with a GDP that's half of ours, and spending a much smaller percentage of that GDP on healthcare than we do, they cover EVERYONE.
You make some good points about how the healthcare system in Canada is not perfect. But for the 45+ million Americans without healthcare, the situation is unimaginably worse. We know that doctors charge their uninsured patients outrageous rates, and since those are people who could not afford insurance anyway, the choice is likely between bankrupting their family or going without care for their condition. Forever. Kind of put that waiting list in perspective.
Posted by: Battlepanda at Nov 19, 2005 12:18:29 PM
Many people are critical of the long waiting periods of the Canadian medical system but they seem to be working under the false assumption (as economists often do) that everyone in the US has easy access to health insurance. This is not true. For the people who do not have health insurance there is a waiting period in the US; you must wait for the windfall of cash to allow you to recieve care. The reality is that the availability of private health insurance in the US will continue to decline and the assumptions of pro-private sector healthcare will become more and more unrealistic.
I must note that the only real evidence I have ever seen showing the US health system to be the "best in the world" has been of the ancedotal variety while I have seen statistics that convince me that this is not the case.
Posted by: CBBB at Nov 21, 2005 4:03:20 PM
