By Dr Jeremy Lim

These are my reflections after an intense week of discussions with Taiwanese policy makers, doctors, and the quintessential ‘man in the street’ about their healthcare system. Taiwan has been a lightning rod for discussions on Universal Health Coverage (UHC) in Singapore after academics had expressed concern over its sustainability, with one NUS don decrying the Taiwanese model as an example for Singapore to emulate, citing how it had “plunged into financial difficulties” just a few years after inception.

At the same time, renowned economists such as Uwe Reinhardt of Princeton University and Nobel laureate Paul Krugman have praised highly the Taiwanese model for its universal coverage and cost-Taiwanese model for its universal coverage and cost-efficiency. The Taiwanese too seem pleased with their model of care, with satisfaction rates of over 80% since 2009.

What then is the ‘truth’, if there is even one?

The Essentials of the Taiwanese Health System
Taiwan adopted its National Health Insurance (NHI) system in 1995, bringing together three disparate health funds and expanding coverage to over 90% of the population in one fell swoop. Today, NHI covers over 99% of the population and offers comprehensive coverage including primary care, traditional Chinese medicine and specialist services such as cancer surgery. It is funded by a mandatory payroll tax with the government pumping in approximately 25.6% of the total costs to supplement funds from premiums. In 2011, the Bureau of National Health Insurance (BNHI) had a budget of US$16.9 billion to cover Taiwan’s 23 million citizens. As a single payer system, BMHI has formidable monopsony and monopoly powers which it uses to great effect to squeeze down payments to hospitals, doctors and pharmaceutical companies. Administrative efficiency is also high and comprises only 1.51% of the total budget. By contrast, the Americans estimate that 20 cents out of every dollar in healthcare is spent on administration.

That said, Taiwan’s model is no Utopia and has its fair share of challenges including increasing concerns over its financials. The list below summarizes my observations of this unique model which offers interesting insights for us in Singapore as we carry on our ‘national conversation’ to define the sort of society we want to be. Healthcare for all Singaporeans will be a key pillar of this ‘national conversation’ and Taiwan will hold useful perspectives.

Pride in the NHI and strong sense of equity

Everywhere I went and every person I spoke to expressed great pride in the NHI and its flagship status as THE social program of Taiwan. From the pioneers who worked to realize the NHI in the late 1980s to early 1990s to the taxi driver and the hotel doorman, there was unanimity that the NHI had resulted in higher healthcare standards and universal access to healthcare. Taiwanese were in particular proud that whether a corporate chieftain or a humble hawker, all were ‘equal’ in the eyes of the NHI and there was almost a child-like confidence that everyone would receive an equal level of healthcare.

I specifically asked the people I met about the ‘nation-building’ effects of the NHI and many spoke of how important it was that society looked after the weakest and most vulnerable, and that this reality provided a focal point for pride in being Taiwanese. One venerable public health professor in particular shared how in the pre-NHI days, it was fully possible and perhaps even common that ordinary citizens faced with catastrophic illnesses sold their homes and risked their children’s futures, and how he would always look back with pride to that fateful day in March 1995 when the NHI was launched.

Peculiar politics

Professor  Shou-hsia Cheng, an affable Yale-educated professor of health policy who had served from 2008-2010 as Taiwan’s deputy minister of health remarked to me that in the 17 years of the NHI, premiums had been raised twice and in both instances, the health minister had been ‘forced’ to resign. My look of alacrity must have alarmed him for he quickly went on to reassure that in the last 10 years, the health minister role had always been filled by a seconded academic. For himself and his peers, this was a reluctant leadership role taken up only to protect and preserve the NHI. In fact, Prof Cheng shared, resigning from government was not a bad thing as return to academia was far more agreeable than the rough-and-tumble of Taiwanese politics.

Taiwan’s peculiar arrangement upon further reflection was not as absurd as it sounded. An academic on secondment from university had the credentials to warn of financial collapse and the need to raise premiums or find other revenue generators, and unlike career politicians who had to worry first and foremost about being re-elected or re-appointed, Taiwan’s cadre of health policy professors/ ministers and deputy ministers paradoxically had it easier and could more courageously ‘do the right thing and damn the consequences’.

President Ma Ying-jeou hosted the banquet dinner to mark the end of the conference and this personal commitment to the NHI by Taiwan’s presidents regardless of political affiliations is also a critical reason why the NHI has survived and even thrived since its inception in 1995. One pioneer relating the genesis of the NHI paid tribute to then-President Lee Teng Hui for putting his personal stamp of endorsement on the NHI and overcoming stiff resistance from physician groups and bureaucrats who at that time were vehemently opposed to the NHI for perceived loss of income/ autonomy and loss of power respectively.

Use of foreign advisors and international benchmarking

Throughout the meetings, Taiwanese policy professors constantly referred to the Taiwan model as a car built from parts sourced from many different parts of the world, but assembled in Taiwan. Professor William (Bill) Hsiao, the eminent Harvard economist, was in particular credited with being the intellectual father of the NHI. Synthesizing accounts from various persons, the story of the NHI can be summarized as follows:

Taiwan was increasingly unhappy that less than 60% of the population enjoyed insurance coverage and more than 8 million citizens, mainly children, the unemployed and the elderly, were vulnerable. Taiwanese officials scoured the world for ideas to enable healthcare both affordable and accessible to all her people and brought the greatest thinkers of the time to Taiwan to advise the government. Bill Hsiao, a China-born, Harvard-trained health economist proved to be most influential and his ideas formed the backbone of the NHI.

Over the years, the Taiwanese have hosted numerous policy thinkers and welcomed thoughtful critique and criticisms. Prof  Rachel Lu, one of Bill Hsiao’s students and herself now Dean, College of Management at Chang Gung University, Taiwan, told me how health economists from Taiwan, South Korea and Japan would gather every year to update each other on their respective systems’ developments and debate ideas on reforms and improvements. Shortly after my conversation with Rachel, a Korean professor gently chided the Taiwanese for their system of ‘revolving ministers’ and advocated for an adoption of the Korean model where an expert committee set the premium rates for Korea independent of the minister and other politicians. He opined this was a superior way of keeping politics out of financing decisions and urged consideration.

Candid dialogue supported by ample data

One aspect of Taiwan’s system that has impressed me tremendously is the wealth of data available and the robust and very frank policy exchanges. The BHNI is candid about revenues and expenditures with detailed accounts of where funds are derived and how monies are spent. Utilization data are also readily available and enable open discussions about how Taiwan’s system can or needs to be strengthened.

One presentation during our conference focused on the challenges facing Taiwan and Taiwanese professors and policy makers openly shared concerns over the imbalance between revenues and expenditures and how difficult it was to raise premiums. The ‘unintended system consequences’ of universal health coverage through the NHI, namely over-use of services by citizens (Taiwan averages 15 physician visits per citizen per year which is the highest in the world) and the financial pressures faced by providers which has led to increases in treatment intensity and claimed expenses, were laid out in full, gory details .

Overall, I went away with a strong sense that while the Taiwanese are fiercely proud of the NHI, they are not blindly defensive. There is a deep affection for the NHI and how it has transformed accessibility and affordability by citizens, but at the same time, there is thoughtful analysis of the challenges faced and a keenness to confront these issues head-on.

Sustainability of the NHI

Despite the precarious financials of the NHI, the Taiwanese I spoke to, right to the last man, were confident the NHI was here to stay. Yes, financial sustainability is and will always be a pressing issue, but there was optimism that good sense would prevail and necessary premium increases, no matter how painful, would be adopted. The NHI, much like the grand old dame of England, the National Health Service, has become an institution in itself, and no politician on either sides of the aisle would even dare to suggest dismantling it. There would be a definite political cost, but most Taiwanese did not seem particularly perturbed at the prospect of a health minister resigning. When I asked a former health ministerover lunch whether Taiwan would ever abandon the NHI, he emphatically said this was an impossibility.  The NHI, he declared was what made Taiwan Taiwan.

Of deeper concern was the operational sustainability. Prof Cheng identified some conditions under which the NHI would be in jeopardy, namely if quality falls in NHI-reimbursed hospitals and the rich and middle-class turn to other providers. He felt that the NHI worked because of the solidarity in healthcare services shared by all Taiwanese, and if this fractures, then the specter of dismantling would become real. Quality erosion is a genuine concern. The NHI has been so efficient in part because of the onerous conditions it imposes on healthcare professionals (low salaries, high patient volumes). Healthcare today is a global enterprise and the international shortage of healthcare professionals coupled with increasing demands for ‘work-life balance’ and ‘quality of life’, the clear and present danger is of physicians and nurses seeking greener pastures elsewhere. Taiwan is also exploring throwing open her doors to medical tourism and if done and overwhelmingly successful, runs the risk of the best doctors concentrated in private hospitals catering to mainly foreigners to the detriment of the NHI and Taiwanese citizens.

This is a thoughtful analysis: Looking at certain developing countries where universal health coverage is declared but any citizen with means flees to private hospitals or overseas, the potential for a quality gap quickly descending into a  ‘death spiral’ for universal health coverage (in practice, although it remains in rhetoric) is very real. And if this happens, political support for NHI would plummet and even heroic resuscitation then may prove futile.

Another potential flashpoint raised by a younger faculty member was the lack of collective history and sense-making. She intimated that she had known no other alternative and feared that her generation, not having lived through and witnessed the days of medical bankruptcy and poverty-induced death and morbidity, would not fight with the same vigor for the NHI. She candidly shared that only the ‘seniors’ would enter politics and take up ministerial positions in what many of her peers saw as ‘suicide missions’, and that she doubted any of her vintage would sacrifice for the system.

Concluding Thoughts

As with all policy conundrums seeking to balance finite resources and infinite demand, healthcare provision will prove an ongoing ‘hot button’ issue for Singapore. Universal health coverage in the vein of Taiwan and other OECD countries (sans the United States of America) has been raised as a model for Singapore. Taiwan’s journey is now 17 years in the making and offers a fascinating crystal ball into possible futures for Singapore imbued with both opportunity and challenge. Providing accessible, affordable, quality healthcare to all citizens should rightly be the ambition of every health planner. But even as we dream of a better tomorrow, we need to examine our noble intentions against the realities of the lessons other systems offer and collectively forge a way forward for Singapore.

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Dr Jeremy Lim, Saw Swee Hock School of Public Health, visited Taipei, Taiwan in Aug/ Sept 2012 to participate in discussions on healthcare financing and coverage.

Graphs from Taiwan National Health Insurance Report 2011.