The current health care system in Taiwan is the National Health Insurance (NHI) system. NHI was submitted to Parliament by President Lee Teng-Hui. Under pressure from upcoming elections, President Lee promptly established the Bureau of National Health Insurance (BNHI) and began operations of NHI in 1995.
The current health care system in Taiwan is the National Health Insurance (NHI) system. NHI was submitted to Parliament by President Lee Teng-Hui. Under pressure from upcoming elections, President Lee promptly established the Bureau of National Health Insurance (BNHI) and began operations of NHI in 1995. NHI was created with three specific purposes: provide equal access to health care for all citizens; ensure quality and efficiency in health care delivery; and control health expenditures within an affordable range. NHI replaced the previous patchwork of separate social health insurance funds with one single-payer, national compulsory social insurance plan that is administered by an agency of the central government’s Department of Health. The Bureau of National Health Insurance (BNHI) funds and operates the NHI under the jurisdiction of the national government’s Department of Health. NHI enrollment is mandatory to ensure adequate risk pooling and the broad-based collection of funds to finance it. As of 2009, more than 97% of the population was enrolled.
The system is financed by a mix of premiums and payroll taxes collected from households and employers with large governmental subsidies from general revenue. Co-payments are required, in the realm of about 10% of the cost of an inpatient visit and 20% for an outpatient visit. Both co-payments and premiums are waived for the very poor and veterans and there are ceilings imposed on co-payments for the general public in order to provide financial risk protection from large medical expenses.
The NHI centralizes the disbursement of health-care funds through a single government-run insurer managed by the BNHI under a global budget with uniform fee schedules. About 99% of all claims are processed electronically, which aids in keeping the administrative burden down to about 2% of the NHI’s total budget. As a single payer entity, the BNHI exercises considerable monopsony power over fees, drug prices, and other terms of engagement with providers. The providers operate within a competitive system composed of mixed public and private delivery. This provides patients with the ability to freely choose between providers, and allows hospitals and physicians to choose their practice mode, as about 90% of providers in Taiwan contract with BNHI. In addition, there is no rationing of care, no queues for care, and no referral system, which in combination create a great deal of freedom of choice for users.
A uniform comprehensive benefit package is offered by the NHI that covers some preventative medical services (pediatric immunizations, adult health exams, prenatal care, etc), prescription drugs, dental service, Chinese medicine, home nurse visits, inpatient care, and ambulatory care, among others. More expensive treatments, such as medication for HIV/AIDS and organ transplants are also covered.
NHI exists alongside a very small private health insurance system, which provides specialized and “gold-plated” health insurance plans that are generally targeted at the wealthy.
National Health Insurance
Program Summary
The current health care system in Taiwan is the National Health Insurance (NHI) system. NHI was submitted to Parliament by President Lee Teng-Hui. Under pressure from upcoming elections, President Lee promptly established the Bureau of National Health Insurance (BNHI) and began operations of NHI in 1995. NHI was created with three specific purposes: provide equal access to health care for all citizens; ensure quality and efficiency in health care delivery; and control health expenditures within an affordable range. NHI replaced the previous patchwork of separate social health insurance funds with one single-payer, national compulsory social insurance plan that is administered by an agency of the central government’s Department of Health. The Bureau of National Health Insurance (BNHI) funds and operates the NHI under the jurisdiction of the national government’s Department of Health. NHI enrollment is mandatory to ensure adequate risk pooling and the broad-based collection of funds to finance it. As of 2009, more than 97% of the population was enrolled.
The system is financed by a mix of premiums and payroll taxes collected from households and employers with large governmental subsidies from general revenue. Co-payments are required, in the realm of about 10% of the cost of an inpatient visit and 20% for an outpatient visit. Both co-payments and premiums are waived for the very poor and veterans and there are ceilings imposed on co-payments for the general public in order to provide financial risk protection from large medical expenses.
The NHI centralizes the disbursement of health-care funds through a single government-run insurer managed by the BNHI under a global budget with uniform fee schedules. About 99% of all claims are processed electronically, which aids in keeping the administrative burden down to about 2% of the NHI’s total budget. As a single payer entity, the BNHI exercises considerable monopsony power over fees, drug prices, and other terms of engagement with providers. The providers operate within a competitive system composed of mixed public and private delivery. This provides patients with the ability to freely choose between providers, and allows hospitals and physicians to choose their practice mode, as about 90% of providers in Taiwan contract with BNHI. In addition, there is no rationing of care, no queues for care, and no referral system, which in combination create a great deal of freedom of choice for users.
A uniform comprehensive benefit package is offered by the NHI that covers some preventative medical services (pediatric immunizations, adult health exams, prenatal care, etc), prescription drugs, dental service, Chinese medicine, home nurse visits, inpatient care, and ambulatory care, among others. More expensive treatments, such as medication for HIV/AIDS and organ transplants are also covered.
NHI exists alongside a very small private health insurance system, which provides specialized and “gold-plated” health insurance plans that are generally targeted at the wealthy.
Revenue for the National Health Insurance (NHI) system comes primarily from individual payroll deductions and employer contributions, supplemented by governmental funds from general revenue. A small proportion of revenue also comes from a “sin tax” on cigarette sales. The working population pays premiums that are split with employers while non-working individuals pay a flat rate which is subsidized by the government.
Revenue for the National Health Insurance (NHI) system comes primarily from individual payroll deductions and employer contributions, supplemented by governmental funds from general revenue. A small proportion of revenue also comes from a “sin tax” on cigarette sales. The working population pays premiums that are split with employers while non-working individuals pay a flat rate which is subsidized by the government. The share of premiums paid by the insured, employers, and government varies greatly within the different population subgroups and also varies based on how many dependents an individual has. For public or private employees the government pays 10%, the employer 60%, and the employee 30% through a payroll deduction. The non-poor self-employed pay 100% of their income-based premium without a government subsidy. For the poor who are unable to pay the premium and for military personnel, the government subsidizes 100% of the premium from general government revenues.
In 2002, the Supreme Court in Taiwan ruled that no one could be denied care because of lack of ability to pay. For those temporarily unable to pay, the Bureau of National Health Insurance (BNHI) has a fund from which such people may take out interest-free loans to pay premiums. Taiwan’s economy has advanced to a stage where most workers were employed in the formal sector, so a compulsory NHI can effectively collect premiums through employers. The government also has the revenue to subsidize the coverage of the poor, veterans, and farmers. Taiwan also has the organizational ability and human resources to manage national health insurance.
The premiums are supplemented by out-of-pocket payments. Regular office visits have co-payments that are fixed and unvaried by the person’s income in the realm of about 10% of the cost of an inpatient visit—adjusted according to type of wards and length of stay—and 20% for an outpatient visit. Both co-payments and premiums are waived for the very poor and veterans. To help cope with NHI budget pressures, patient cost sharing increased in 2001 and again in 2002 for certain kinds of visits, drugs, inpatient care, lab tests and examinations. These copayments are unvaried by income to avoid the burden of administering a complex individual income-related-cost-sharing program. Though out-of-pocket payments fell from 48% of the total amount spent on health care in 1993 to 30% in 2000, critics still argue that the copayments are regressive, putting the burden primarily on the sick that are already disadvantaged and are often poor.
National Health Insurance
Funding
Revenue for the National Health Insurance (NHI) system comes primarily from individual payroll deductions and employer contributions, supplemented by governmental funds from general revenue. A small proportion of revenue also comes from a “sin tax” on cigarette sales. The working population pays premiums that are split with employers while non-working individuals pay a flat rate which is subsidized by the government. The share of premiums paid by the insured, employers, and government varies greatly within the different population subgroups and also varies based on how many dependents an individual has. For public or private employees the government pays 10%, the employer 60%, and the employee 30% through a payroll deduction. The non-poor self-employed pay 100% of their income-based premium without a government subsidy. For the poor who are unable to pay the premium and for military personnel, the government subsidizes 100% of the premium from general government revenues.
In 2002, the Supreme Court in Taiwan ruled that no one could be denied care because of lack of ability to pay. For those temporarily unable to pay, the Bureau of National Health Insurance (BNHI) has a fund from which such people may take out interest-free loans to pay premiums. Taiwan’s economy has advanced to a stage where most workers were employed in the formal sector, so a compulsory NHI can effectively collect premiums through employers. The government also has the revenue to subsidize the coverage of the poor, veterans, and farmers. Taiwan also has the organizational ability and human resources to manage national health insurance.
The premiums are supplemented by out-of-pocket payments. Regular office visits have co-payments that are fixed and unvaried by the person’s income in the realm of about 10% of the cost of an inpatient visit—adjusted according to type of wards and length of stay—and 20% for an outpatient visit. Both co-payments and premiums are waived for the very poor and veterans. To help cope with NHI budget pressures, patient cost sharing increased in 2001 and again in 2002 for certain kinds of visits, drugs, inpatient care, lab tests and examinations. These copayments are unvaried by income to avoid the burden of administering a complex individual income-related-cost-sharing program. Though out-of-pocket payments fell from 48% of the total amount spent on health care in 1993 to 30% in 2000, critics still argue that the copayments are regressive, putting the burden primarily on the sick that are already disadvantaged and are often poor.
Participation in the National Health Insurance (NHI) system is mandatory to ensure adequate risk pooling and the efficient broad-based collection of funds. Since NHI was implemented in March 1995, enrollment increased to 92% by the end of 1995, and 97% by 2001. The Bureau of National Health Insurance (BNHI) collects premiums and enrolls new members.
BNHI provides each participant in the program with a smart card that contains their basic medical data.
Participation in the National Health Insurance (NHI) system is mandatory to ensure adequate risk pooling and the efficient broad-based collection of funds. Since NHI was implemented in March 1995, enrollment increased to 92% by the end of 1995, and 97% by 2001. The Bureau of National Health Insurance (BNHI) collects premiums and enrolls new members.
BNHI provides each participant in the program with a smart card that contains their basic medical data. They can use this card at any clinic or hospital in the country, with a small co-pay. The smart card is a valuable tool for maintaining data on patients, and reducing insurance fraud, overcharges, and duplication of medical services.
National Health Insurance
Population covered
Participation in the National Health Insurance (NHI) system is mandatory to ensure adequate risk pooling and the efficient broad-based collection of funds. Since NHI was implemented in March 1995, enrollment increased to 92% by the end of 1995, and 97% by 2001. The Bureau of National Health Insurance (BNHI) collects premiums and enrolls new members.
BNHI provides each participant in the program with a smart card that contains their basic medical data. They can use this card at any clinic or hospital in the country, with a small co-pay. The smart card is a valuable tool for maintaining data on patients, and reducing insurance fraud, overcharges, and duplication of medical services.
National Health Insurance (NHI) offers a comprehensive benefit package that covers some preventative medical services (pediatric immunizations, adult health exams, prenatal care, etc), prescription drugs, dental service, Chinese medicine, home nurse visits, inpatient care, and ambulatory care, among others. More expensive treatments, such as medication for HIV/AIDS and organ transplants are also covered.
National Health Insurance (NHI) offers a comprehensive benefit package that covers some preventative medical services (pediatric immunizations, adult health exams, prenatal care, etc), prescription drugs, dental service, Chinese medicine, home nurse visits, inpatient care, and ambulatory care, among others. More expensive treatments, such as medication for HIV/AIDS and organ transplants are also covered. Abortion services are covered in the case of sexual assault and 60 days of end-of-life care is included either in a hospice or hospital. Out-of-pocket expenditures are for services not covered by the NHI such as orthodontics and lab tests that are not medically necessary.
National Health Insurance
Benefits package
National Health Insurance (NHI) offers a comprehensive benefit package that covers some preventative medical services (pediatric immunizations, adult health exams, prenatal care, etc), prescription drugs, dental service, Chinese medicine, home nurse visits, inpatient care, and ambulatory care, among others. More expensive treatments, such as medication for HIV/AIDS and organ transplants are also covered. Abortion services are covered in the case of sexual assault and 60 days of end-of-life care is included either in a hospice or hospital. Out-of-pocket expenditures are for services not covered by the NHI such as orthodontics and lab tests that are not medically necessary.
Taiwan has a market-driven health care delivery system with a mix of publicly and privately owned hospitals. The National Health Insurance (NHI) program provides medical services to the insured population through contracts between the Bureau of National Health Insurance (BNHI) and providers, including hospitals, clinics, pharmacies, medical laboratories, and home nursing care.
Taiwan has a market-driven health care delivery system with a mix of publicly and privately owned hospitals. The National Health Insurance (NHI) program provides medical services to the insured population through contracts between the Bureau of National Health Insurance (BNHI) and providers, including hospitals, clinics, pharmacies, medical laboratories, and home nursing care. For hospitals and dental clinics, the contracted rate is 98% of all health facilities in Taiwan, suggesting that the contract serves as a comprehensive and inclusive network for consumers to access providers’ services. The contracted rate of clinics for both Western medicine and Chinese medicine are in the range of 84 to 90%. The broad and inclusive range of institutions that contract with NHI allows patients to see almost any doctor within the country.
Most health providers operate in the private sector and form a competitive market. Citizens have almost complete freedom of choice among providers and therapies. There is no rationing of care, no referral system, and patients are also allowed to seek out care at tertiary institutions regardless of the severity or nature of their illness. This has allowed patients large degrees of freedom in provider choice. However, doctors who practice in private clinics do not have hospital admitting privileges, thus hospitals have developed large outpatient departments and affiliated clinics for primary care, to maintain inpatient flows. Many private clinics also maintain about a dozen beds for their patients. One criticism of this system is that its delivery system is somewhat fragmented, because private physicians can practice, but have no hospital admitting privileges. This occasionally results in duplicative facilities and equipment, and can disrupt continuity of care.
Table 1: Health Service Delivery System in Taiwan, 2004
| Number | Ratio | |
|---|---|---|
| Health workforce (per 10,000 population) | ||
| - Doctors | 33,360 | 14.7 |
| - Dentists | 9,868 | 4.3 |
| - Pharmaceutical personnel | 26,079 | 11.5 |
| - Nursing personnel | 101,924 | 44.9 |
| Health infrastructure | ||
| - Public hospitals | 90 (43,865 beds) | 56 hospital beds per 10,000 populations |
| - Private hospitals | 500 (83,802 beds) |
Source: Health Statistics (2006)
In total, there are about 5.7 beds per thousand people, 35% of which are public and 65% are private. In 2000, about 86% of hospitals were privately owned. Doctors in Taiwan are either salaried staff physicians in the hospitals or self-employed owners of clinics. A majority of clinics, about 97%, are privately owned. About 63% of physicians are employed by hospitals and paid on a salaried basis and the remaining 36% of doctors are private practitioners.
Since the NHI’s inception in 1995, the capacity and use of Taiwan’s health care system has expanded. While Taiwan’s population grew by 5.2% between 1994 and 2000, the supply of health professionals overall increased by 39.6%, and the number of physicians increased by 33.5%. Over the same period the number of hospital beds increased by 32.3%. While Taiwan’s population grew 5.2% between 1994 and 2000, the volume of hospital outpatient visits increased by 16.6%, emergency room visits by 42.2%, outpatient surgery by 56.4%, and inpatient hospitalization by 18%. With the exception of certain costly high-tech treatments which require prior authorization from BNHI, there are effectively no ceilings on utilization, which has resulted in high health care usage rates, especially for outpatient care.
The use of services has expanded unevenly across hospital types and locations. Services in low income and remote areas are not well-distributed and offer varying degrees of service. While the overall ratio of physicians per 1,000 people in 2001 was 1.37, it was only 0.33 among Taiwan’s aboriginal people and 0.8 in the mountainous areas and offshore islands. BNHI has since introduced incentives for providers to practice in remote areas and has exempted cost sharing for the poor and for those who live in remote areas.
National Health Insurance
Service delivery system
Taiwan has a market-driven health care delivery system with a mix of publicly and privately owned hospitals. The National Health Insurance (NHI) program provides medical services to the insured population through contracts between the Bureau of National Health Insurance (BNHI) and providers, including hospitals, clinics, pharmacies, medical laboratories, and home nursing care. For hospitals and dental clinics, the contracted rate is 98% of all health facilities in Taiwan, suggesting that the contract serves as a comprehensive and inclusive network for consumers to access providers’ services. The contracted rate of clinics for both Western medicine and Chinese medicine are in the range of 84 to 90%. The broad and inclusive range of institutions that contract with NHI allows patients to see almost any doctor within the country.
Most health providers operate in the private sector and form a competitive market. Citizens have almost complete freedom of choice among providers and therapies. There is no rationing of care, no referral system, and patients are also allowed to seek out care at tertiary institutions regardless of the severity or nature of their illness. This has allowed patients large degrees of freedom in provider choice. However, doctors who practice in private clinics do not have hospital admitting privileges, thus hospitals have developed large outpatient departments and affiliated clinics for primary care, to maintain inpatient flows. Many private clinics also maintain about a dozen beds for their patients. One criticism of this system is that its delivery system is somewhat fragmented, because private physicians can practice, but have no hospital admitting privileges. This occasionally results in duplicative facilities and equipment, and can disrupt continuity of care.
Table 1: Health Service Delivery System in Taiwan, 2004
| Number | Ratio | |
|---|---|---|
| Health workforce (per 10,000 population) | ||
| - Doctors | 33,360 | 14.7 |
| - Dentists | 9,868 | 4.3 |
| - Pharmaceutical personnel | 26,079 | 11.5 |
| - Nursing personnel | 101,924 | 44.9 |
| Health infrastructure | ||
| - Public hospitals | 90 (43,865 beds) | 56 hospital beds per 10,000 populations |
| - Private hospitals | 500 (83,802 beds) |
Source: Health Statistics (2006)
In total, there are about 5.7 beds per thousand people, 35% of which are public and 65% are private. In 2000, about 86% of hospitals were privately owned. Doctors in Taiwan are either salaried staff physicians in the hospitals or self-employed owners of clinics. A majority of clinics, about 97%, are privately owned. About 63% of physicians are employed by hospitals and paid on a salaried basis and the remaining 36% of doctors are private practitioners.
Since the NHI’s inception in 1995, the capacity and use of Taiwan’s health care system has expanded. While Taiwan’s population grew by 5.2% between 1994 and 2000, the supply of health professionals overall increased by 39.6%, and the number of physicians increased by 33.5%. Over the same period the number of hospital beds increased by 32.3%. While Taiwan’s population grew 5.2% between 1994 and 2000, the volume of hospital outpatient visits increased by 16.6%, emergency room visits by 42.2%, outpatient surgery by 56.4%, and inpatient hospitalization by 18%. With the exception of certain costly high-tech treatments which require prior authorization from BNHI, there are effectively no ceilings on utilization, which has resulted in high health care usage rates, especially for outpatient care.
The use of services has expanded unevenly across hospital types and locations. Services in low income and remote areas are not well-distributed and offer varying degrees of service. While the overall ratio of physicians per 1,000 people in 2001 was 1.37, it was only 0.33 among Taiwan’s aboriginal people and 0.8 in the mountainous areas and offshore islands. BNHI has since introduced incentives for providers to practice in remote areas and has exempted cost sharing for the poor and for those who live in remote areas.
The organization of health administration in Taiwan is divided into two structures: The National level and the local level. The National Health Insurance (NHI) system is administered by the central government, which has the overall responsibility for the formulation of health care policies and the regulation of health care services throughout Taiwan.
The organization of health administration in Taiwan is divided into two structures: The National level and the local level. The National Health Insurance (NHI) system is administered by the central government, which has the overall responsibility for the formulation of health care policies and the regulation of health care services throughout Taiwan. The Department of Health (DOH) has jurisdiction over the Bureau of National Health Insurance (BNHI), the NHI supervisory Committee, the NHI Dispute Mediation Committee, and the NHI Medical Expenditure Negotiation Committee, all of which plan and monitor tasks that relate to the NHI. BNHI acts as the primary executive of the NHI. BNHI contracts with health care facilities and is the primary organization responsible for administering the National Health Insurance system, collecting premiums from the insured and regulating health care services for the insured.
Under the executive branch, Taiwan has 6 regional divisions divided into 25 local health bureaus under city or county local governments. These local bureaus are responsible for daily operations of health management and directly handle underwriting operations, insurance premium collection, review and payment of medical claims, and management of NHI-contracted medical care institutions. The bureaus all have close relationships to local level health and aid in managing the contracted medical institutions through quality counseling, and management of emergency rescue services, mental health services, and human resources. In addition, each of the 25 county governments in Taiwan has a health liaison bureau, which is responsible for the operation of public health centers within their geographical region under the guidance of the health department.
While the NHI is governed by the central government, most management of NHI is decentralized. The BNHI is the primary overseer of NHI, acts to set the annual national budget, and implements most policy in a centralized, top-down fashion. The BNHI also acts as the primary intermediary between the insured and the providers. Oversight of the NHI is also provided by the NHI Supervisory Committee (NHISC), which provides a forum for social associations, employers and providers to communicate with one another; the NHI Disputes Mediation Committee (NHIDM), which mediates disputes between the insured and providers; the NHI Expenditure Negotiation Committee (NHIENC), which negotiates the payments for providers under the Global Budget Payment; and the NHI Task Force. The daily management of the NHI, however, is highly decentralized. The BNHI distributes responsibilities to the 6 regional divisions and local governments.
National Health Insurance
Institutional structures
The organization of health administration in Taiwan is divided into two structures: The National level and the local level. The National Health Insurance (NHI) system is administered by the central government, which has the overall responsibility for the formulation of health care policies and the regulation of health care services throughout Taiwan. The Department of Health (DOH) has jurisdiction over the Bureau of National Health Insurance (BNHI), the NHI supervisory Committee, the NHI Dispute Mediation Committee, and the NHI Medical Expenditure Negotiation Committee, all of which plan and monitor tasks that relate to the NHI. BNHI acts as the primary executive of the NHI. BNHI contracts with health care facilities and is the primary organization responsible for administering the National Health Insurance system, collecting premiums from the insured and regulating health care services for the insured.
Under the executive branch, Taiwan has 6 regional divisions divided into 25 local health bureaus under city or county local governments. These local bureaus are responsible for daily operations of health management and directly handle underwriting operations, insurance premium collection, review and payment of medical claims, and management of NHI-contracted medical care institutions. The bureaus all have close relationships to local level health and aid in managing the contracted medical institutions through quality counseling, and management of emergency rescue services, mental health services, and human resources. In addition, each of the 25 county governments in Taiwan has a health liaison bureau, which is responsible for the operation of public health centers within their geographical region under the guidance of the health department.
While the NHI is governed by the central government, most management of NHI is decentralized. The BNHI is the primary overseer of NHI, acts to set the annual national budget, and implements most policy in a centralized, top-down fashion. The BNHI also acts as the primary intermediary between the insured and the providers. Oversight of the NHI is also provided by the NHI Supervisory Committee (NHISC), which provides a forum for social associations, employers and providers to communicate with one another; the NHI Disputes Mediation Committee (NHIDM), which mediates disputes between the insured and providers; the NHI Expenditure Negotiation Committee (NHIENC), which negotiates the payments for providers under the Global Budget Payment; and the NHI Task Force. The daily management of the NHI, however, is highly decentralized. The BNHI distributes responsibilities to the 6 regional divisions and local governments.
Providers obtain their revenues from 3 sources: 1) payments by the NHI; 2) patient user fees and co-payments; and 3) proceeds from the sale of products and services not covered by the NHI.
The government acts as the single-payer system with a uniform payment schedule that has effectively controlled the cost shifting that occurred frequently before the implementation of NHI.
Providers obtain their revenues from 3 sources: 1) payments by the NHI; 2) patient user fees and co-payments; and 3) proceeds from the sale of products and services not covered by the NHI.
The government acts as the single-payer system with a uniform payment schedule that has effectively controlled the cost shifting that occurred frequently before the implementation of NHI. Initially, NHI providers were paid on a fee-for-service basis, however providers were able to make sizable profits by overprescribing medications and ordering unnecessary procedures, leading to quickly rising per person expenditures. Hospitals in Taiwan reward their staff physicians individually for bringing in revenue, known as a “professional fee,” further encouraging physician-induced over-prescription. The Bureau of National Health Insurance (BNHI) estimates that overuse and misuse of health care may constitute up to a third of BNHI’s expenditures.
Facing the need for cost containment, BNHI introduced a reasonable volume standard for outpatient visits coupled with a sliding fee schedule for visits above the volume standard, which discouraged supply-induced demand and reduced the number of visits per person. BNHI also reduced the high profit margin that clinics and hospitals can obtain from dispensing drugs by reducing the reimbursement rates for drugs, using reference pricing, and encouraging the use of generic drugs. The NHI experimented with different payment systems, such as diagnosis-related groups (DRGs) for hospitals, primary care capitation for certain population groups, and even performance-based payments. DRGs were phased in for the 50 most common diseases and treatments, which effectively reduced the average length-of-stay in hospitals.
The ultimate cost control measure, however, has been the imposition of global budgets for hospital outpatient and inpatient services in 2002. This remains highly controversial because global budgeting incorporates an aggregate fixed sum budget imposed on all hospitals in Taiwan collectively, creating a zero-sum game in which the players cannot effectively police one another. Reimbursement contracts are negotiated with health care providers on a fee-for-service basis with a uniform pay schedule. A deflation mechanism engages once a service quota is reached, resulting in declining reimbursement rates. Under the global budget payment system, the NHI Medical Expenditure Negotiation Committee convenes and negotiates overall caps on total medical payments based on a set of equations and indicators prior to the beginning of a fiscal year.
Along with the implementation of global budgets, the NHI took several measures to control the demand for selected types of health care, such as increasing copayments for high users of drugs and outpatient services. The global budget payment system with these measures has been successful in containing the annual growth in the health insurance system's expenditures with spending growth leveling out at below 5% a year since it was fully implemented in July 2002.
National Health Insurance
Provider payment mechanisms
Providers obtain their revenues from 3 sources: 1) payments by the NHI; 2) patient user fees and co-payments; and 3) proceeds from the sale of products and services not covered by the NHI.
The government acts as the single-payer system with a uniform payment schedule that has effectively controlled the cost shifting that occurred frequently before the implementation of NHI. Initially, NHI providers were paid on a fee-for-service basis, however providers were able to make sizable profits by overprescribing medications and ordering unnecessary procedures, leading to quickly rising per person expenditures. Hospitals in Taiwan reward their staff physicians individually for bringing in revenue, known as a “professional fee,” further encouraging physician-induced over-prescription. The Bureau of National Health Insurance (BNHI) estimates that overuse and misuse of health care may constitute up to a third of BNHI’s expenditures.
Facing the need for cost containment, BNHI introduced a reasonable volume standard for outpatient visits coupled with a sliding fee schedule for visits above the volume standard, which discouraged supply-induced demand and reduced the number of visits per person. BNHI also reduced the high profit margin that clinics and hospitals can obtain from dispensing drugs by reducing the reimbursement rates for drugs, using reference pricing, and encouraging the use of generic drugs. The NHI experimented with different payment systems, such as diagnosis-related groups (DRGs) for hospitals, primary care capitation for certain population groups, and even performance-based payments. DRGs were phased in for the 50 most common diseases and treatments, which effectively reduced the average length-of-stay in hospitals.
The ultimate cost control measure, however, has been the imposition of global budgets for hospital outpatient and inpatient services in 2002. This remains highly controversial because global budgeting incorporates an aggregate fixed sum budget imposed on all hospitals in Taiwan collectively, creating a zero-sum game in which the players cannot effectively police one another. Reimbursement contracts are negotiated with health care providers on a fee-for-service basis with a uniform pay schedule. A deflation mechanism engages once a service quota is reached, resulting in declining reimbursement rates. Under the global budget payment system, the NHI Medical Expenditure Negotiation Committee convenes and negotiates overall caps on total medical payments based on a set of equations and indicators prior to the beginning of a fiscal year.
Along with the implementation of global budgets, the NHI took several measures to control the demand for selected types of health care, such as increasing copayments for high users of drugs and outpatient services. The global budget payment system with these measures has been successful in containing the annual growth in the health insurance system's expenditures with spending growth leveling out at below 5% a year since it was fully implemented in July 2002.
The central Department of Health is in charge of regulating and making changes to the National Health Insurance system.
The central Department of Health is in charge of regulating and making changes to the National Health Insurance system.
National Health Insurance
Regulation
The central Department of Health is in charge of regulating and making changes to the National Health Insurance system.
The Department of Health is the primary source for monitoring and evaluating the National Health Insurance system (NHI). This has been done primarily through medical claims processing and monitoring patient smart card information. The Bureau of National Health Insurance (BNHI) is required to review reimbursement claims filed by medical institutions. The sheer volume of claims spurred the BNHI to develop an automated claims review system.
The Department of Health is the primary source for monitoring and evaluating the National Health Insurance system (NHI). This has been done primarily through medical claims processing and monitoring patient smart card information. The Bureau of National Health Insurance (BNHI) is required to review reimbursement claims filed by medical institutions. The sheer volume of claims spurred the BNHI to develop an automated claims review system. This helps detect fraud in the claims and also to monitor service utilization.
There is also a peer review process which includes 2 parts: procedural reviews and professional reviews. The BNHI trains and orients panel members on the workings of the insurance system and applicable standards for the review process. In recent years, BNHI has initiated a series of quality monitoring and assurance programs. Using data gathered for Diagnosis Related Groups, BNHI compiles information on re-hospitalizations, repeated emergency department visits, and the use of antibiotics and other prescriptions drugs to share findings with providers to help them improve quality. This is made easier using smart card technology. Each enrollee in the system has a Health Smart Card, which includes provider and patient profiles to reduce fraud and monitor the patient’s medical history. BNHI has created a "Virtual Private Network" (VPN), which links it to hospitals and clinics, and other Internet-based tools that provide health-related information to the public.
Internal monitoring and evaluation, however, is still at a primitive stage. The government only initiated a voluntary hospital accreditation program in 1998 and there is no regulation requiring the systematic reporting of clinical performance, patient outcomes, or adverse events. Furthermore, hospitals are not required to have uniform clinical records systems. There is however a great deal of external interest in Taiwan, which has led a number of external organizations and countries to develop their own studies on Taiwan.
National Health Insurance
Monitoring and evaluation
The Department of Health is the primary source for monitoring and evaluating the National Health Insurance system (NHI). This has been done primarily through medical claims processing and monitoring patient smart card information. The Bureau of National Health Insurance (BNHI) is required to review reimbursement claims filed by medical institutions. The sheer volume of claims spurred the BNHI to develop an automated claims review system. This helps detect fraud in the claims and also to monitor service utilization.
There is also a peer review process which includes 2 parts: procedural reviews and professional reviews. The BNHI trains and orients panel members on the workings of the insurance system and applicable standards for the review process. In recent years, BNHI has initiated a series of quality monitoring and assurance programs. Using data gathered for Diagnosis Related Groups, BNHI compiles information on re-hospitalizations, repeated emergency department visits, and the use of antibiotics and other prescriptions drugs to share findings with providers to help them improve quality. This is made easier using smart card technology. Each enrollee in the system has a Health Smart Card, which includes provider and patient profiles to reduce fraud and monitor the patient’s medical history. BNHI has created a "Virtual Private Network" (VPN), which links it to hospitals and clinics, and other Internet-based tools that provide health-related information to the public.
Internal monitoring and evaluation, however, is still at a primitive stage. The government only initiated a voluntary hospital accreditation program in 1998 and there is no regulation requiring the systematic reporting of clinical performance, patient outcomes, or adverse events. Furthermore, hospitals are not required to have uniform clinical records systems. There is however a great deal of external interest in Taiwan, which has led a number of external organizations and countries to develop their own studies on Taiwan.
Since the implementation of National Health Insurance (NHI), studies indicate that Taiwanese currently have more equal access to health care, greater financial risk protection and more equity in health care financing. The World Health Organization’s Fairness in Financial Contribution Index, which measures inequality in the share of household income spent on health, showed an improvement in equitable financing from 0.881 in 1992 to 0.992 in 1998.
Since the implementation of National Health Insurance (NHI), studies indicate that Taiwanese currently have more equal access to health care, greater financial risk protection and more equity in health care financing. The World Health Organization’s Fairness in Financial Contribution Index, which measures inequality in the share of household income spent on health, showed an improvement in equitable financing from 0.881 in 1992 to 0.992 in 1998. This change in the FFC index indicates that the share of health financing burden borne by households has become more equal since the NHI’s introduction. In total, out-of-pocket payments for patients fell from 48% of the total amount spent on health care in 1993 to 30% in 2000.
With more equality in health care financing, the previously uninsured have increased their usage of medical services. With regards to access, studies indicate that the newly insured consumed twice the amount of outpatient physician visits and hospital admissions than before universal health insurance was implemented, bringing them to the same amount of health care contact as the previously insured group. By contrast, use rates for the previously insured group increased only slightly. Overall, while Taiwan’s population grew 5.2% between 1994 and 2000, total hospital outpatient visits increased by 16.6%, emergency room visits by 42.2%, outpatient surgery by 56.4%, inpatient surgery by 19.7%, kidney dialysis by 80.4%, and inpatient hospitalization by 18%. The aim to remove financial barriers to health care appears to have been effective almost immediately, though it also raises questions about moral hazard.
Although NHI appears to have increased use of the health system, studies have found that the implementation of the single-payer NHI system allowed Taiwan to decrease total direct operating costs to 2%—the lowest in the world—and more effectively manage health spending inflation. Total Health Spending remained almost unchanged at about 5% per year. The universal uniform procedures for reporting, claims-filing, and benefits have reduced administrative costs for health facilities and regulating groups, while the single-payer system provides comprehensive information to create provider profiles that reduce potential fraudulent claims, abuses in coding, and the overuse of tests. In addition, costs were contained by heavily discounting payments to providers, increasing patient out-of-pocket costs for devices and medications not covered by national health insurance. These measures have resulted in savings that largely offset the incremental cost of covering the previously uninsured. In addition, there is evidence that global budgeting in Taiwan has had a positive effect on stemming the rising costs of healthcare that NHI experienced since 1995. Overall growth rates of per capita medical spending for every sector except clinics show declines in 2002, which suggest that global budgets are effective in controlling costs for the time being.
With regards to health outcomes, overall health outcomes improved throughout the country, but the impact was small when the pre-existing health trends were considered. Life expectancy improved after the introduction of NHI from 71.83 years to 74.22 years. Life expectancy increased faster in groups with lower baselines of health, and appeared to decrease slightly for individuals with better health, creating a reduction in disparities for life expectancy between the healthiest and the least healthy groups by .62 years. The groups with poorer health also witnessed a reduction in mortality rates from cardiovascular diseases. These findings indicate that health insurance coverage had a significant impact on vulnerable populations and a more modest effect on the larger population. The Satisfaction rate is as high as 80%, indicating the system is broadly favored by the public.
National Health Insurance
Results of the reform
Since the implementation of National Health Insurance (NHI), studies indicate that Taiwanese currently have more equal access to health care, greater financial risk protection and more equity in health care financing. The World Health Organization’s Fairness in Financial Contribution Index, which measures inequality in the share of household income spent on health, showed an improvement in equitable financing from 0.881 in 1992 to 0.992 in 1998. This change in the FFC index indicates that the share of health financing burden borne by households has become more equal since the NHI’s introduction. In total, out-of-pocket payments for patients fell from 48% of the total amount spent on health care in 1993 to 30% in 2000.
With more equality in health care financing, the previously uninsured have increased their usage of medical services. With regards to access, studies indicate that the newly insured consumed twice the amount of outpatient physician visits and hospital admissions than before universal health insurance was implemented, bringing them to the same amount of health care contact as the previously insured group. By contrast, use rates for the previously insured group increased only slightly. Overall, while Taiwan’s population grew 5.2% between 1994 and 2000, total hospital outpatient visits increased by 16.6%, emergency room visits by 42.2%, outpatient surgery by 56.4%, inpatient surgery by 19.7%, kidney dialysis by 80.4%, and inpatient hospitalization by 18%. The aim to remove financial barriers to health care appears to have been effective almost immediately, though it also raises questions about moral hazard.
Although NHI appears to have increased use of the health system, studies have found that the implementation of the single-payer NHI system allowed Taiwan to decrease total direct operating costs to 2%—the lowest in the world—and more effectively manage health spending inflation. Total Health Spending remained almost unchanged at about 5% per year. The universal uniform procedures for reporting, claims-filing, and benefits have reduced administrative costs for health facilities and regulating groups, while the single-payer system provides comprehensive information to create provider profiles that reduce potential fraudulent claims, abuses in coding, and the overuse of tests. In addition, costs were contained by heavily discounting payments to providers, increasing patient out-of-pocket costs for devices and medications not covered by national health insurance. These measures have resulted in savings that largely offset the incremental cost of covering the previously uninsured. In addition, there is evidence that global budgeting in Taiwan has had a positive effect on stemming the rising costs of healthcare that NHI experienced since 1995. Overall growth rates of per capita medical spending for every sector except clinics show declines in 2002, which suggest that global budgets are effective in controlling costs for the time being.
With regards to health outcomes, overall health outcomes improved throughout the country, but the impact was small when the pre-existing health trends were considered. Life expectancy improved after the introduction of NHI from 71.83 years to 74.22 years. Life expectancy increased faster in groups with lower baselines of health, and appeared to decrease slightly for individuals with better health, creating a reduction in disparities for life expectancy between the healthiest and the least healthy groups by .62 years. The groups with poorer health also witnessed a reduction in mortality rates from cardiovascular diseases. These findings indicate that health insurance coverage had a significant impact on vulnerable populations and a more modest effect on the larger population. The Satisfaction rate is as high as 80%, indicating the system is broadly favored by the public.
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