Lessons from Taiwan: National Health Insurance
Soon I will receive my National Health Insurance (NHI) card from the Taiwan government. I’m pretty excited about this because if you had to make a case for which country in the world has the best healthcare policy, it would be pretty easy to make a strong argument for Taiwan. The island nation adopted its government administered insurance-based national healthcare system in 1995 as democracy began to bloom. While people were hesitant about the program at first, today nearly 90 percent of Taiwanese people approve of the NHI system, up from 40 percent when the program was first introduced.
And it makes sense why the people are so happy, there is a lot to love about healthcare in Taiwan. For starters, Taiwanese people can see any doctor at any time, they don’t have to spend their days making phone calls searching for doctors that are in their providers network like most Americans are accustomed to doing. Once they are at the doctor, the costs are relatively cheap. Each Taiwanese person can receive an annual cancer screening for free and residents over 65 can attend a check up for no cost. Other visits have very small co-pays. A physician visit with a referral costs about $3 on average, while a visit without a referral cost about $9. For NHI covered drugs, the copay is $6.64 per outpatient visit, regardless of the number of drugs prescribed. No single diagnosis can cost a person more than $2,112 per year and all healthcare costs of low-income residents are subsidized.
Because going to the doctor is such a convenient and affordable experience, Taiwanese people go a lot — on average 12.1 times per year. Yet, while concerns of over usage are warranted, Taiwan still manages to keep its overall expenditures on healthcare exceptionally low. Taiwan spends just 6 percent of its GDP on healthcare, America spends nearly three times that amount at about 17 percent. Despite spending less, Taiwan beats the United States on a variety of important health outcomes, including life expectancy and infant mortality.
Another advantage of Taiwan’s national health insurance system is its centralized medical records. Each person’s medical history is automatically downloaded via a chip in their NHI card, making it simple and easy for doctors to provide care with as much information as possible. In contrast, the US has an antiquated system that often leaves patients and doctors hunting for medical records. It can feel like some of your records have vanished completely if you move to another state or your primary care physician’s office closes down. Universal medical records are a key component of a national health insurance system that can boost the medical experience for patients and doctors alike and ensure people are provided with the most accurate care.
While about 1 in 10 Americans lack health insurance, Taiwan’s NHI is just one of a myriad of ways that other developed nations have achieved universal health coverage. In the UK, healthcare is completely nationalized, meaning the government does not simply pay for the healthcare, it also provides it via the National Health Service. Germany has what’s called a universal multi-payer health care system which blends together private employer based insurance and public insurance to ensure that everyone is covered. Other countries mix together these approaches to ensure universal coverage.
Still, Taiwan’s approach stands out as the best. Countries seem to lack the state capacity to completely socialize healthcare and multi-payer systems seem to add unnecessary complications and administrative costs. For example, the U.S. spends more than 8.5 percent of its healthcare expenditures on administration, Taiwan spends less than 2 percent.
Yet just because Taiwan has the best healthcare system does not mean it has a perfect healthcare system. Taiwan has just 1.7 doctors for every 1,000 patients while the OECD average is 3.3. There are still large disparities in healthcare access and outcomes in rural communities compared to the wealthier urban counterparts. And the NHI is at serious risk of running out of funds in the next two decades.
Yet, as the US debates moving to a single payer system (Medicare For All) we should learn from these mistakes not abandon universal national health insurance altogether.
For example, some may look at over usage in Taiwan and believe that it is important that the U.S. keep higher copays to reduce the incentive for people to go to the doctor. Yet large copays run the risk of people skipping out on needed care that can reduce their life expectancy or lead to more costly procedures down the road. A better solution would be to ensure that increases in demand are matched with equal or greater increases in supply. The US currently makes it really difficult for people to become a doctor and places unnecessary restrictions on which medical professionals can perform which tasks. Some simple solutions would be to increase immigration, make medical school free, and allow nurses and nurse practitioners to perform more procedures. I’d be remiss if I didn’t at least acknowledge the role the American Medical Association (AMA) plays in reducing the supply of doctors.
On another note, lower outcomes in rural and impoverished areas shows the limits of profit seeking private providers. In rural areas with less density, hospitals will see less patience and thus less revenue. The government can either step in to subsidize rural providers or nationalize hospitals that fail to make a profit. Government run hospitals would not need to break-even, losses could simply be filled in with tax revenue and it could be seen as a way to slowly build the state capacity to nationalize healthcare in the future.
Finally, a government run health insurance program can’t really run out of funds. Without going too deep into monetary policy, the government could simply spend more money. After all, the US creates its own currency. Still, some may worry that increasing the money supply to pay for health expenditures may cause inflation, so additional funds can always be raised through the tax code.
By looking at Taiwan’s system, US advocates for national health insurance can spend more time coming up with actual solutions to real problems instead of engaging in pointless debates over affordability or vague claims of socialism. Yes, the U.S. can afford National Health Insurance, and no the government cutting the check for healthcare does not mean the end of the free market. Let’s move on to some actual substance.
For now, I’m excited to be covered by Taiwan’s NHI, but I’ll be back in the US by the end of the year, anxiously waiting for my employer sponsored health insurance to kick in. If I get injured, I know I’ll spend hours on the phone looking for which provider in my network offers the best deal and still probably footing a large bill. But, I know that no matter my healthcare woes I am still privileged in the American system. Thousands of Americans die each year due to being under or uninsured. We can and must do better and as I consider my role in the cultural exchange initiatives of Fulbright, I also dream of some policy exchange as well. The US has many lessons to learn from Taiwan and vise versa. This will be just the first in a series of blog posts investigating what the two countries have to learn from each other and how we can build a fairer and better world.
