Taiwans National Health Insurance: overview and perspectives

1
Taiwans National Health Insurance overview
and perspectives
2
Characteristics of NHI (1)

• Mandatory enrollment
• Government-run insurer
• Single-payer insurance system
• Comprehensive benefits coverage

3
Characteristics of NHI (2)

• Payroll-related premiums shared by employers,
  employees, and the governments
• Copayment required for ambulatory care, inpatient
  care, and pharmaceuticals
• Fee-for-services payment system

4
Premium Contribution Equations

• Wage-earners
• Employee Insured amount x 4.25 x
  Contribution share
• x (1 no. of
  dependents up to 3 persons)
• Employer Insured amount x 4.25 x Contribution
  share x (1 0.78)
• Insured amounts ranging from NT15,840 to
  NT57,800 classified by 29 grades based on
  employee's declared monthly income
• Community EnrolleeA flat premium rate of NTD604
  
• (Ringgit73.5)
• 
  

5
The Structure of NHI
Medical Claims
6
Eligibility

• Citizens with household registry
• Legally employed foreigners
• Foreigners with resident permits for at least
  four months
• Dependents of the above mentioned persons
• Exclusion prisoners

7
Benefits Coverage

• Inpatient care
• Ambulatory care
• Laboratory and X-ray examinations
• Prescription drugs and certain OTC drugs
• Dental services
• (Orthodontics and Prosthodontics excluded)
• Traditional Chinese medicine
• Day care for the mentally ill
• Limited home health care
• Certain preventive services

8
Medical Expenses -- by service (January of
1999- December of 1999)
Physician Services 55
Pharmacy 0.72
Chinese Medicine 4
Inpatient Services 32
Dental Care 8
9
Premium Revenues -- by source (January of 1999-
December of 1999)
The Insured 39
Government Subsidy 28
Employer 32
10
Trends of NHI Financial Status(March of 1995 -
December of 1999)
11
Total Health Expenditures as of GDP 1983-1999
out-of-pocket
12

• Multiple Payment Systems
• Fee-for-services
• Case Payment (DRGs)
• Global Budget
• Capitation

13
Evaluation of NHI
1. Equity Comprehensive health care services
guaranteed for all citizens with very low
cost-sharing at point of service. 2.
Accessibility Provider contract rate over 90,
making medical services convenient and
accessible. 3. Cost Containment Total health
expenditure as of GDP is still low at
5.44(1999). 4. Administration Cost Only 2.21
of the total health insurance expenditure in
1999. 5. Quality Overall satisfaction rate
agreeable, recently scored 75.4(2000.12.07).
14

• Major reform of the system
• Equity of premium contribution
• Multiple carrier.
• Payment system reform
• Case payment
• Global Budget
• Financial viability.
• Quality of medical service.

15
Moral Hazard

• There are three types of moral hazard effects
• Incentive and ex ante moral hazard,
• Incentive and static ex post moral hazard,
• Dynamic ex post moral hazard,
• referring to the insureds tendency to reduce
  preventive effort, to demand more medical
  services, and to opt for the newest medical
  technology, respectively, compared to the
  situation where the individual paid the full cost
  of his or her actions.
• 
  (Culyer Newhouse , 2000)

16

Moral Hazard
The response of seeking more medical care with
insurance than in its absence is a result not of
moral perfidy, but of rational economic behavior.
(Mark Pauly, 1968)
17
Tradeoffsbetween cost control and accessibility
A. Measures of cost-sharing reduce the necessary
and unnecessary medical services at the same
time. B. Copayment reduces utilization but not
the intensity of medical services. C.
Cost-sharing at the point of service are
regressive, i.e. the burden is more on the poor
then the better-off.
18
Cost-sharingPrevention of Moral Hazard
1. Coinsurance 2. Copayment 3. Deductibles 4. MSAs
19
NHI Act 35
Coinsurance for Inpatient Care
(Acute Ward)
(Chronic Ward)

• Copayment ceilings NT23,000 (MYR2800) per stay
  or NT39,000 (MYR4750 ) cumulative for the
  entire calendar year (within 30 days in the acute
  ward or within 180 days in the chronic ward)

(1 MYR 8.21 NTD)
20
User Fees for Ambulatory Care
UnitNT(US)
(1 USD 33 NTD)
21
NHI Act 36
Exemption from Coinsurance
1. Catastrophic diseases 2. Child delivery 3.
Preventive health services 4. NHI medical
services offered at the defined mountain areas or
on offshore islands.