For years, the National Health Insurance (NHI) system has been described as on the brink of insolvency. But is the NHI really at risk of collapsing?

The year was 2007. Then-Deputy Minister of Health Chen Shih-chung – yes, the same man who 15 years later would shepherd Taiwan through the COVID crisis with minimal harm – announced gravely: “The National Health Insurance (NHI) system is on life support.”

“We have a terrific NHI, ranked second in the world by The Economist,” said a visibly frustrated Chen. “It serves 99% of the population, it covers an extremely wide range of medical treatments, it has extremely low administrative costs – but we have to be willing to pay to keep it going.”

Chen was speaking at the Bureau of National Health Insurance’s year-end news conference. As a health reporter for the Taipei Times (my first job in the media), I dutifully wrote my copy: “The NHI totters on the brink of insolvency.”

That sentence, and various paraphrases of it, had been written by numerous reporters in all types of outlets long before I wrote it for the Taipei Times. And although my career took me away from health reporting, I couldn’t help but notice how many variations of the same story kept appearing. For example, Taiwan Business TOPICS in 2019 published a cover story titled “The Looming Challenge for National Healthcare Insurance.”

The story’s lead reads: “For the time being, Taiwan’s highly popular universal healthcare program is still solvent. But due to rising costs and a rapidly aging population, the system may run out of funds within two years unless increased premiums and other reforms are put in place.” While some of the details had changed, it was in essence an article that could have been written in 2007.

How is it possible for such a popular system – the NHI garnered an approval rate of 91.6% in 2021, according to the National Health Insurance Administration (NHIA) – to exist for decades in a state of near-permanent financial crisis? Will it ever reach a state of stability? To get to the bottom of this issue, I sit down with Donald TF Shang, director-general of the Department of Social Insurance at the Ministry of Health and Welfare.

“So this is why some of your questions were so… vintage,” Shang says when I tell him that a snapshot of the NHI’s current financial state will not suffice. Having tracked the story for a decade and a half, I want the long-term, panoramic view of the NHI’s true financial situation.

Shang pulls out a chart showing two ascending lines. The blue line shows the annual costs of the NHI, while the dotted red line represents the income of the insurance scheme. The red line weaves around the blue line, sometimes going over it, sometimes dipping under.

When the NHI scheme was launched in 1995 the plan was to readjust the premiums every five years. In fact, a 2013 amendment to the National Health Insurance Law called for annual adjustments of premiums. But in practice, raising premiums is such an unpopular political move that rates have been increased only thrice, all when the red line dipped under the blue: first in 2002, again in 2010, and most recently in 2021.

In fact, premiums were even lowered twice, once in 2013 and once in 2016. The latest reduction came after updated NHI rules closed a loophole for non-traditional payment structures, allowing premiums to be collected from entertainers, speakers, and other workers with a non-traditional salary. Due to the expansion of the collection base, the red line temporarily surpassed the blue, and pressure mounted for the NHI to cut premiums.

“We didn’t want to do it – we knew that was short-sighted,” says Shang. Indeed, NHI immediately returned to a state of financial turbulence after the 2016 rate cut.

Penny-wise but pound-foolish

Who decides the rate hikes and cuts? That would be the National Health Insurance Committee (NHIC). This 39-member body, made up of representatives of the insured, employers, medical providers, “reputable public figures,” and representatives from relevant agencies, keeps a tight leash on the NHI’s finances.

The good news is that despite the doom-and-gloom headlines over the years, the NHI is nowhere near an insolvency-induced collapse. The program is too popular and serves too many people. But the committee, a proxy for popular and expert opinion, loathes hike rates and will cut them if any surplus appears.

This state of affairs is highly suboptimal, argues Shang. He was a thoracic surgeon for 20 years before the SARS outbreak in 2003 made him realize that he “wanted to do more than save one patient at a time.” After that, Shang went into public health. “Our task is to convince the public that it’s worth it to spend a little more money on their health,” he says.

Shang doesn’t contest that Taiwan’s current NHI system provides excellent value for money. Healthcare spending across OECD countries was 9.7% of GDP in 2020. In the U.S., that number reached a whopping 19.7%, while in Taiwan total healthcare expenditure was just 6.69%. The 6.69% spending includes NHI, out-of-pocket payments, non-NHI government spending, and business spending.

Back in 2007, when annual NHI expenditure accounted for around 3% of GDP, then-Deputy Minister Chen urged the nation to increase NHI spending to 5%. Thirteen years later the annual NHI spending in 2020 was just 3.54%.

While some would hail Taiwan’s system as a paragon of thriftiness, Shang shakes his head at the stagnation. “Do you think our current system is that great?” he says. “For chronic diseases, it certainly can be better.” One example he provides is the treatment of Hepatitis C. Although newer medications have a high cure rate, they are not covered by the NHI, and people in Taiwan who cannot afford to pay out of pocket are forced to live with the disease.

A balance must be struck between fairness, efficiency, and quality of healthcare. In Shang’s opinion, too much emphasis has been placed on efficiency.

“Remember before the time we had the high-speed rail?” he says. “Everybody complained about the cost and predicted that nobody would pay that much money. Now that it’s been built, we wouldn’t think of doing without it.” The same would hold true for increased investment in the NHI, but the challenge is persuading people that moving forward is better than staying put.

Just as the SARS epidemic made him reconsider his career choices more holistically, Shang hopes that COVID-19 will encourage people to see the big picture of healthcare. “COVID revealed gaps in our services that we would do well to fill – none more so than the in-hospital caretaking issue,” he says.

Unlike hospitals in the U.S. and many other OECD countries, orderlies are all but missing in Taiwanese hospitals. All medical procedures are handled by doctors and nurses, but patients’ families are responsible for personal care, including bathing, dressing, feeding, and transporting the patients in wheelchairs and moveable beds, with the exception of those in intensive care units. Individuals without family support need to hire caretakers, who do not need licensing for this type of work.

The problem with Taiwan’s patient care procedures became apparent during COVID when family members and caretakers were restricted from entering hospitals. The lack of professional alternatives for caretaking created a gap in care. This should be a wake-up call to amend the system, notes Shang.

“The caretaking of patients should not be left solely to the family and unlicensed caretakers,” he says. “Not only did it cause a care crisis during COVID – even during ordinary times, something like post-operative care should be handled by professionals with the proper training.”

The reason professionals in Taiwan do not handle non-medical care is, again, cost. Shang notes that there are pilot programs with some 50 participating hospitals to “improve the skill mix.” This entails hiring lower-skilled but qualified staff for caretaking. But these types of efforts still face many opposing voices, including from hospitals that are already under-resourced and don’t want to shoulder the responsibility of caretaking – and liabilities from any accidents – currently borne by families.

Doctor burnout

The real unsustainability of the Taiwanese system is the growing workload placed on medical staff, especially in hospitals, notes a psychiatrist who prefers to remain unidentified. “Every hospital doctor I know is completely burnt out, and it’s worse for the nurses,” he says. “I got out as soon as I could.”

“Exploitation” is not an overly harsh description of the situation according to the psychiatrist, who runs a clinic in the Greater Taipei metropolitan area. While he accepts NHI patients, most of his income comes from non-NHI treatments and services, including therapy. “When I see a patient, the payment is NT$200,” he says. “When I was in the U.S., I went to a CVS mini-clinic for a 10-minute consultation with a doctor. The price was 200… U.S. dollars.”

It seems that patients in Taiwan are getting filet mignon at hamburger prices – but how?

“We, the medical professionals, have no power, and we are brainwashed,” says the psychiatrist. “Starting from medical school, it’s all about duty and sacrifice and how real doctors work at hospitals. But more and more, people don’t want to do it anymore.” He estimates that about half of the doctors and nurses he knows who still work at hospitals are looking for a way out. “Ever noticed how many medical beauty clinics there are nowadays?”

Ironically, medical professionals who specialize in “self-pay” procedures such as cosmetic surgery, weight loss, or cosmetic dentistry are likely to be far better remunerated than doctors and nurses in specialties that save lives. This will inevitably result in a hollowing out of the talent pool, says the psychiatrist. “People are selfish. Doctors and nurses are not saints.”

I ask him what reforms he thinks are needed to create an NHI that is sustainable for everyone, including the medical community. “The Taiwanese system sacrifices the doctors, the U.S. system sacrifices the patients,” he says. “If only we can find a place in the middle. But I’m not counting on it.”

Shang is well aware of the plight of medical professionals. “I wrote op-eds pointing out this very problem with the system when the NHI first started,” he says with a chuckle. The irony of the critic becoming the administrator is not lost on him.

Shang hopes that the NHI can move forward in a positive direction with greater investment for better services. “We want to reward our medical professionals for better outcomes, not bigger output,” he says.

Even at prestigious hospitals in Taiwan, patients have access to specialists on a same-day basis. The catch is that you might get less than two minutes with your doctor, whom you will need to pay out of pocket. Patients like the system because having access to the doctors they want makes them feel in control. From a public health point of view, however, Shang sees drawbacks. “There is no opportunity for the doctor to actually get to know the patient, and quality inevitably suffers,” he says.

Finally, I have my answers. No, the NHI is not “tottering on the brink of insolvency.” More accurately it is a beast of burden, always fed enough to survive but never enough to thrive. Taiwan could maintain its current system indefinitely, as long as it doesn’t push medical professionals to the point of quitting en masse.

But if Taiwan wishes to become a world leader in healthcare, there is another option: investing in a better, more comprehensive system.

“I hope one day the people of Taiwan can think more holistically and recognize the value of investing in medical quality,” says Shang. “Increasing spending on the NHI is absolutely not wasted if it comes back to the people in greater health.”