Amid profound demographic shifts, Taiwan needs to come up with new strategies to safeguard the health of the population and ensure continued economic viability.
As Taiwan has undergone deep-seated economic and societal changes over recent generations, the fertility rate (the average number of children born per woman) has declined dramatically, from seven births in 1951 to just 1.09 in 2023 – one of the lowest rates in the world. Due to the low number of births and increased longevity, a marked increase has occurred in the elderly proportion of the population: from 2.5% over 65 years of age in the 1950s to 17.6% in 2023.
Taiwan is projected to become a super-aged society (meaning at least 20% of the population aged 65 or older) by 2025. Come 2060, Taiwan’s elderly are anticipated to account for a staggering 41% of the population. But this is not just Taiwan’s problem. By 2025, it will join a list of super-aged societies that already includes Japan, Italy, Portugal, Finland, France, and Greece – countries that are wrestling with implementing and funding numerous policies in response to changing demographics.
The National Development Council has predicted that Taiwan’s dependent population – including children and people aged 65 or older – will reach 53.2% by 2030 and will outnumber the working population by 2060. Providing for this sector of the population will be an immense challenge. A well-balanced workforce of young and old people is essential for long-term economic development. As this balance shifts in favor of older people, productivity suffers on the one hand, while the older population places greater demands on healthcare services on the other.
Still, an aging population can prove to be a boon for certain business sectors, from the medical industry to long-term care, housing, services, and even robotics. What has been dubbed the “care economy” combines the paid work of professionals with the unpaid efforts of patients and their family members to help produce “health,” an increasingly quantifiable concept.
While the government last year increased the child-rearing allowance from NT$3,500 to NT$5,000 per month for each child aged between two and five and introduced paid maternity leave and a new baby cash bonus, the birthrate is expected to keep declining. The reasons behind this trend are multifaceted – the cost of childcare is substantial, and parents are struggling to find vacancies in daycare centers, whether public or private. These factors, combined with a declining marriage rate, delayed parenthood, and a societal shift from regarding child raising as aspirational to viewing it as an economic burden (especially considering the rapidly increasing cost of housing and education, as well as stagnant wage levels and long working hours) make increasing birthrates an unlikely scenario for Taiwan. As a result, ensuring that people remain active and healthy later in life becomes not only a social issue but also an economic imperative.
Staying mentally active is a key component of delaying or abating Alzheimer’s and similar degenerative brain diseases that come with age. To promote active learning, the Ministry of Education in 2006 released a White Paper emphasizing six principles for older adult learners that include resource integration and sharing, localized solutions, civil engagement, and professional development.
There are thousands of classes for older adults throughout Taiwan, providing lifelong learning that benefits mental health, cognitive functions, and societal inclusion. Many of these classes are at open universities where students of all ages attend, interact, and cooperate.
To encourage older people to remain engaged in society, Taiwan has also promoted job training programs for senior workers. These programs help contribute to the economy by extending individuals’ working years, lessening their societal burden, and contributing to overall health.
Another effective approach to addressing the issue of the shrinking workforce is to consider easing immigration requirements, allowing more people to relocate to Taiwan and contribute to its workforce. For this to be effective, Taiwan would need to realign its Employment Gold Card – a special visa program for high-level foreign professionals – and open a broader swathe of the job market to foreigners (see the article on migration in this issue).
Perceptions and outcomes
But the most significant challenge of an aging population, many argue, is its impact on an already heavily burdened healthcare system. The average annual growth rate of Taiwan’s National Health Insurance (NHI) expenditures has usually exceeded that of income, and spending has increased significantly in the past decade. According to NHI data, its budget has increased from approximately NT$320 billion in 2002 to NT$830 billion in 2023.
Although the increase looks significant, total healthcare expenditure as a percentage of GDP has risen only modestly from 5.5% in 2002 to 6.1% in 2022. In comparison, the United States’ health expenditure accounts for 16.8% of its GDP, Japan’s 10.9%, and Korea’s 9.7%.
Yet despite Taiwan’s low numbers, online database NUMBEO has ranked Taiwan’s healthcare system as the world’s best from 2019 to 2023. Reasons for Taiwan’s high ranking include its highly trained medical staff, modern facilities, and a public satisfaction rate of around 90%. But that satisfaction rate might be different if the polling were limited to long-term patients, since a majority of the population is healthy and doesn’t rely on the healthcare system to survive. Overall satisfaction doesn’t necessarily equal solid health outcomes.
“Taiwan is in many cases good at screening and early detection,” says Pongo Peng, general manager of biopharmaceutical company Gilead Sciences Taiwan and co-chair of AmCham Taiwan’s Public Health Committee. “But despite this, our health outcomes are not better than those in neighboring countries. We need to look at what’s causing this.”
According to the Ministry of the Interior, life expectancy in Taiwan has significantly improved over the years – from 54.9 years in 1951 to a high of 80.9 years in 2022. While these advancements are impressive, Taiwan’s life expectancy still falls short of that in countries like South Korea, where it stands at 83.4 years, and Japan, which leads the region with an expectancy of 84.6 years.
Cancer screening and outcomes also show Taiwan lagging behind South Korea. In 2022, the overall cancer mortality rate in Taiwan reached 222.7 per 100,000 people, a year-on-year increase of 1.2% and significantly higher than Korea’s 157.4. The level of screening, which is the first line of defense against cancer, was also unimpressive in comparison. Despite the more than 100 mobile breast cancer screening facilities spread across Taiwan, screening coverage for the disease in 2022 was only 40%, far below Korea’s 66%.
An August report prepared by accounting firm PricewaterhouseCoopers Taiwan (PwC Taiwan) for the International Research-Based Pharmaceutical Manufacturers Association (IRPMA) further showcases how Taiwan’s healthcare spending puts it at a disadvantage compared with its neighbors. Titled Invest in Healthcare: A Review of Healthcare Outcomes and Expenditures in Taiwan, the report tracks Taiwan’s health expenditure and data and compares it to several countries, focusing mainly on Japan.
The PwC report explains that the Japanese government provides subsidies from general tax revenue to its health insurance system to enhance social security. In contrast, government funding for Taiwan’s NHI is limited primarily to insurance premiums shared by the insured, employers, and the government. In addition, Japan has established a medical care system for those aged 75 and above to cater to specific and more resource-intensive procedures and medicines, from rehabilitation to palliative care. Also worth noting is that Taiwan’s compulsory contributory health insurance payments come to 3.4% of GDP, while Korea’s is 4.3% and Japan’s a whopping 8.3%.
More investment needed
Healthcare spending in Taiwan is capped by what is called the global budget, a system in which healthcare providers receive a fixed, predetermined sum for all services rendered during a specific period. This system compels healthcare providers to manage costs beyond the set limit while maintaining quality outcomes, fostering an incentive to reduce unnecessary utilization and prioritize prevention. In Taiwan, the budget process involves a negotiation between the National Health Insurance Administration (NHIA) and the healthcare sector.
“The global budget provides protection, but at the same time it causes lots of constraints when it comes to introducing new products and technologies to the market,” says Gary Wong, general manager of multinational healthcare company Baxter International’s Taiwan branch. “The government should be accountable for providing services to patients, no doubt. But at the same time, if patients are willing to pay extra for higher-quality products, they should have the opportunity to make well-informed choices regarding their health.”
Another industry representative familiar with the matter suggests two measures that should be implemented as soon as possible: increasing government investment in healthcare overall and in novel treatments that can improve quality of life and relieve caregivers’ burden. “We have to think ahead how to ensure the young and adult will not carry too much burden due to a super-aged society to retain their productivity, which is critical for the economic development,” they say.
“Government leaders should make a clear commitment to increase the investment in healthcare along with clear strategy, implementation plan, and timeline,” the representative adds. “The President should supervise this commitment as a national-level strategic policy plan.”
Gilead’s Peng notes that reshaping the perception of healthcare from a burden to a valuable investment that enhances productivity should primarily be driven by the government. However, Peng stresses that the enhancement of health outcomes among the Taiwanese population will also heavily depend on significant contributions from public-private partnerships.
Pfizer Taiwan Country Manager, Cellina Yeh, echoes this sentiment, stressing that it’s “crucial for all stakeholders to understand the long-term benefits of investing in health and demonstrate the positive impact of healthcare investments.” Chiu also believes that shifting the perspective of healthcare from being viewed as a cost to being regarded as an investment requires a multifaceted approach that encompasses policy changes and public awareness.
Achieving such change will require the collective effort of policymakers, healthcare professionals, community leaders, patients, and industry to shape future policy that recognizes health as a strategic investment. Policy goals should encompass broader dimensions, including average life expectancy, cancer survival rates, quality of life, well-being, and other outcomes, says Chiu. She suggests establishing a cross-ministerial task force that reports directly to the Executive Yuan to facilitate cooperation among ministries and government agencies.
Another piece of the puzzle is incorporating digital health solutions. In a May presentation to AmCham Taiwan members, NHIA Director General Shih Chung-liang stressed the administration’s commitment to digital health transformation. One of the NHIA’s approaches is working to connect hospital systems with the central government to drive the efficiency of the healthcare process and enable information sharing.
Baxter’s Wong says that while he welcomes these developments, digital healthcare transformations should further include new products and services that enable remote treatment and monitoring. He notes that during the pandemic, the Taiwan government implemented several successful telemedicine programs. To improve efficiency and patient safety, Wong says the government should continue promoting such programs.
“Home therapy can and should be the preferred choice in many cases,” he says. “Digital solutions like remote patient monitoring would make sure that the patient can safely receive treatment at home without exposure to the risk of infection in hospitals. At the same time, it would reduce the burden of the healthcare system.”
But these solutions would require a shift in the reimbursement system for healthcare providers. Healthcare professionals in Taiwan receive payments for face-to-face interactions, and there is currently no mechanism that reimburses remote services. To enable digital health, Wong suggests establishment of a dedicated contact window to address this and other challenges, as well as to help streamline projects.
“This solution is not just about the Ministry of Health – it includes IT and the FDA (Food and Drug Administration), and other departments,” says Wong. “It’s cross-functional. If we could have a single point-of-contact that helps drive digital health and pilot projects, that would encourage industry to work with hospitals and initiate some budget.”