Reforming Taiwan’s National Health Insurance System: The Problem

Reforming Taiwan’s National Health Insurance System: The Problem
What you need to know

Hailed as one of the world's best healthcare systems, Taiwan's national health insurance is facing the risk of bankruptcy. What went wrong?

This is the first part of a series on reforming Taiwan’s National Health Insurance system.

Lately there have been calls to raise Taiwan’s National Health Insurance (NHI) premiums to avoid bankrupting the healthcare system. 

Taiwan’s healthcare expenditures have increased steadily over the years (5.1 percent at a compound annual growth rate), and there is currently a budget shortfall.

The Ministry of Health in February released data on the total expenditure for NHI in 2018, which had exceeded NT$714 billion and had a deficit of almost NT$25 billion. 

Yet the situation is not as dire as some proclaim. The latest data from 2018 shows Taiwan’s healthcare spending at 6.6 percent of GDP, much lower than the United States at 17.7 percent, United Kingdom at 9.6 percent, and Japan at 10.9 percent.  

With this current financial trajectory, the Taiwanese government will inevitably need to raise premium rates or allocate a greater portion of the national budget to healthcare. Taiwan’s economic growth rate (estimated at 1.67 percent for 2020) is far below NHI’s growth in spending. Merely increasing premiums is a temporary solution that lacks introspection on why healthcare costs are increasing. 

Quantity over quality

Taiwan’s healthcare system has been praised for its minimal wait times, low cost, and convenient access for outpatient visits; but these services also contribute to waste. Due to the system’s incredible accessibility, the average patient visits the doctor 15 times a year compared to seven visits for OECD countries in 2018. 

Some of these visits could be reduced if doctors spent more time listening to and addressing patients’ concerns. Many doctors spend less than five minutes per consultation in order to see as many patients as possible and maximize the fees they receive from NHI. Patients with complex medical problems may only have time to talk about one issue and invariably seek further consultation from other doctors. 

Along with these short visits, doctors’ diagnostic accuracy suffers and their treatment recommendations may not be as effective. In the absence of an accurate diagnosis, many doctors are likely to prescribe multiple medications during each visit to broadly cover a range of possible illnesses while increasing their drug reimbursement rates. However, overmedication leads to antibiotic resistance, unnecessary side effects from drug interactions, and wasted medical resources. 

The 15 provider visits per year are further exacerbated by unproductive visits. For example, doctors ask patients to come for follow-up appointments to check lab results. If the lab results are normal, the visit wastes the patient’s time and out-of-pocket expenses to pay for the brief visit. Given Taiwan’s prowess in software, an online patient portal that clearly explains lab results would be preferable. 

No guidance from primary care physicians

Some patients may immediately ask for a CT or MRI scan if they have a headache or minor ailment. The doctors may oblige even if these scans are not helpful, subject patients to unnecessary radiation, and ultimately cannot diagnose migraines or headaches. And 15 percent of all patients who receive a CT or MRI scan fail to even return to review their results.  

Waste also occurs when patients are responsible for coordinating their own care. Unlike other countries where a primary care physician acts as a gatekeeper to see specialists, patients in Taiwan can choose to see any specialist they want rather quickly. But this assumes the patients are able to conduct a basic diagnosis of themselves and choose to the right kind of specialist. 

Patients may also be prone to misusing the emergency department and increase the healthcare system’s costs for a non-urgent issue. 

Distorted Incentives 

Wasteful spending also occurs when physicians do not practice evidence-based medicine. Evidence-based medicine is when doctors use the latest medical research to treat a patient. This requires physicians to learn continually from the latest medical studies. It also means letting go of their biases and previous training when it contradicts with the most up-to-date evidence. One common fallacy is a misplaced trust in testing.

For example, a CT or MRI scan is immediately ordered for patients with acute back pain with no concerning symptoms to warrant those scans. The inappropriate imaging ultimately does not factor into the patient’s care and is a waste of financial resources. 

Another example is a coronary-artery stent might be used for patients with stable cardiac disease, when studies indicate that stenting is not always an effective treatment.

A final example are providers pushing for patients to have robotic surgery (with the benefit of a smaller incision and minimal scarring) when the evidence suggests that for certain conditions, traditional, minimally invasive laparoscopic techniques have the same outcomes, cost less, and require much less time in the operating room

Unfortunately, there is no financial incentive for physicians in Taiwan to practice evidence-based medicine. Their salary is not tied to healthcare quality measures or improved patient outcomes. In fact, most physician salaries are based on volume: seeing more patients, performing more procedures, and prescribing more drugs. The system rewards doctors for the quantity but not the quality or efficiency of healthcare.  All of this waste contributes to cost overruns for NHI.

Solutions for these problems will be addressed in next part of this series.


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TNL Editor: Nicholas Haggerty, Daphne K. Lee (@thenewslensintl)

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