Disclaimer: The views expressed in this paper/presentation are the views of the author and

do not necessarily reflect the views or policies of the Asian Development Bank (ADB), or its
Board of Governors, or the governments they represent. ADB does not guarantee the
accuracy of the data included in this paper and accepts no responsibility for any
consequence of their use. Terminology used may not necessarily be consistent with ADB
official terms.

Evolution of social insurance system

-NHI consolidate health benefits of 13 SI into one

1995
1990
1985
1958
1950
Labor
Insurance
(40.1%)

Governme
nt
Employees
& school
Staffs
Insurance
(8.5%)

Farmers
Health
Insurance
(8.2%)

Indigent
Health
Insurance
(0.6%)

National
health
Insurance
(NHI,99.6
% in 2015)

*( ) percent of total population

covered in 1994
2

Strategies to achieve UHC

I. Employment-based compulsory social insurance system
1950:Labor insurance (employees of large
business>10 persons)

1958:GEI: Gov. employee & private school teacher &

the retired person, congressman city council

2.Expansion of social insurance system (1+2:cover58% pop)

1985:farmers HI
LI: Employee of small business (>5 persons),Self-employed

1990:Indigent HI
GEI: dependent of GEI employee

3.1995 National Health Insurance consolidate health benefits of 13 SI (cover 99.6% pop. In 2015)
Dependent of enrollees of SI other than GEI+ the rest of population

Characteristics of Taiwan NHI system

Coverage

Compulsory enrollment for all citizens and legal residents

Administra
-tion

Single-payer system run by the National Health Insurance

Administration (NHIA) of Ministry of Health&Welfare

Financing

Benefits

-Payroll-based premium+ supplemental premium

-Government and employers share contribution for the
insured and its dependents
Comprehensive benefits, including outpatient visits
(Dental, Chinese), hospitalizations, home care &drugs
Co-payment required, higher co-pay without referral
Freedom to choose healthcare providers

Providers

-Public contract model,93% contract with NHIA

Payment

Uniform fee schedule under an annual global budget cap

Predominate by FFS, also DRGs,P4P,capitation, per diem

Privileges

Premium and co-payment subsidies for the disadvantaged

4

Single vs. multi-payers system

System

Single
Payer (Taiwan)

Multiple
payer

Equitable financing

+++
(FFCI=0.992)*

+
(++ with risk
adjustment)

Economies of scale
(rule of large #)

+++

---

+++
(NHI:3.2% GDP)

+
(++ if single-pipe
payment)

Low
(1.08)

High

Control cost

Administrative costs

FFCI: Fairness in Financial contribution Index (Lu&Hsiao,2001)

Advantage of Single Payer System (SPS)

Equitable financing: avoid risk selection, cost shifting, or cream
skimming among payers, dont need risk-adjustment
Economies of scale: rule of large number
Easy to control costs:
Control price through collective bargaining (bargaining power higher
than multi-payer unless uniform fee-schedules are applied)
Control costs well through global budget and computerized profile
analysis

Low administrative costs, esp. marketing and management

should still establish single-pipe uniform payment system and
utilization review guideline, even under multi-payer systems.

Governance
Ministry of health and
Welfare

NHI Negotiation
Committee

National Health Insurance

Administration
File the
claims

Health Care
providers

enrollment

payment
premium
Seek care and co-pay

Insured

Provide care
7

Risk pooling
Payroll-based premium:
Employment-based enrollees:
Monthly salary*premium rate(4.69%)*contribution rate

Community based enrollees: flat amount per month

Dependents are also required to pay the same amount of
premium (max 3 person ) as subscriber.
Government (various rate, 10,40,100%) & employer (60%) share
contribution for individual and their dependents(30%).

Supplement premium:2% of supplement income: rent,

interest, bonus, stock dividend, income from professional
practice, salary from other employment.
Disadvantage pop.( the poor, the disabled) do not have to
pay premium and co-payment.

Health care provision

NHI contracts with 93% of health facilities (hospitals,
clinics, Chinese med. clinic, dental clinics, pharmacies)
Except for low income and those with catastrophic
illness, patients need to pay a co-payment when seek
care. (10% of inpatient, fixed amount for OPD)
Patients have free choice of providers, yet higher
copayment are required if without referral.
Patients seek medical care for acute problems in other
countries can get reimbursement based on local rates
frequent users are subjects to NHIs inquiry and advise

Provider payment
Global expenditure cap apply to dental care, traditional
medicine, clinics and hospitals sectors.
Unit of payment: move toward bundled payment

Fee for Services: major unit of payment for IPD and OPD
DRGs-based payment for 401 cases
Per diem payment for chronic mental beds and day care
Case payment system for home nursing care
Other payment initiatives: move toward person-centered
performance(outcome)-base payment
Pay for Performance: DM, asthma, TB, schizophrenia, breast
cancer, Hepatitis B,C, Early-CKD, Pre-ESRD, etc
Capitation / integrated care Initiatives: pilot projects
Family physicians initiatives

Payment reform: Objectives & Strategies

Perspectives

Objectives

Macro reform
Micro Reform

Control NHI cost

Global budget (P&Q),DET*
Efficiency, quality,
Effectiveness
Production efficiency DRG-based case payment.etc
T-RVS (RBRVS)
Distributive justice

-Unit of payment
- Fee Schedules
-Drug Price List

Drug price adjustment(market

price survey, reference pricing)

-Global Budget
Allocation efficiency
structure reform
-Quality improve.
Initiatives
-Peer review &
co-management

Reform Strategies

OPD vs. IPD, GP vs. hospitals;

Service vs. drugs
OPD dialysis vs. others

Effectiveness/quality

Performance/Quality-based
payment
Integrated care system

Fairness/cost control

Guideline, profile analysis,

Peer group self-mgmt.
11

*DET: drug expenditures

Successes and Challenges

Successes

Challenges

Achieve universal coverage

(99.6%)
Equitable financial
contribution
Easy access, almost no
waiting list
Affordable cost (3.2-3.6% of
GDP)
Control cost well, with
acceptable quality
Population health improved
High satisfaction

Financial sustainability of the

whole social insurance system
include NHI.
Providers lack of financial and
health accountability under
FFS .
Difficulty in reform financing,
benefit and payment scheme,
let alone copayment scheme
Increasing OOP raise the
question of the extent of NHI
protection.

Implications

For countries interested in achieving UHC.

Apply mandatory social insurance to cover formal sector
first, then dependents and other population. For the
latter, gov. subsidy may be necessary
Select single payer system if possible, if not, single-pipe
payment scheme should be established for multi-payers
Design the benefit packages prudently, cover primary
care first, apply HTA to determine benefits
Copayment is required except for the disadvantage
Global expenditure cap and bundled payment are
essential to improve efficiency and control cost
Align payment incentive to providers financial and
health accountability to enhance disease/ population
health management in facing aging society.

Thank You Very Much for

Your Attention
yclee@ym.edu.tw