Tsung-Mei Cheng on the success of Taiwan’s single payer system

Health Affairs
March 2015
Reflections On The 20th Anniversary Of Taiwan's Single-Payer National
Health Insurance System
By Tsung-Mei Cheng

Abstract

On its twentieth anniversary, Taiwan's National Health Insurance (NHI)
stands out as a high-performing single-payer national health insurance
system that provides universal health coverage to Taiwan's 23.4 million
residents based on egalitarian ethical principles. The system has
encountered myriad challenges over the years, including serious
financial deficits. Taiwan's government managed those crises through
successive policy adjustments and reforms. Taiwan's NHI continues to
enjoy high public satisfaction and delivers affordable modern health
care to all Taiwanese without the waiting times in single-payer systems
such as those in England and Canada. It faces challenges, including
balancing the system's budget, improving the quality of health care, and
achieving greater cost-effectiveness. However, Taiwan's experience
with the NHI shows that a single-payer approach can work and control
health care costs effectively. There are lessons for the United States
in how to expand coverage rapidly, manage incremental adjustments to the
health system, and achieve freedom of choice.

Lessons Learned

The most important lesson of Taiwan's experience is that the
single-payer approach can offer all citizens timely and affordable
access to needed health care on equal terms, regardless of the patient's
social, economic, and health status; sex; age; place of residence; and
employment status.

A second lesson is that a single-payer model such as Taiwan's can
control costs effectively. It is administratively simple and inexpensive
and is the ideal platform for a powerful health IT system. It also
facilitates global budgeting, if that is the only way to keep health
spending in line with the growth of GDP.

A third lesson is the importance of investing heavily, up front, in a
modern IT infrastructure. A modern IT system such as Taiwan's allows the
government to have information about health utilization and spending in
almost real time.

Fourth, Taiwan's case illustrates that health policy makers should not
miss windows of opportunity for major health reform. Enabling factors
include rapid economic growth, which makes it easier to redistribute
resources; strong popular demand for reform; strong political
leadership; a broad social and political consensus on the ethical
principles that guide the health system; and the availability of a cadre
of competent civil servants motivated and able to implement reform.

Lessons For The United States

Taiwan's experience demonstrates that with competence and goodwill, the
challenge of adding a large influx of newly insured citizens can be met.
Health systems appear to be adaptive, and the case of Taiwan illustrates
that incremental improvements on reform are possible.

Taiwan's experience also might induce Americans to think more deeply
about the term freedom of choice. In health care, freedom of choice
could mean choice among health insurance carriers and health insurance
contracts, choice among health care providers, or both. For Taiwan's
citizens, freedom of choice among providers of health care trumped
freedom of choice among insurance carriers and contracts. These
citizens' high satisfaction with their health system suggests that they
still endorse that choice. By contrast, in the United States freedom of
choice among insurance carriers and products ranks above freedom of
choice among health care providers, which often is limited to narrow
networks of providers.

A growing body of literature has shown that by international standards,
enormous human resources are used in the United States to facilitate
choice among insurers and insurance products, process claims, and
annually negotiate a payment system that results in rampant and
bewildering price discrimination. Relative to the less complex health
systems elsewhere in the industrialized world, the US system is a poor
platform for the effective use of modern health IT.

According to a recent report by the Institute of Medicine, the US system
has excessive administrative costs that in 2009 amounted to $190
billion. That is more than it would cost to attain true universal health
care in the United States.

It is not this author's role to prescribe what Americans should or
should not do in regard to freedom of choice. But it is appropriate to
invite readers to think more deeply about the relative benefits and
costs of their choices. It is remarkable that in cross-national surveys,
Americans have consistently given their health care delivery system
relatively high marks, but their health system relatively poor ones.

(Tsung-Mei Cheng is a health policy research analyst at the Woodrow
Wilson School of Public and International Affairs, Princeton University,
in Princeton, New Jersey.)

http://content.healthaffairs.org/content/34/3/502.abstract

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Comment by Don McCanne

The people of the United States have continued to watch our health care
spending increase far beyond that of all other nations. We have watched
the quality of our insurance coverage deteriorate as insurers take away
our choices of physicians and hospitals and shift more costs to those
with health care needs, often causing the very financial hardships that
health insurance should be preventing. And we have continued to tolerate
leaving tens of millions uninsured.

For the past generation we also have been observing the natural
experiment in single payer healthcare financing taking place in Taiwan -
Taiwan serving as the experimental subject and the United States as the
control. As Tsung-Mei Cheng explains in this Health Affairs article, it
has been a spectacular success for Taiwan. Had we adopted a similar
program twenty years ago, today everyone would be covered, no one would
face financial hardship because of medical bills, we would have freedom
of choice of our physicians and hospitals, we would have eliminated much
of our profound administrative waste, and our total national health
expenditures would have followed a lower trajectory and thus would be
much less than they are today.

What is it about American exceptionalism? In our stubbornness, we are
going to continue our feeble search for policy solutions to our
intolerable deficiencies and inequities in health care, when we have
before us one of the nearest to perfect natural experiments ever
completed - in precisely the reform that we need. By the definition,
"much better than average," exceptional we are not. Or by the
definition, "deviating from the norm," we should have no pride in either
our health care system or in our obstinate refusal to apply proven
health policies that would inject much needed remedies into our sick system.

At our PNHP meetings and in the health policy literature, Tsung-Mei
Cheng has provided us with an abundance of observations and data that
should illuminate for us a clear path forward for reform. We just have
to make good use of her contributions. We can begin by sharing this
Health Affairs article with others who care about the future of our
health care system.