NHI to See over US$3-bil. Deficit in Taiwan, Health Minister Announces Resignation

Taiwan's Bureau of National Health Insurance (BNHI) director-general, Zheng Shou-xia, today revealed that Taiwan's NHI deficit will reach 101.5 billion new Taiwanese dollars (US$3.2 billion) this year if no adjustments are made to NHI premium rates. In order to maintain a sustainable operation of the NHI system in Taiwan, he urged a quick move from the government to tackle this issue, according to a report by Central News Agency.

On the same day, Taiwan's health minister, Yang Chih-liang, announced in a press conference that he has decided to resign from the current role, which he has held for just over seven months. In his statement, Yang noted that Executive Yuan Premier Wu Dun-yi requested that 75% of Taiwanese people should be exempt from NHI premium increases, a goal he was unable to achieve. Following the BNHI's assessment on possible premium adjustment plans, the rate of people uninfluenced by the change can only remain at 59%, added Yang.

Second-Generation NHI Reform: A Missed Target

The revision of NHI premiums to push through Taiwan's long-delayed NHI system reform has been one of Yang's primary goals, which was revealed as soon as he assumed the position of Health Minister (see Taiwan: 7 August 2009: New Health Minister Vows to Increase NHI Premiums for High-Income Groups in Taiwan). He was originally aiming to increase the premium for high-income groups and relieve some burdens from those on low incomes to avert the deficit of the BNHI. However, the Department of Health's (DoH) plan has encountered strong objections from relevant interest groups as well as the Executive Yuan. The resignation of the Health Minister, if finalised, will leave the NHI reform still unachieved.

Outlook and Implications

Although Yang's surprising resignation has added a dramatic tone to Taiwan's NHI revision scheme, the rough progress the scheme has faced was not completely unexpected. Since the inception of the NHI system in Taiwan in 1995, premiums have only experienced one increase in 2002, which brought them up to 4.55% from the previous level of 4.25%. The NHI has ended up running a deficit as premium growth fell behind the increased medical expenditure in Taiwan. The premium revision has therefore been on the government's agenda on and off for years, but without much success so far. The so-called "second-generation" medical insurance system was proposed by the government in 2006, under which premiums will be based on overall household income instead of the previous salary-based calculations. However, the change was difficult to put through, which led to a "halfway", tentative, "1.5-generation" medical insurance plan. Proposed to increase NHI funding by including extra annual income in the basis of premium calculation, the 1.5-generation plan was scrapped again in early 2009 due to the opposition claiming that it was not the right time to increase premiums under the economic downturn.

Looking back to the ill-fated medical insurance reform in Taiwan, the opposition has been mainly from those related to interest groups who would be heavily affected, primarily those with higher incomes and their employers. In addition, the timing of the revision has also been an influential factor during recent reform attempts as the global recession has made the premium hike an additional burden to businesses and families to be influenced. Nevertheless, the prospect of a US$3.2-billion deficit, which is likely to keep growing without effective measures, will continue to urge the Taiwanese government to take actions to avert the trend before the situation worsens. The premium revision is one of the measures to be taken sooner or later to increase the BNHI income. On the other hand, the BNHI may also have to curb the increase of medical expenditure so as to reduce the deficit of the island's medical insurance system. The assessments and debates over this issue are far from over in Taiwan, however, and it also won't be solved any time soon, with strong objections from relevant interest groups and due to the existing economic situation.