Taiwan’s National Health Insurance: The Experience and Reform of a Single-payer System 1 Yi-Ren Wang, MS, ML Director, Planning Division Bureau of National Health Insurance 31 st, October, 2011

Presenter Disclosures (1) The following personal financial relationships with commercial interests relevant to this presentation existed during the past 12 months: Yi-Ren Wang No relationships to disclose 2

Characteristics of the NHI in Taiwan Coverage Compulsory enrollment for all citizens and legal residents Administration Single-payer system run by the government Financing Payroll-based premium shared by the employee, employer and government Benefits Comprehensive package, copayment required Providers 92% of providers contracted with NHI Payment Uniformed fee schedule under the global budget Privileges Premium and copayment subsidies for the disadvantaged 3

Major Achievements of NHI Universal coverage Universal coverage Equitable protection Affordable cost High public satisfaction Improved health status 4

Population Covered ： 23.1 million (99.51%) Universal Coverage Mainly people staying abroad 5

Government34.8% Enterprise27.7% Households37.5% I (Lowest Income) 3.0% II5.9% III7.7% IV9.1% V (Highest Income) 11.8% I (Lowest Income) 13.7% II17.9% III20.9% IV23.1% V (Highest Income) 24.5% Premium Contribution NT$ 4550 Billion Benefit Received* NT$ 4615 Billion Benefit / Premium Ratio 4.9 times 3.3 times 2.9 times 2.7 times 2.2 times 6 Average: 2.9 times Premium Revenues & Benefits Received by Different Income Groups (1996~2009) Equitable Protection *There is a deficit of NT$ 65 Billion (1.4%)

Affordable Cost Average Annual Growth Rate of Medical Expenses ( ) 7 Source : OECD Health Data 2010, Department of Health Note : Japan ( ), Australia ( )

Improved Health Status 10 Years Prior to NHI Standard mortality rate has decreased by 12% Average life expectancy at birth increased 1.0/1.9 (male/female) years 10 Years After NHI Standard mortality rate has decreased by 18% Average life expectancy at birth increased 1.9/2.1 (male/female) years 8 Source: Department of Health, Taiwan

9 High Public Satisfaction (1995~2010) Deficit observed again

Annual growth rate from 1996 to 2010 Medical Expenditure : 5.03 Premium Revenue : 4.73 year NT$ billion 10 Challenges 1/2 NHI Financial Status 1.Adjust copayment 2.Increase other revenue 3.Strict review 1.Adjust premium rate 2.Adjust copayment 3.Implement Global Budget system 1.Adjust copayment 2.Increase other revenue Adjust premium rate

The Rates of Salary to Total Taxable Income 11 Challenges 2/2 LowHigh Income Groups % Source: Government Finance Annual Report for 2011, Ministry of Finance, Taiwan

12 The 2 nd Generation of NHI July 2001 September 2004 May 2006 January 2011 Text 2Text 3 The 2 nd Generation NHI Planning Task Force was formed under the Executive Yuan. The Department of Health started to draft the NHI Act amendment. The NHI Act amendment proposal was submitted to the Congress for review. The NHI Act amendment was passed by the Congress and promulgated by the President.

Financing Reform 13

Annual bonuses Stock dividends Income from professional practice Saving interests Income from part-time or sideline jobs Rentals × 2% Imposing Supplementary Premium to the Insured 14 Monthly payroll × 4.91%( ？ ) × 30% × (1+ 0~3 dependents) Employees’ contribution share Estimated new premium rate Basic premium Suppl. premium

Benefit Reform 15

Decision Making Process for Benefits Coverage 16 Health Technology Assessment 4 Health issues Financial impact on the insurance Medical ethics Cost effectiveness Public Consensus Representatives of medical providers + Insurer + Representatives of payers, scholars and related agencies

Payment Reform 17

18 Developing Diversified Payment Schemes FFS + Case Payment Global Budget P4P Tw-DRGs Capitation Pilot Programs RBRVS (1 st 2004, 2 nd 2011) ~ diseases Address new P4P projects to achieve a 5% annual growth rate of the enrollees. Phasing in Tw- DRGs up to 60% of the inpatient care. Initiate 3-year pilot project for 3 different capitation models.

Final Words  Adding non-payroll incomes into the premium base is a breakthrough for Taiwan’s social insurance.  Enlarged payment unit is expected to integrate medical services with preventive medicine to facilitate our ultimate goal of buying “health” rather than “healthcare”.  Reform for NHI is endless. 19

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