Friday, February 5, 2010

Health Care in Taiwan

In the US we mostly hear news about Taiwan only in terms of their historical dispute with China, as in recent coverage of our proposed arms sales to Taiwan angering the Chinese. I'd like to look at a different aspect of Taiwan, one that ironically makes Taiwan more socialist in one respect than China when their dispute is typically characterized as capitalist Taiwan v. communist China.

I recently stumbled across an interview that the NY Times health care blog did with Harvard professor William Hsiao who led the panel devising health care reform for Taiwan in 1995, which was implemented with great success. The process is almost as impressive as the outcome.

At that time, 45% of Taiwanese had no health insurance. The country's first democratically elected president Lee Teng-hui created a panel to create a plan to cover them. After the initial panel had difficulty getting to a consensus, they invited Hsaio to head the panel and get things under control.

They proceeded to do a study of the health care systems of the US (insurance through employer or individually except government covers poor and elderly), UK (national health care system w/ government running insurance and care), Germany (universal coverage, mixed public and private ie. multi-payer), France (universal coverage, multi-payer), Canada (single-payer w/ private and public care), and Japan (universal coverage, multi-payer) to determine which system they would emulate.

In the end, they chose to emulate the Canadian system, single-payer with, unlike in the UK, both private and public health care delivery. Here's why:
Canada has a single-payer system with universal insurance coverage. It offers people free choice of doctors and hospitals, and it has competition on the delivery side between public and private hospitals. The quality of health services is very high, and people were very satisfied with the system from the 1980s through the mid-1990s.
President Teng-hui pushed the plan through, and it was implemented within 6 months of its passage. Remember how the Democrats' preferred health reform bills wouldn't really take effect until 2013 or 2014 because they said it would take time to set up the exchanges? Bullshit, especially when you add the Taiwan example to the fact that we implemented Medicare (another single-payer system) in 1966 just after it was passed in 1965.

Thus Taiwan's national health insurance plan became the sole payer for health care in the country with an excellent result. The country made the utmost effort to sign up everyone, even sending out people to sign up the homeless! Employers pay 60% of their workers' premiums, and workers pay the other 40% through a payroll tax, currently at 4.6%. Hsiao compares this to the 12-20% of wages that American workers pay for employer-based insurance, a hidden appropriation of which many Americans are not cognizant. The government covers the premiums completely for the poor and partially for veterans, the self-employed, and farmers.

Every citizen gets a "SmartCard" that contains their health care information and history. This, combined with the fact that in a single-payer system patients have total freedom to choose their provider (unlike in the US where insurance companies restrict patient choice of doctor and hospital), gives them flexibility to see whatever doctor they wish to. In addition, it cuts costs because it allows the claims system to be paperless.

The benefits are comprehensive. The national insurance system covers prevention, primary care, hospitalization, home care for the chronically ill (cheaper than hospitals), mental health, dental, eye care, and even traditional medicine like acupuncture and Chinese massage. Not only is this comprehensiveness totally awesome, but it practically guarantees better health care outcomes, and not just by traditional measures like life expectancy, which, as Hsaio notes, is on the rise.

It's important to note that this is socialized insurance. As I've written before, socialized health insurance lowers administrative costs while allowing for true universal coverage (as opposed to the 97% "universal" coverage that mandate-and-subsidies approach with a public option charging Medicare rates was projected to achieve here). It lowers costs by eliminating the costs of investor profit, exorbitant executive compensation, marketing, underwriting, and denying claims. Their administrative cost for insurance is 2.3% of premiums while ours fluctuates between 12-14%. Single-payer also lowers the cost for hospitals and doctors in dealing with claims from different payers. Currently Taiwan has universal coverage with health care costs at 6% of its GDP, while we have about 85% of our population covered and health care costs at 16% of our GDP (they actually jumped up to 17% last year, yikes).

The Taiwan case shows that is possible to implement single-payer and achieve universal coverage at a reasonable cost in a short time. The claim of those like President Obama that switching to single-payer would be too disruptive is total bullshit intended to avoid explaining why they don't support single-payer when it makes so much sense. Considering our problem with health care costs (the worst in the world I might add), we need structural change in our insurance system. Hsaio concludes that this is true for just about any country:
You can have universal coverage and good quality health care while still managing to control costs. But you have to have a single-payer system to do it.
So next time a liberal or leftist friend of yours threatens to move to Europe out of frustration with our government, tell them to consider Taiwan!

PS. There's much more to be gleaned from this brief interview, so watch out for a Part 2 and maybe 3.

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