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Healthcare Report Taiwan August 2017

Healthcare Report Taiwan August 2017

  • August 2017
  • ID: 2350466
  • Format: PDF

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  • Taiwan's healthcare expenditure has increased steadily over recent decades, following the introduction of a nationwide, single-payer, public national health insurance (NHI) system in 1995. However, at an estimated 6.7% of GDP in 2016, health expenditure still accounts for a lower share than in other advanced Asian economies such as Japan (10.3%) or South Korea (7.5%), and below the estimated OECD average of 9% of GDP in 2016.
  • The Economist Intelligence Unit expects healthcare expenditure as a proportion of GDP to rise to 7% in 2019-21. This implies a compound annual growth rate (CAGR) of 3% in local-currency terms, or 3.5% in US dollar terms, in a low-inflation environment. With the country's population size expected to remain virtually unchanged, healthcare spending per head will also rise substantially, to US$1,795 in 2021, from an estimated US$1,507 in 2016.
  • Rising rates of prosperity-related chronic illnesses and rapid population ageing will drive this growth in health spending. The proportion of the population aged over 65 will rise from around 13% in 2016 to 16.5% by 2021.
  • In January 2017 the Legislative Yuan (parliament) passed amendments to the Long-term Care Services Act of 2015, dubbed LTC 2.0. The ten-year programme will substantially expand the scope of the care available for the elderly and disabled, at a cost of around NT$30bn (US$980m) a year. However, the government has also adjusted NHI premiums and co-payments over the past year, in a bid to optimise patients' use of health services.
  • Pharmaceutical sales will record a CAGR of 4.3% in local-currency terms in 2017-21, reflecting the rising costs of imported medicines in Taiwan. Rising political tensions with China could hinder the government's plans to boost the value of Taiwan's biotech industry to NT$1trn (US$32.6bn) by 2025.




Funding sources




  • Around 60% of healthcare funding comes through the NHI system. Membership is mandatory for all Taiwan citizens, and funding comes primarily from premiums paid by the insured and employers, as well as government subsidies.



  • Over 90% of all healthcare facilities have contracts with the NHI and are reimbursed on a fee-for-service basis. The NHI offers a comprehensive package of benefits, including out-patient and in-patient care, preventive care, dental services, Chinese-medicine services and prescription drugs.
  • The so-called second-generation NHI came into effect in 2013, with a view to improving both the quality of care available and the NHI's finances. As part of this, the government's minimum funding obligation to the NHI budget was set at 36% (excluding funding from tobacco health and welfare surcharges, and lottery proceeds).





  • The resulting improvement in the NHI finances allowed the National Health Insurance Administration (NHIA) to cut the health insurance contribution rate from 4.9% to 4.7% in 2016. The supplementary premium rate was cut to 1.9%. These new rates are expected to remain fixed until 2019. A 2% supplementary premium is charged on income from part-time work, stock dividends, interest earnings and annual bonuses in excess of four months' salary.
  • In order to optimise use of healthcare the government has also adjusted the level of NHI co-payments, which are required for both out-patient and in-patient care. These include fixed fees for out-patient visits and 10-30% of hospital costs for in patients, depending on the length of stay. Some categories of patients are exempt from such payments.
  • In February 2017 the outgoing health minister, Lin Tzou-yien, confirmed that the Ministry of Health and Welfare had begun planning for the third-generation NHI, a process that he estimates will take six to eight years to complete. However, at present the government's priority is the imple-mentation of LTC 2.0, which is expected to benefit 738,000 people, compared with 511,000 under the previous long-term care scheme.
  • The government has earmarked NT$20.7bn for LTC 2.0 in its 2017 budget, and expects this to rise to NT$30bn in the 2018 budget. The cost will be covered by raising taxes on cigarettes, gifts and inheritance in order to generate an extra NT$28.8bn in annual revenue.



Private health insurance



  • Supplementary private insurance is available in Taiwan, and demand is likely to rise as population ageing puts the NHI under increasing strain. However, at present most private expenditure comes from out-of-pocket spending, which accounts for 38% of total health expenditure, according to the US International Trade Administration.
  • Most private-sector spending goes towards out-patient facilities, although in-patient services, pharmaceuticals and medical devices are also important areas of expenditure.






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