Vol I: A Crash Course on the Taiwanese Health Care System

The Taiwanese health care system has famously been described as a car manufactured domestically from parts imported from abroad [3]. For many years, Taiwan studied the health care systems of other countries and consulted with health policy experts from around the world, before orchestrating a dramatic transformation of its own health care system. In 1995, Taiwan introduced its National Health Insurance program (known as the NHI), which extended health insurance coverage to all Taiwanese citizens and legal residents. Taiwan designed and implemented a government-run, single-payer system with universal insurance coverage much like what we have here in Canada. However, the Taiwanese system also boasts comprehensive coverage for prescription drugs, dental care, and traditional Chinese medicine, a cohesive electronic health-records system, and relatively short waiting times for health care.

Given that Taiwan has learned so much from the experience of other countries, I thought it was very appropriate that we Canadians a group of 10 students from McGill University representing a variety of degrees, experiences, and career aspirations also had the opportunity to learn from the Taiwanese experience. As part of an educational and cultural exchange organized by McGill‘s Comparative Healthcare Systems Program, we were invited to learn about Taiwan‘s ongoing experience with health care reform and policy development.

Before we left for Taiwan last May, I was doing my best to keep up with the health care issues close to home. My “Economics for Health Services Research and Policy” class discussed the latest health care controversies making Canadian news headlines when Newfoundland and Labrador Premier Danny Williams flew down to Florida for his cardiac surgery [1] and Québec’s government was trying to sneak in extra fees for health care into its updated provincial budget [6]. The US health reform debate raged on and finally, US President Barack Obama signed the Patient Protection and Affordable Care Act into law on March 23, 2010 [7]. A friend of mine making a documentary on the US health care reform debate was just able to update her final cut to include this historic event.

With all this in mind, I was very keen to get a sense of the current health care issues in Taiwan. I was eager to observe what was similar and what was different between Canada and Taiwan‘s health care systems and excited to learn about the day-to-day realities of patients, doctors, public health professionals, policy makers, and other actors within the health care system. During our stay in Taiwan, we attended two formal lectures given by professors from the top universities on the topic of the national health care system and insurance program. However, I also learned a great deal about health care in Taiwan by talking to doctors, nurses, medical students, and everyone else I met.

Taiwans health care system is impressive in many respects. It has been successful in extending health insurance coverage to 99 percent of the population [8]. Before the establishment of the NHI, 41 percent of the population was uninsured the majority of whom were children and elderly persons but now there is universal coverage for all citizens and legal residents [3]. Health insurance in Taiwan under the NHI plan is comprehensive: medical care, preventive care, traditional Chinese medicine, home nurse visits, prescription drugs, and dental care are all covered [5]. Remember that in Canada, prescription drugs, dental care, and many other services are not covered by most provincial health insurance plans. We pay for these services from our own pocket, unless we have a supplementary health insurance plan.

In Taiwan, patients have the freedom to choose between many different health care providers and facilities. Traditional Chinese doctors often offer complementary treatments to biomedicine. Fortunately, every patient has a “Smart Card” that keeps track of their medical history in an electronic record. The “Smart Card” allows each doctor to see what services have already been provided or what drugs have already been prescribed, and it also communicates with the NHI to automatically process insurance claims and pay out the doctors. As a result, administration costs are very low for the Taiwanese health care system, at approximately 2 percent of its total budget [5]. Overall, Taiwan spends roughly 6 percent of its GDP on health care, compared to 16 percent in the United States [8]. And most importantly, the population is healthy and happy with the system. Life expectancy at birth is 75.3 years for males and 81.2 years for females [2], and public approval ratings of the NHI ranged from 60-80 percent from 2001-08 [3].

Some aspects of the Taiwanese health care system were very different from what I was familiar with in Canada. In Canada, we sometimes navigate a system of gatekeepers and referrals through the health care maze. To get an appointment with a specialist, we have to get a referral from our family doctor. In Taiwan, it is possible to bypass the gatekeepers and referrals to get an appointment directly with a specialist. Furthermore, because there are many health care providers to choose from and no gatekeepers, it is possible to see a doctor almost right away. The long wait-times that we have come to expect for health care in Canada are not a factor in Taiwan.

Instead of dealing with long wait-times like we do in Canada, patients in Taiwan do have to pay a small fee for each health care service they receive (known as a co-payment) to the health care provider. The co-payment is very small and the NHI sets a ceiling so that patients will not go bankrupt from the fees and waives the fees altogether for certain patients. In theory, the co- payments encourage patients to use less health care services, or at least make patients think twice about whether they really need to see the doctor. According to the RAND health insurance study, an experiment that randomly assigned families to dierent health insurance plans, the more people have to pay for health care services up front, the less they will use [4]. In Canada, although we can just show our health insurance card and receive medical care without any co- payments, our long wait-times and gatekeeper system may also ration the amount of health services we consume.

As it turns out, Taiwanese people use a lot of health care services: an average of 14.4 outpatient visits per capita per year vs. 6.4 per capita per year in Canada and 129 hospital admissions per 1,000 per year vs. 99 per 1,000 per year in Canada [3]. Small co-payments do not deter most Taiwanese people from seeking health care services when they have a health concern, and since there is no referral or gatekeeper system, people are able to see different doctors as they please. This leads to “doctor shopping,” a term that describes when a person consults with many different doctors for the same problem. Taiwanese people may also end up visiting a specialist unnecessarily and may even go to the hospital for a common cold.

Consequently, health care revenues have not kept pace with expenditures and the NHI has been running a deficit since 1998 [3]. The NHI is financed by premiums paid by the insured individual, their employer, and the government, as well as revenues from the lottery and a tobacco tax. Most people who are employed pay 30 percent of the premium, their employer pays 60 per- cent, and the government subsidizes the remaining 10 percent. The premium-shares vary such that self-employed individuals pay 100 percent of the premium and low-income individuals are fully subsidized by the government. In turn, the NHI is responsible for reimbursing health care providers for the services they perform and the patients also contribute the small co-payments to the health care providers. Since it has been politically unpopular to raise the premiums and Taiwanese people continue to use a lot of health care services, the NHI continues to pay out more to the health care providers than it takes in from premiums and taxes.

To try and control costs, the NHI has experimented with dierent ways of re- imbursing health care providers. Origi- nally, health care providers were reim- bursed for each service they provided on a fee-for-service schedule without any limit, which allowed doctors to inflate their salaries by prescribing more drugs, seeing more patients, and performing more tests and procedures as fast as they could. To curb this problem, the NHI implemented global budgets between 1998 and 2002 for dental care, traditional Chinese medicine, primary care, and hospitals. Each sector now has a set expenditure cap and is reimbursed at lower rates for any services provided beyond the cap, encouraging providers to stay within their set budget and stop abusing the fee-for-service scheme [3]. Most recently, the NHI has introduced a diagnosis-related-group reimbursement scheme, under which doctors are reimbursed a certain amount for different types of patients accord- ing to their primary diagnosis. These strategies hope to motivate health care providers to help control costs, and also provide better quality care. On the patient side, surveillance of the “Smart Card” records has been used to flag the highest users of health care services who may be guilty of “doctor shopping.” Another recent development is the growth of the medical tourism industry in Taiwan, which may bring in significant revenue from China, the United States, and other parts of the world.

In our short visit to Taiwan, we were quick to notice aspects of the Taiwanese health care system that were dierent from, similar to, or better than our own system in Canada. Taiwan was very thoughtful leading up to its 1995 health system reform and has benefited from laying the foundations of a well-designed health care system. However, like other universal national health insurance programs, the NHI is challenged to run a sustainable program that also keeps doctors, patients, and the rest of the population happy. This unenviable responsibility requires ongoing troubleshooting.

The obvious conclusion that I came to after our crash course in Taiwan is that no health care system is perfect. No two health care systems are the same either, but there is much to be learned from comparative study. Both the Taiwanese and the Canadian health care systems will face similar challenges in the future and hopefully, we can continue to learn from each other‘s experiences.

Jason Tan de Bibiana is interested in public health research and practice that addresses the social determinants of health, improves health care systems, and reduces inequity. He thinks that there is a lot of work to be done locally and globally. Jason graduated from McGill University with a Bachelor of Science in physiology, geography, and social studies of medicine and is currently based in Vancouver at the University of British Columbia‘s School of Population and Public Health, where he is pursuing a Master of Science in epidemiology, public health, and health services research.


  1. [1]  Blackwell, T. (2010, February 1). Danny Williams could have stayed in Canada for top cardiac care, doctors say. Retrieved June 2010, from The National Post:http://www.nationalpost.com
  2. [2]  Central Intelligence Agency. (2010, June). Taiwan. Retrieved June 2010, from The World Factbook:https://www.cia.gov/library /publications/the-world-factbook/geos/tw.html
  3. [3]  Cheng, T.-M. (2003). Taiwan’s new national health insurance program: genesis and experience so far. Health Aairs , 22(3), 61-76.
  4. [4]  Folland, S., Goodman, A. C., & Stano, M. (2009). The Economics of Health and Health Care. Prentice Hall.
  5. [5]  Lu, R. J.-F., & Hsiao, W. C. (2003). Does universal health insurance make health care unaordable? Lessons from Taiwan. Heatlh Aairs, 22 (3), 77-86.
  6. [6]  S ́eguin, R. (2010, March 30). Quebec stirs health-care debate with proposed user fee. Retrieved June 2010, from The Globe and Mail: http://www.theglobeandmail.com /news/politics/quebec-stirs-health-care-debate-with-proposed-user- fee/article1517624/
  7. [7] Stolberg, S. G., & Pear, R. (2010, March 24). Obama Signs Health Care Overhaul Bill, With a Flourish. Retrieved June 2010, from The New York Times:http://www.nytimes.com/2010/03/24/health/policy/24health.html
  8. [8]  Underwood, A. (2009, November 3). Health Care Abroad: Taiwan. Retrieved June 2010, from The New York Times :http://prescriptions.blogs.nytimes.com /2009/11/03/health-care-abroad-taiwan
This article was originally published in the Spring 2011 issue, and can be seen here.
Photo by Jason Tan de Bibiana.
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