Health Care in Taiwan

[D-Rex Naptime]

This was my response in an email debate about health care in Taiwan while defending Liberty based principals vs. utilitarian and authoritarian solutions. Sorry for the length. Please let me know what I missed, as I'm only making a few arguments here.

 

Taiwan has implemented a pretty darn good healthcare system, but it wasn’t without its challenges. Furthermore, while a socialized healthcare might be working well on an island of about 22 million people, there are plenty of reasons to be skeptical of a similar plan in the U.S.

 

 

 

About 10 years after the implementation of NHI, Taiwan experienced a surge in demand for healthcare and doctor visits. While they didn’t have long wait times, like in Canada, they did have to limit their doctor’s visits to just a few minutes around 2003 – 2004. Taiwan dealt with this increased demand by increasing co-payments. This seemed to work, but it is noteworthy, that while we pay co-payments here in the U.S., it is far less likely to deter over usage of healthcare, as our average income per household is more than double the average income per household in Taiwan.

 

 

 

Doctors also had to protest for higher premiums, as they were capped by NHI. The government then raised rates and satisfaction dipped from around 70% to around 60%. This leaves Taiwan with a dilemma of lagging adjustment to changing economic conditions, as raising rates, in the face of increasing costs, would not be a very popular politically. In fact, Taiwan might have to increase their spending from roughly 6% of GDP to 8% of GDP. While this would still be about half of what we pay per GDP in the U.S., is there any reason for us to believe that spending would decrease under a socialized healthcare system in the U.S., when Taiwan experienced spending growth from 4.8% GDP, before NHI, to 6% today and 8% in the future?

 

 

 

Now, when we talk about satisfaction ratings, we also have to consider the healthcare environment before NHI in Taiwan compared to today. Moreover, after observing the problems faced since implementation of NHI, such as the very short doctor visits, could we really expect Americans to rate satisfaction as high as 60-70% if these problems existed in the U.S.? Regarding healthcare costs, our satisfaction rating is currently around 20-30%. This disparity more illustrates the differences in service expectations between two very different cultures, rather than providing useful insights into reality.

 

 

 

But we could extract this lesson: increasing rates to the public, leads to lower satisfaction. Given that the ACA in the U.S. is likely to add $1.3 trillion to our debt over the next 10 years, according to the CBO, as well as create an almost equally large deficit, I wouldn’t expect the costs borne by the public and the resulting satisfaction rates to improve. While we may take pride in short term victories, such as the $7.4 billion saved by hospitals since the ACA, we forget that this will come at a $72 billion cost to the public in 2015. So, we saved hospitals about $1.5 million each, at a cost of approximately $300 per U.S. adult (this gets higher when considering only tax paying adults). Sorry to derail, but this topic is rather tangential.

 

 

 

I suppose this would leave us with life expectancy. To this, I would just again point out the difference in culture, population, and diversity. We have higher homicide rates here in the U.S. vs. Taiwan and a very different history, so we could expect some differences in this area. Not to mention the fact that Taiwan doesn’t subsidize- and therefore make cheaper – the very foods which are killing its citizens; the U.S. has among the highest in obesity rates with the number one killer being heart disease. Yeah, this would add some costs and lower life expectancy for sure.

 

 

 

A libertarian solution to the U.S. healthcare woes would be as simple as putting individuals in charge of their own health insurance, rather than having employer sponsored insurance be the norm. This could be accomplished simply by shifting the tax deduction from employers to employees. Naturally, employers would prefer to just pay the employees the money formerly devoted to their employees’ insurance. The employees would then search for the best deals and the competition between insurance companies would lead them to innovate and create better deals for their consumers. Moreover, it is more likely that these employees would choose cheaper packages which cover only the big stuff, like surgeries and severe injuries, rather than using insurance for every doctor visit. This would curtail medical over usage, create more transparency in costs, as well as bring prices down (which would already be lower without the tedious and redundant forms required by government and insurance companies). A plan very similar to this was estimated to increase the amount of people insured in the U.S. by approximately the same amount as the ACA. We don’t hear much about it though, as it is not as romantic as socialization of healthcare costs and doesn’t require as much government.