Taiwan: #10 in the 2020 World Index of Healthcare Innovation
Taiwan boasts an effective single-payer health care system—for now—thanks to its innovative approach to digital health records.
By Gregg Girvan and Avik Roy
Introduction
Taiwan ranks 10th in the World Index of Healthcare Innovation with an overall score of 49.19. Notably, Taiwan is the highest-ranked single-payer health care system in the Index. Taiwan scores best on Choice (#6, 46.42) and Fiscal Sustainability (#8, 67.90), owing to its low debt-to-GDP ratio of 30.7% and its low overall cost of health care.
Taiwan ranks poorly in Science & Technology (#27, 25.28), due to its restrictions on utilization of new treatments and medical advances. However, Taiwan ranks #1 in health digitization, due to its innovative, universal system of electronic medical records.
Background
Modern Taiwan emerged in 1949, after Kuomintang forces retreated there upon losing the Chinese Civil War to communists. After decades of spectacular economic growth and the lifting of martial law in 1987, Taiwan had a partial health care system, in which only 55% of the population had health insurance—mostly civil servants, employees of large companies, farmers, and the military.
Beginning in the late 1980s, the Taiwanese government under Lee Teng-hui sought to achieve universal coverage. It recruited several U.S. health economists, including William Hsiao of Harvard and Uwe Reinhardt and Tsung-Mei Cheng of Princeton, to advise it on reform ideas, and the group recommended a single-payer model along Canadian lines, in which providers remained private, but the government was the sole provider of health insurance. Financing of the scheme was modeled on the German system, in which premiums are paid through payroll taxes.
The Taiwanese benefit package is more comprehensive than typical western single-payer systems, and includes dental care, mental health, home nursing, and traditional Chinese medicine. Enrollees have complete freedom to choose their providers.
Prescription drugs, on the other hand, are heavily restricted. New drugs tend to remain off of the Taiwanese government formulary for 2 to 5 years after they have been introduced in the United States.
Notably, in 2009, Taiwan introduced a universal system of electronic health cards, resembling chip-based credit cards, which store 22 kilobytes of patients’ demographics and health information, including past medical history, claims data, and drug allergies. Health care services can only be provided if a health care professional and a patient simultaneously use their cards to confirm a transaction. This system gives Taiwan real-time claims data, enabling the government to identify areas of increased utilization, and proved invaluable in helping Taiwan prevent an outbreak of COVID-19.
Quality
Taiwan comes in at #18 for Quality. Its ranking is bolstered by the best response to the COVID-19 pandemic of all countries in the Index. However, its ranking on infrastructure (#26) is weighed down based on very low doctor- and nurse-to-patient ratios — a direct result of over-reliance on hospital care. That said, Taiwan has among the shortest wait times for specialty care in the Index, a mark of the country’s relentless emphasis on operational efficiency.
Choice
Of the four dimensions in the Index, Taiwan ranks highest in Choice at #6. Though Taiwan is a single-payer system and often delays the introduction of new therapies to market as a cost containment measure, it otherwise provides the freedom to choose health care services (#3) with virtually no restriction. Taiwan utilizes co-pays for certain services and hospitals, giving patients more choices on where to receive care.
Science & Technology
Despite being a world leader in technological advancement, Taiwan ranks #27 overall in Science in Technology. This is mostly due to the lack of investment in pharmaceutical and medical equipment development as well as a lack of scientific innovation (#26) in life sciences.
That said, Taiwan leads the world in health digitization (#1), with each citizen carrying a medical ID card complete with health history and insurance information.
Fiscal Sustainability
Another strength for Taiwan is in Fiscal Sustainability, ranking #8 overall. Taiwan’s national solvency (#6) is strong with a debt-to-GDP ratio just over 30% (#6), while its public health spending as a share of GDP stands at below 4% (#9). And while Taiwan ranks in the middle of the Index for growth in public health spending (#15), such spending as a share of GDP has remained relatively steady over the last 10 years.
