Learning Chinese

Aug 1, 2014 | Christopher F. Koller, President

“Physicians at my hospital are retiring. Younger doctors are exploring opportunities in other regions where they can make more money. I can’t recruit new physicians. If my rates from payers don’t improve, I won’t have any providers to see patients.”

When I was Health Insurance Commissioner in Rhode Island reviewing proposed rate increases from insurers, I regularly heard complaints like these. But this wasn’t a public meeting on rate increases. It was a health systems symposium in Taiwan where I was a week-long guest of the Ministry of Health and Welfare; and the speaker was a hospital administrator, pleading his case to Taiwan’s National Health Insurance Administration (NHIA), the group that oversees that country’s health insurance system. Allocating scarce resources, it seems, is a universal problem.

Since 1995, the Taiwanese have systematically implemented a single-payer financing system with a mostly private delivery system. The results are impressive. The Taiwanese have longer life spans than Americans (an average of 80.6 years vs 79.8, according to the World Health Organization), yet spend one-third the GDP as the United States on health care. More than 99% of the population carries an NHIA card that guarantees a standard set of benefits. With it, providers can verify enrollment at time of service, confirm recent medical services, and get paid the next day. The Taiwanese enjoy unlimited provider choice and see doctors at higher rates than those in the United States.

But all is not rosy on the island. Concerns about funding adequacy lead to contentious national budget debates and the provider payment discussions noted above. Physicians complain of dispiriting workloads and patients with unrealistic expectations. The provider payment system is largely fee-for-service and efforts at experimentation have yielded no consensus for a better alternative. Public providers express concern about having a disproportionate number of lower income, socially complicated patients in their care, leaving easier cases for private practices. Legislators routinely bombard the executive branch with long lists of demands.

With a population of 23 million, Taiwan is analogous to a US state, although it shares no borders, has no federal partner, and has a relatively homogenous population with strong cultural values of civic order and collective welfare. Despite these differences, I came away from my visit convinced that there are relevant lessons from Taiwan for the United States in general and states in particular.

Global Budgeting

In Taiwan: For a sustainable medical care system, the total costs of medical care need to be measured and rates of growth targeted. There is an ineluctable truth here—we can’t have everything—and medical care, like other public goods, must be subject to budgets. In Taiwan, budgets are set by medical service category in negotiations with associations representing each category, much as in Ontario.

In the States: With mixed public and private sources of funding and limited degrees of control over Medicare and commercial payments, states find it challenging merely to measure medical expenses. The move to state-based global budgeting is taking place nonetheless—Maryland has renewed its waiver with Medicare to maintain an all-payer hospital budgeting system and has committed to move on to outpatient services. Vermont is implementing standard provider payment rates for Medicaid and commercial insurance and is starting to negotiate with Medicare. Massachusetts is measuring total costs of care across all payers and has set targets for total cost growth. Oregon is not far behind. Taiwan’s experience indicates that these states are on the right track.

Mixed Financing Model

In Taiwan: The NHIA is financially independent from the Taiwanese government and subject to solvency standards. It relies on a formula of contributions from employers, individuals, and the federal government. This formula was re-legislated recently, made more progressive by taking into account individuals’ salaries and taxing a broader base of individual assets. Lower-income families have access to subsidies and interest-free credit to make their payments.

In the States: Some Medicaid agencies have learned much the same lesson as Taiwan— focusing on graded premium payments rather than negotiating small copayments at the time of visit. The Small Business Health Options Program (SHOP) models in the ACA’s health insurance exchanges, like Taiwan, blend employer, employee, and public financing.

Health Promotion

In Taiwan: The Ministry of Health in Taiwan has an entire agency devoted to health promotion. Freed from other public health functions, this agency uses insurance claims and population surveys to analyze disease incidence and preventive care screening rates for the country and for each municipality. With public input, it sets improvement priorities and works across agencies, branches of government, local municipalities, and private sector stakeholders to improve performance. The results? Maternal and child health measures are high. Not only are smoking rates declining but—perhaps unique in the world—so are adult obesity rates. The Health Promotion Agency’s strategies do not target providers and do not shame individuals. “We have the communities set targets and we measure and hold them accountable—these are social movements and we must use social mobility strategies,” says the agency’s director-general.

In the States: While the United States has achieved remarkable progress in reducing smoking incidence, it has much work to do to reduce other health risk factors. Governors like John Hickenlooper in Colorado have realized that they are in perfect position to take on population health issues and have spent some of their leadership capital working with public and private sector partners to promote improved population health.

Links to Social Services

In Taiwan: The Ministry of Health and Welfare is the product of a recent merger of previously separate health and welfare agencies. Responding to evidence about the importance of the social determinants of health, officials hope to link the two sets of services—particularly for vulnerable populations such as Taiwan’s rapidly burgeoning elderly population. The potential in Taiwan seems strong. The executive director and lead physician at the rural health public health clinic we visited are focusing on improving tuberculosis treatment adherence rates for their largely low-income aboriginal population. What about access to adequate housing and food, issues that bedevil colleagues in parts of the United States? “Not a problem,” she says.

In the States: Research has shown that the United States spends proportionately more on health care and less on social services than other countries. Only now, with increasing accountability for population health and costs, are some provider groups looking for tighter coordination with social services.

Professionalized Public Services

In Taiwan: Taiwan invests money and prestige in public service. Every agency director with whom we met in the Ministry of Health has an MD and a PhD. They entered public service from clinical practi
ce or academia and will return there when their public service ends. Staff members also are physicians and PhDs and so both intellectual and administrative continuity is maintained between administrations. Developing public policy involves rigorous evidence reviews and much public input gathering in meetings. Policymakers may take a beating from demanding public stakeholders but there is a competence there born of education and experience.

In the States: Adequate skills and resources are of increasing concern for state health and human services officials. The Affordable Care Act continues to be implemented, Medicaid programs grow in size and complexity, state budgets tighten, and population health challenges remain. State leaders routinely tell me about the challenges of developing and maintaining high quality staff given budget limitations, antiquated administrative rules, and public attitudes. Addressing this takes work, skill, and resources. In Arkansas, health and human services officials have focused on building human capital to manage their programs—developing new leaders, managing culture change, and using consultants not just for operations and analysis, but also for skills development.

Developing and Maintaining Public Support

One of the most telling remarks of the week came from Michael Chen, a recently departed senior NHIA official. After outlining an ambitious list of future priorities for the Ministry and the NHIA—developing better ways to engage citizens in their care choices and the cost implications, reaching out to underserved rural populations, innovating on provider payments, and developing a companion National Long-Term Care Insurance Program in the wake of unfavorable demographics—he smiled and said to us, “But these are technical challenges. If we do not develop and maintain the political will for the program, none of this will be even possible.”

This final lesson from Taiwan is the most important. Some colleagues cringe when I acknowledge how much of the work of public policy is political—as if good ideas ought to triumph of their own merit and politics is too ugly. But politics—the process of building consensus around collective priorities—is inherent for any society, whether it is an island nation or northern plains state. It is not all that culturally dependent. It takes conviction, professionalism, patient communication, power, and healthy doses of common sense. Those of us engaged in improving population health by gathering and implementing the best evidence and experience would do well to heed Mr. Chen’s words.