Taiwan's healthcare system and its role in the country's successful battle with COVID-19

by Roy Ngerng
Taiwan is today one of the few countries which have brought the COVID-19 pandemic under control and to date, it has seen no new cases for 11 days straight and zero domestic cases for more than a month – or 36 days to be exact. One reason for Taiwan’s success can be attributable to Taiwan’s world renowned healthcare system, and most importantly, an affordable system that allows citizens to have the peace of mind to access healthcare and be protected.
In the CEOWORLD Health Care Index last year which ranked 89 countries in terms of the quality of their healthcare, such as on their infrastructure, cost and government readiness, Taiwan ranked first while also ranking fifth in terms of cost or affordability. On Numbeo’s 2020 Health Care Index, Taiwan also ranked first. Other East Asian industralised countries South Korea and Japan ranked second and third, respectively, while Singapore ranked 25^th. Australia was 9^th, the United Kingdom 13^th, and the United States 30^th.
Indeed, Taiwan’s healthcare is highly affordable. Taiwan’s healthcare system runs on a single-payer National Health Insurance (NHI) financing system, and while the total insurance premium rate is already a low 4.69% of the insured’s wages, it is shared between the employee, employer and government.  For example, for a single public or private-sector worker earning about the median wage of NT$40,100 (S$1,895), he or she would only need to pay 30% of the premium, or 1.407% of wages, with the company paying twice that (60% or 2.814% of wages) and the government footing 10% (00.469 of wages). In other words, the worker is only required to pay NT$564.21 (S$26) of his or her wages into NHI, which would cover for most healthcare expenses. Low-income households are exempted from paying premiums, and not only that, also receive healthcare for free.
For such low premiums, Taiwan’s residents receive bang for the buck – a visit to a local clinic only requires copayment for as low as NT$50 and for smaller district hospitals, it is as low as NT$80 or NT$420 at major hospitals. A visit to the emergency room also requires only a co-payment of between NT$150 and NT$550. Medication is also free for drugs costing less than NT$100 (S$4.7). Healthcare in Taiwan is therefore largely affordable, or even free in universal terms.

In fact, individuals who have catastrophic illnesses, or those living in villages in the mountains or island areas are also not required to make copayments. Healthcare is also free under the NHI system for low-income households, children under three years old, private-sector workers being treated for work-related injuries (which is covered under the labour insurance), as well as for women giving birth, among others. Patients with chronic illnesses and dental patients are also not required to pay for medication under NHI.
Not only that, Taiwan’s residents covered under NHI only need to pay a cap of NT$39,000 for any particular condition at a single hospital for stays of not more than 30 days for acute conditions and not more than 180 days for chronic conditions. There is also a cap of NT$65,000 in one year for any one specific condition. Waiting times are short too – for major surgeries, it can even be as short as two weeks.
In 2018, the NHI collected revenues of NT$610.6 billion while expenditures totalled NT$637.3 billion, or about 4.4% higher than revenues. While expenditures slightly exceeded revenues in 2017 and 2018, revenues collected were actually higher than expenditures for the last seven years prior. In addition, there was still a reserve fund of NT$211 billion in 2018, or more than 12 times the revenue shortfall in 2018.
Of the revenues collected, 97.5% came from the NHI premiums while the rest came from tobacco tax (2.3%), lottery revenue (0.2%) and the reserve fund (0.2%), among others. In 2017, Taiwan increased tobacco taxes to the tune of 63%, and together with lottery levies, were used to finance Taiwan’s long-term care program, which according to Vox, is a more “progressive” way of expanding access to citizens.
The administration of the NHI is also highly cost-efficient. Health and Welfare Minister Chen Shih-chung who has been credited for Taiwan’s COVID-19 success, highlighted that the administrative costs for the management of NHI was only 0.9% in 2017 – which according to Chen, is already the lowest in the world at that time. In 2018, administrative expenses were reduced to a lower 0.86%, or NT$5.5 billion out of the expenses of NT$610.6 billion.
Chen who is a trained dentist, explained that Taiwan has been able to reduce the administrative spending of NHI because its single payer system has allowed for “high levels of efficiency”.
“While no national health insurance program in the world is perfect, Taiwan’s model has been a resounding success and can serve as a reference for other nations,” Chen added.

Taiwan’s NHI system was launched in 1995 and foreigners working in Taiwan are also included as part of the program. Its introduction also enabled the coverage of Taiwan’s national health system to be expanded from 59% to “virtually all the population in Taiwan”, and in 2018, 89.7% of Taiwanese said that they were satisfied with the NHI system – the highest approval rate in the history of the NHI.
The roots of Taiwan’s current NHI system began in 1986 when the government decided to expand universal health insurance to all its citizens, and its policy planners thereafter embarked on a study of the health care systems in the world between the late 1980s and 1994, before it decided to adapt models from more than 10 countries to model its system against. The single-payer system was modelled against Canada while the financing system followed Germany’s premium-based model. The NHI reform therefore enabled disparate insurance schemes which existed prior to 1995 to be consolidated and expanded to all, which not only ensured greater access but also reduced the out-of-pocket payments for the insured.
Uwe Reinhardt, the late Princeton economist, was a high-level government advisor to Taiwan during this period, and recommended to the government a single-payer system on three principles – that a single-payer could effectively control cost, and was “administratively simple and easy for the public to understand,” and importantly, because such a system is “equitable” and “all insured are treated equally regardless of ability to pay or preexisting conditions”. The introduction of NHI has therefore enabled the annual growth in national health expenditures to gradually decline over the years.
As a result, due to Taiwan’s low-cost and efficient health system and NHI financing, current health expenditure comprised only 6.1% of GDP in 2018, which is among the lowest when compared with other countries in the Organization for Economic Cooperation and Development (OECD). On a per capita basis, Taiwan’s current expenditure of US$1,574 also ranks among the lowest when compared with other OECD countries.
There are however pitfalls to Taiwan’s system – doctors in Taiwan can see as many as 80 to 100 patients a day, resulting in the belief among doctors that Taiwan’s efficient and affordable health system is coming at the cost of doctors seeing “too many patients every day”. Keeping costs low also means that patients with “complex and costly conditions” might also have difficulty accessing the latest treatments, unless they fork out more out-of-pocket.
Consequently, Taiwanese rank their satisfaction of the duration they spend with their doctors sixth among eight OECD countries and at the bottom in terms of the clarity of explanations that doctors provide.
One of the reasons for this is the low number of healthcare workers relative to Taiwan’s population – Taiwan has only 2.3 physicians per 1,000 population and only 7.1 nurses and midwives per 1,000 population, which place it as having among one of the least healthcare workers in the advanced countries, alongside other Asian industrialized countries Singapore and South Korea.
Nevertheless, Taiwan has come off as one of the countries to have successfully battled the COVID-19 pandemic – at least in the first wave – but even so, Minister Chen is already thinking ahead about how Taiwan’s healthcare system needs to be further strengthened. Chen pointed out that while competition in Taiwan’s medical industry has allowed it to operate at “peak efficiency”, this “become[s] a problem during pandemics”, and there is therefore a need to “leave room to do more”.
Indeed, Taiwan has outlined at least five steps with which it would adjust its health system in response to COVID-19, from the current 1,100 negative pressure isolation beds, and expanding to 21 hospitals and then later to 100 hospitals which will be designated isolation hospitals, depending on the severity of how the pandemic pans out.
However, as of the time of writing, Taiwan has already seen 398 out of its 440 confirmed COVID-19 cases recover, while there are only 35 people still being hospitalized – or an usage of only 3% of its isolation beds. In 2018, Taiwan had 483 hospitals with 135,496 beds – more than adequate for Taiwan’s current case load. Taiwan also has the highest number of critical beds in Asia relative to its population.
But Taiwan has other tricks up its sleeves – it has developed the strong manufacturing ability that enabled it to increase its face mask production from 1.88 million a day in early January to as many as 20 million today, allowing it to become the second largest manufacturer in the world; and with its stockpile of masks reaching 100 million, it is now considering lifting the export ban on masks it implemented in January.

The deep integration of digitalization into Taiwan’s health system also enabled it to use its cloud network to allow its mask distribution to be efficiently conducted. Taiwan’s biotechnological capabilities have also seen it not only develop its own but also partner with other countries to develop rapid test kits, vaccines and treatment for COVID-19.
As such, it is this person-centric healthcare system that Taiwan has developed that has delivered universal access to healthcare at low cost to enable the good health of the Taiwanese and allowed its healthcare system to be so well-prepared for the pandemic; and coupled with Taiwan’s traditional industrial and manufacturing prowess as well as digital capabilities, has also enabled Taiwan’s healthcare system to develop an effective response against COVID-19 and to keep it one step ahead of the virus.