By Elaine Hou
Taiwan Today, Feb. 11, 2011

Debate has raged for almost a decade over the design of Taiwan’s second-generation National Health Insurance System. The seemingly endless rounds of consultations and negotiations pushed the patience of private and public sector participants to the limit, but their efforts paid handsome dividends Jan. 4 after amendments to the NHI Act passed muster in the Legislature.

Despite some lingering concerns, experts believe the 2G NHI is a fairer, more efficient and financially healthier system.

Launched in 1995, NHI is compulsory social insurance covering more than 99 percent of the nation’s 23 million population. Premium payments are shared by the government, the insured and employers.

Under the amended act, the NHI premium rate for individuals is set at 4.91 percent of their monthly salaries, down from 5.17 percent. A new supplementary premium system will also be in place, charging 2 percent on additional earnings over NT$2,000 (US$69), including interest, professional practice income, rent, stock dividends and bonuses exceeding the equivalent of four months’ wages.

According to former Minister of Health Yaung Chih-liang, the altered premium system will enhance NHI’s finances via the expanded premium base. This approach will also reinforce the ability-to-pay principle and relieve the financial burden on salaried employees, who usually receive little additional income.

“Around 83 percent of the population will pay less,” Yaung said. “Only 17 percent will have increased premiums resulting from extra sources of income.”

“The new plan will generate NT$508.6 billion in health insurance premiums per year, balancing the financial shortfall of the current system in five years,” said Tai Kuei-ying, director-general of the Bureau of National Health Insurance. She added that supplementary payments are estimated to bring in NT$20.8 billion annually.

The system is now in the red for over NT$60 billion, according to the BNHI.

Fu Li-yeh, director of National Yang-Ming University’s Institute of Health and Welfare Policy, described the supplementary premiums as a positive change, though not a perfect solution.

The extra premiums will help realize the core objective of the system’s reform—that those who earn more also pay more, thus making the system fairer from a social standpoint, said Fu, a minister without portfolio from 2004 to 2006.

Responsible for the 2G plan originally submitted to the Legislature, Fu pointed out that as a result of economic development since NHI was implemented, people have more and more supplementary income beyond salaries and wages. “This is especially true for wealthier people.”

She also expressed approval of the integration of the NHI Supervisory Committee and Medical Expenditure Negotiation Committee to form the new NHI Supervisory Commission, a move designed to bring revenues and expenditures more in line.

This body, composed of representatives of the insured, employers, medical service providers, experts in related fields and health care authorities, will be tasked with reviewing issues such as premium rates, the scope of benefits and total yearly payments to contracted medical facilities, the BNHI said.

This change will improve NHI’s financial management, Fu said.

The amended act also stipulates that the commission’s meeting records be made available to the public, and that public opinion be consulted before the government decides on major policies.

“This is an encouraging initiative that will keep information transparent and expand citizen participation,” said Chiang Tung-liang, dean of National Taiwan University’s College of Public Health.

Another improvement with regard to information transparency is the requirement for the public release of NHI financial reports, medical quality ratings of contracted hospitals and major violations by medical facilities.

To ensure quality health care for the entire population, the 2G NHI protects the rights of the disadvantaged via continuous coverage and reduced co-payments, and incorporates convicts into the system.

Meanwhile, the government will cover at least 36 percent of annual premiums, up from 34 percent. “The 2-percent increase is expected to require roughly NT$30 billion in government contributions during the first year of implementing the new system,” the BNHI said.

To prevent abuse of the system, the penalty for fraudulent insurance claims and medical expenses will be increased to up to 20 times the amount illegally received. The current fine is set at twice the illicit gain.

These revisions have received a thumbs up from the Taiwan Healthcare Reform Foundation, an independent, nongovernmental organization promoting the country’s health care quality and patient rights. “We believe they are conducive to a sustainable system, and will unveil a new era for NHI,” the foundation said.

Moreover, the new program will adopt diversified methods of benefit payment to promote illness prevention and the efficient use of resources. These include equal payments for similar diseases or medical treatments, and a capitation fee system.

“Implementation of capitation payment will push physicians to become more proactive in helping people prevent illness, rather than just passively providing medical care to patients,” Fu commented.

Another major amendment to the act requires citizens living overseas for long periods to have been enrolled in NHI over the last two years or to have maintained legal household registration in Taiwan for at least six months before they can enjoy medical care covered by the insurance. In the past, immediate access was granted to those with previous NHI registration or four months of household registration.

“The stricter regulations aim to enhance the system’s fairness,” the BNHI said.

Despite these improvements, the amended act still faces some criticisms, mostly over the new premium base and the unchanged separation of the insured into six categories by occupation, providing the basis for differential premium subsidies from the government.

“The supplementary premiums, which depend mostly on capital gains, seem a less stable source of NHI revenue,” Chiang said. “The amount will go up when the economy is heated and plummet during economic recessions.”

Chu Tzer-ming, former president and chief executive officer of the BNHI, said the six-category structure is a flawed, unfair policy that should be abandoned. “People with the same total income are charged different premiums because they are placed under different categories according to their jobs and vocational status.”

In addition, the policy is inefficient, Fu said. As the categories are based on occupations, when people change careers they may have to drop the insurance and then re-register under a different classification.

“This procedure is unnecessary since these people remain in the same insurance program,” she said.

Fu added that resolving these problems was the major reason for one of the initial 2G NHI proposals—calculating an individual’s insurance fee based on total household income. But this tax-like scheme was roundly rejected in the Legislature due to questions about the rates for the unemployed and those with no income.

Although the outcome is regrettable, Fu said she is still optimistic about the revised act.

“If the supplementary premium system works well, it will encourage future implementation of premium calculations based on household income,” she said.

Cheng Shou-hsia, former director-general of the BNHI, said although the amended bill is not 100-percent perfect, one thing for sure is that the 2G NHI is better than its predecessor. “This should be
acknowledged.”

Despite its problems, Taiwan’s NHI is highly regarded by international experts, Fu said. “I look forward to ongoing improvements to our system.” (THN)

Write to Elaine Hou at elainehou@mail.gio.gov.tw

Excerpted from Taiwan Today: http://www.taiwantoday.tw/ct.asp?xItem=150360&CtNode=428

By Wendell Potter
The Huffington Post, Feb. 12, 2011

The media had lots of health care news to obsess about last week. A federal judge ruled the health care reform law unconstitutional, and Senate Republicans tried in vain to repeal the law. But most of the press paid virtually no attention to a potentially much more important development — a multi-pronged effort by five major insurers to strip from the law key regulations and consumer protections that aren’t to their liking.

The insurers do not want the bill repealed or declared unconstitutional. Congress gave them exactly what they wanted by including in the legislation a requirement that all Americans not eligible for Medicare or Medicaid buy coverage from a private insurance company. That provision alone will result in hundreds of billions of dollars in revenue and profits the insurers otherwise would never see.

Officially, the insurers are maintaining neutrality on the court challenges to the law and the repeal efforts. They understand that Republican attorneys general who filed the lawsuits and the Congressional Republicans who voted to repeal the law — most of whom received campaign contributions from the insurers’ political action committees — must go through the motions to satisfy “the base.”

The court challenges and repeal efforts are, in reality, a useful smokescreen for the big insurers, whose real agenda is to gut the law while preserving the mandate. Expect a big lobbying and PR campaign — financed by our insurance premiums — to persuade us that the new regulations and consumer protections will make those premiums skyrocket.

The story much of the press missed was the revelation that the CEOs and lobbyists for the five biggest for-profits — UnitedHealth, WellPoint, Aetna, CIGNA and Humana — have been meeting frequently to plot their attack on the law.

Bloomberg’s Drew Armstrong reported that three committees formed by the group have been meeting almost weekly. While Armstrong didn’t indicate what those committees are doing, I can speculate from previous experience as an insurance company executive that the committees are developing strategies in these areas: lobbying, strategic communications the formation of alliances with other political and business groups and the creation of fake grassroots, or “Astroturf” organizations.

Bloomberg and the the National Journal also reported that the for-profits have solicited proposals from three big PR firms that have done extensive work for the industry: APCO WorldWide, Weber Shandwick and Public Strategies. It sounds familiar. While I was serving as head of corporation communications at CIGNA, I hired APCO and Weber Shandwick to help direct similar efforts and to enhance CIGNA’s reputation.

The for-profits reportedly formed the new coalition — as yet unnamed — because they were upset that America’s Health Insurance Plans (AHIP), their umbrella trade association, had been unsuccessful in keeping the new regulations and consumer protections out of the law in the first place.

So they’re going back to a familiar and successful playbook. Over the past two decades, the big insurers have formed such coalitions to defeat reform initiatives or to persuade the public and lawmakers to see things their way.

When the Clinton reform plan was being debated in 1993 and 1994, Aetna, CIGNA, Prudential and United formed the Alliance for Managed Care (AMC) to argue for a “market-based” solution — managed competition, as it came to be called — as an alternative to broader government involvement in health care. The AMC described itself as “a private-sector approach to health care system reform that uses the marketplace and the power of informed consumer choices to achieve better coverage, while improving quality and cutting costs.”

The AMC later joined a broader coalition that included the U.S. Chamber of Commerce and the National Association of Manufacturers to defeat the Clinton plan.

A few years later, within weeks of being named as defendants in two massive class-action lawsuits, the for-profits formed a new group, America’s Health Insurers (AHI), designed to redirect scrutiny away from them and toward the trial lawyers behind the suits. Attorney Richard “Dickie” Scruggs alone cost the companies billions of dollars in market capitalization when the Wall Street Journal reported on Sept. 31, 1999, that Scruggs was planning to file charges against the insurance firms. On that day, stock prices of Aetna and United alone had plunged nearly 20 percent by the time the closing bell rang at the New York Stock Exchange.

I was CIGNA’s main representative to America’s Health Insurers. My counterparts from other big insurers and I met secretly in hotel conference rooms in Washington and elsewhere with APCO to plan the PR strategy. The idea was to “reframe the debate” — shift attention away from the reasons the insurers were being sued — onerous policies and cheating doctors out of payments — and toward those trial lawyers who were getting filthy rich filing “frivolous” lawsuits. The lawyers — not the insurers — were the real villains. APCO reactivated the front group it had created for the tobacco industry — the Coalition Against Lawsuit Abuse — to generate letters-to-the editor and op-ed pieces in cities where the lawsuits had been filed – particularly Miami, where suits were eventually consolidated. The intent was to influence both the federal judges and potential jurors. (The suits were ultimately settled, with the defendants agreeing to change many of their practices and to pay the plaintiffs hundreds of millions of dollars.)

I was also CIGNA’s representative to yet another organization — the Coalition for Affordable Quality Healthcare (CAQH) — that the big insurers created later. We mounted a huge PR and advertising campaign designed to restore Americans’ faith in managed care, which had taken a beating in the press for such well-publicized practices as “drive-through mastectomies” and “drive-though deliveries.”

So this new grouping is just the latest variant on an oft-used tactic to influence public opinion and public policy. This time, however, the stakes are even higher, for both the insurers and for consumers.

What don’t the companies like? Well, for starters, the rules that now require insurance firms to devote at least 80 percent of what we pay in premiums for actual medical care.

But their sights are also on other provisions of the law that might impair profits. AHIP spokesman Robert Zirklebach provided a glimpse of what insurers really want when he told a reporter last week that industry lobbyists have embarked on a campaign to “educate” members of Congress about ‘flaws’ in the law. For instance, the industry will be trying to persuade lawmakers that young people, many of whom are being charged too much already, will see their premiums go sky high. How do you fix that? The insurers, of course, have an answer: get rid of the requirement that insurers can only sell policies that meet minimum benefit requirements and jettison the prohibition against charging older Americans any more than three times as much as young people. They want to charge them five to ten times as much.

If the latest coalition of big for-profit insurance firms meets its objectives, many of us will eventually be convinced — through sophisticated, behind-the-scenes PR campaigns — that those protections are not in our best interests after all. If those campaigns help the big insurers eliminate such protections, that would be ideal for their bottom lines — but devastating for consumers.

This also appeared on the Center for Public Integrity’s website.

Follow Wendell Potter on Twitter: www.twitter.com/wendellpotter

http://www.
huffingtonpost.com/wendell-potter/the-insurers-real-agenda_b_822356.html