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Lessons on Health Coverage

Source: Bangor Daily News
Thursday, 07/08/2004
Edition: all, Section: a, Page 8

A significant concern about expanding Maine's health care system through the governor's Dirigo plan is that it will encourage many more people to use and overuse the system, driving up costs and making health care less affordable for everyone. Taiwan, which transformed its health care system in the mid-1990s, provides both reassurance and lessons for Maine.
Dirigo expands access by subsidizing a voluntary insurance program and lowering costs for preventative care. It even plans to offer incentives for those who improve their health habits, including perhaps getting regular check-ups.

Starting in 1995, Taiwan instituted National Health Insurance, a single-payer system with mandatory enrollment and low co-pays that is operated by the government but depends on market-driven incentives in its mix of publicly and privately owned hospitals. Nearly everyone in Taiwan is covered with comprehensive insurance (except limited mental- health coverage) yet health care there costs about 6 percent of gross domestic product, compared with 13 percent here.

Utilization has risen significantly since 1995 and so have overall costs in Taiwan, but not in proportion to the number of new people covered and nowhere near the level of the cost in the United States. And health measures such as infant mortality rates and life expectancy are improving. Victor Wu, a deputy general manager at Taiwan's Bureau of National Health Insurance, observes that the Taiwanese system lacks gatekeepers for care, as a primary or family doctor serves here, something the bureau plans to create. Even without that planned change, however, the bottom line is that even as access was greatly expanded, costs largely have remained under control. How?

Health Affairs journal last year published a study that asks that question, and looks first at what preceded the current system. "The separate insurance programs each had different benefit packages, their own rules governing claims payments and their own payment rates. ... These different administrations incurred additional costs while imposing additional administrative costs on providers." That should sound familiar Americans, who pay as much as 20 cents of every dollar in administrative transaction costs.

The single-payer system reduced the administrative costs in Taiwan and, just as important, "it provided comprehensive information to create provider profiles to reduce potential fraudulent claims, abuses in coding and the overuse of tests," says Health Affairs. Maine will use similar amounts of information not only to ensure care is delivered efficiently but that it is of high quality, with services tracked and outcomes reported. Knowing specifically where the money is going and for what result and making those results known to the public will have a major effect on spending in Maine.

Taiwan is quite different from Maine in that it is densely populated and began with a better-organized health system pre-1995 than what Maine has now. However, its system covered only about 60 percent of residents there and Taiwan has a more serious problem with an aging population (expected to rise to 14 percent of the total by 2021), which needs more care, and recently faced a health crisis with severe acute respiratory syndrome (SARS).

The health system in Taiwan isn't perfect, but it shows what is possible: comparatively much lower costs and improving health outcomes. In implementing its own system, Maine could do worse than to follow Taiwan's example.