Paul Krugman's "Pride, Prejudice, Insurance" and Taiwan's National Health Insurance

To establish National Health Insurance in the US,

we'll have to overcome pride - the unwarranted belief that America has nothing to learn from other countries - and prejudice - the equally unwarranted belief, driven by ideology, that private insurance is more efficient than public insurance.

As an example, Krugman points to the Taiwanese National Health Insurance:

Taiwan, which moved 10 years ago from a U.S.-style system to a Canadian-style single-payer system, offers an object lesson in the economic advantages of universal coverage. In 1995 less than 60 percent of Taiwan's residents had health insurance; by 2001 the number was 97 percent. Yet according to a careful study published in Health Affairs two years ago, this huge expansion in coverage came virtually free: it led to little if any increase in overall health care spending beyond normal growth due to rising population and incomes.

Taiwan's NHI first planned in 1987. The original plan was to implement the system in the year 2000. However, in the mid 90s, with Taiwan's political system becoming more democratic and with the first direct democratic election of the president around the corner, both the ruling and the minority parties felt the pressure to pass popular social programs. The originally NHI plan was quickly (and some might say hastily) re-done so as to start in 1995, one year before the 1996 presidential election. The NHI program came finally came into existence in March 1995, less than one month after the legislature finally sorted out NHI's financing details.

This is how a 1997 article in Health Policy summed up Taiwan's experience with NHI up to that point:

What lessons can be learned from Taiwan's experiences, especially for countries facing a large uninsured population and rapidly rising health care costs?

1. Economic and political forces, rather than of health needs, brought about the forced introduction of Taiwan NHI


2. The revolution was initiated at a time when the economy was healthy and health expenditure modest


3. The responses of the health care system, of the previously insured population, and the newly-insured population were not what the Taiwan NHI Bureau expected.

More review of Taiwan'sNHI to come.

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