Editor's Note: Tsung-Mei Cheng is a health policy research analyst at the Woodrow Wilson School of Public and International Affairs at Princeton University and Co-Founder of the Princeton Conference.
By Tsung-Mei Cheng – Special to CNN
This week’s Supreme Court argument on the constitutionality of the individual mandate, a crucial provision in President Obama’s Affordable Care Act (ACA), reminds me of Taiwan’s experience with that provision in its National Health Insurance Act (NHIA) of 1994.
The NHIA provided Taiwan’s citizens universal health insurance under a government-run, single-payer health insurance system. Today, over 99% of Taiwan’s twenty-three million people are insured.
Premium contributions in Taiwan are based on income and are designed to ensure that health insurance is affordable to all. In Obama’s Affordable Care Act that same principle takes the form of income-based subsidies that can be used to offset premiums charged by competing private health insurers.
In May 1994, Taiwan’s parliament began debate on the National Health Insurance Bill, which Taiwan’s executive branch had drafted. The bill had an individual mandate at its core - as the means to achieve universal coverage.
At the time, 41% of Taiwan’s population had no health insurance and had to pay out of pocket for health care. For those without the means to pay, of course, medical expenses resulted in tremendous hardship. Many households went bankrupt because of the burden of medical bills. Many Taiwanese went without timely and needed health care.
After less than three months of parliamentary debate, parliament passed the bill on July 19, 1994, turning it into Taiwan’s NHI Act, but with a catch – the mandate was gone.
The final moments before passage were tense. A group of protesters, mostly blue-collar workers, swamped the parliamentary chamber where the bill was being debated and threw paper money about. They claimed that the NHI bill would skin Taiwan’s workers ‘twice’ - once by having to pay into Taiwan’s Labor Insurance, which had a medical insurance component, and then again by having to pay into the NHI by dint of the mandate.
Adding to the drama, a legislator unexpectedly burst into the chamber while final reading of the NHI Bill was underway. She had been utside the chamber conferring with pharmaceutical lobbyists who, ironically, were opposing another article in the bill. To gain the right to speak in order to present her argument on behalf of the pharmaceutical industry she first had to pretend objection to whatever part of the bill was being read at that moment. That happened to be the mandate clause. Unwilling to lose momentum, the chamber continued to read and vote on the rest of the bill, until it was passed, at one o’clock in the morning of July 19.
Therefore, by quirk of fate, when the NHI bill was voted into the NHI Act, there was one important difference – the individual mandate was gone. In its place was a new clause for voluntary participation as a compromise.
Taiwan’s public was taken aback by this sudden, drastic outcome. There was a tremendous popular backlash against taking the mandate out. The operability of the NHI Act, which had counted on the individual mandate for equitable and affordable financing, had been immediately thrown into question.
As any actuary will tell us, without mandating everyone to buy at least a basic package of needed health care services, healthy individuals would find it financially advantageous to be without insurance coverage until they fall ill. The only protection an insurer had against this self-serving, adverse risk selection is to base insurance premiums on the health status of individuals, which is something citizens usually abhor.
By September 1994, when Taiwan’s parliament began its new session, it quickly put the individual mandate back into the NHI Act. It realized it could not work without it, and the public was solidly behind it.
The moral of Taiwan’s experience is that the mandate is indeed necessary to achieve universal health insurance and that Taiwan’s parliament saw the wisdom of it before it was too late.
Looking around the world, we see that all other rich, developed nations have individual mandates built into their universal health insurance models. All their citizens and residents enjoy equal access to health care. For example, market-oriented Switzerland has an individual mandate in their health insurance program.
The Swiss health system is completely run by private health insurance and has no public health insurance such as America’s Medicare or Medicaid. Rich and poor Swiss share the same insurance plans, and doctors and hospitals are paid the same fees for treating rich and poor Swiss alike.
In my interview with former Swiss federal health minister Dr. Thomas Zeltner published in Health Affairs, he told me that freedom-loving Swiss “consider the health insurance mandate to be a form of socially responsible civic conduct” and that in Switzerland, ’individual freedom’ does not mean that you should be free to live irresponsibly and freeload from others.” About 45% of the Swiss receive government subsidies to help pay their health insurance premiums.
In elementary school in Taiwan, I remember weekly civic lessons teaching us that with individual citizen’s rights come citizen’s responsibilities. One such responsibility is not to freeload on the rest of society. Soon enough in Taiwan, the individual mandate for health insurance was adopted. Today, Taiwanese accept that citizens’ rights and responsibilities are two sides of the same coin. The NHI remains Taiwan’s most popular social institution.
America is a great nation. The rest of the world admires it for being “exceptional”. But does America really want to be exceptional for having the most expensive health care or for being the only developed country without universal health insurance?
The views expressed in this article are solely those of Tsung-Mei Cheng.