The Effect of Global Budget Payment System on Containing Medical Care Expediture under the NHI: 10 Years Experience of Taiwan

Presenter: Ming-Chin Yang, College of Public Health, NTU

Abstract

Taiwan implemented the Health Insurance System (NHIS) in 1995. In order to contain the rapidly increased medical care expenditure, the global budget payment system (GBPS) was introduced incrementally in 1998. The purpose of this paper is to report the inititation of the system, the structure, process and the results of the system.

In terms of initiative, this paper will introduce the theoretical background of the global budget payment system and how was the mechanism of self-regulation being engineered.

The negotiation of global budget is being conducted at a committee under the Ministry of Health. The committee is comprised of 27 members. There are 9 members representing the providers, 9 representing the payers (of insurance premioum) and academic, and the remaining 9 represent the government.

The process of the global budget can be divided into four stages. The first stage is to determing the grand global budget (the budget cap) of the following year. This is done by the central government, based on the information provided by the Ministry of Health. The second stage is to negotiate the increase rate (based on previous year’s expenditure) of each of the four provider sectors, namely dental care, chinese medicine ambulatory care, wetern medicine clinics, and hospital care. The third stage is to negotiate how to allocate budget among six geographic regions. The forth stage is to review inentive programs that will encourage providers to perform services that will improve the accessibility of care or improve quality of care.
The results of the GBPS over the past ten years are quite significant. First, the annual growth rate of medical care expenditure is controlled, from 10% at the peak, to approximately 4%. Second, by allocating budget for improving the accessibility of care in the remote areas, the distribution of doctors does improved or there are outreach programs.

However, there are also some limitations of the system. First, the formula that determing the global budget are constantly being debated. Second, it will take a lot of efforts to enhance the capacity of representatives from the payer side to understand the issues and counter-balance the representatives from the provider side. Thus, constant improvement of the negotiation process is needed.