Reforming Taiwan’s National Health Insurance: From Exploitation to Equitable Participation

This article was originally published by Global Taiwan Institute in its weekly newsletter, The Global Taiwan Brief, Vol. 10, Issue 2. Used with permission. To get the Global Taiwan Brief in your inbox every week, subscribe at globaltaiwan.org/subscribe. Y. Tony Yang is an endowed professor and an associate dean at the George Washington University.

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Taiwan’s National Health Insurance (NHI, 全民健康保險) system is implementing a landmark reform that abolishes the suspension-and-resumption mechanism for overseas residents. Starting December 23, 2024, this significant change—mandated by a 2022 Constitutional Court ruling—requires all Taiwanese nationals to maintain premium payments regardless of where they live. The reform affects approximately 210,000 Taiwanese living abroad, many of whom have greater financial means than domestic residents. This policy shift represents a decisive step toward ensuring fairness, sustainability, and shared responsibility within one of the world’s leading healthcare systems.

Historical Context and System Evolution

Before examining the current reform, it’s crucial to understand the historical context that shaped Taiwan’s NHI system. Established in 1995, the NHI represented a bold experiment in universal healthcare coverage, transforming from a fragmented system of employment-based insurance to a comprehensive national program. Within its first year, coverage expanded from 59 percent to 92 percent of the population, reaching 99.9 percent today—an achievement that has drawn international acclaim and study.

The original system designers could not have anticipated the challenges of increasing global mobility and healthcare tourism. The suspension mechanism, initially conceived as a practical solution for temporary overseas residents, became increasingly problematic as international travel became more accessible and medical costs in other countries, particularly the United States, skyrocketed. This created an unintended incentive for overseas residents to maintain minimal contributions while retaining access to Taiwan’s world-class healthcare system.

The Legal Foundation: A Mandate for Change

The reform’s legal basis stems from a pivotal 2022 Constitutional Court ruling that declared the suspension mechanism was unconstitutional based on a fundamental principle of democratic governance known as Gesetzesvorbehalt (legal reservation). This principle, adopted from German constitutional law, serves as a crucial check on government power by requiring that any significant decisions affecting citizens’ rights and obligations must be explicitly authorized through laws passed by the legislature, rather than merely through administrative rules or agency decisions. In essence, it ensures that major policy changes have proper parliamentary backing. The Court found that the existing provisions regulating NHI coverage suspension were implemented primarily through administrative procedures without sufficient basis in actual legislation, highlighting the need for a proper legal framework to establish clear rights and responsibilities for overseas residents. This ruling emphasized that a policy as important as healthcare coverage couldn’t be managed through administrative discretion alone.

The case that catalyzed this decision involved a Taiwanese expatriate, Ms. Li, who challenged the requirement to pay back premiums between reactivating and suspending her NHI coverage. Her situation exemplified a common pattern: an overseas resident making brief annual visits to Taiwan while seeking to minimize healthcare contributions. The Court’s ruling, while technically focusing on procedural grounds, opened a broader discussion about the ethical implications of selective participation in social insurance systems.

Similar legal challenges regarding overseas citizens’ healthcare obligations have emerged in other countries with universal healthcare systems. The experiences of various nations in managing health insurance requirements for their citizens living abroad provided useful insights as Taiwan developed its own healthcare reform. How other countries balanced universal coverage with overseas residents’ participation helped inform Taiwan’s policy discussions about creating a more equitable and sustainable system.

Addressing Systemic Exploitation

Taiwan’s NHI system has faced significant challenges from systematic exploitation, particularly through a problematic framework that has allowed overseas residents to take advantage of its services. Government data has revealed a concerning pattern wherein many overseas residents who suspended their coverage returned to Taiwan specifically for medical procedures. Analysis of healthcare utilization shows that when these residents accessed medical services, their per-procedure costs often exceeded those of domestic residents, suggesting strategic use of the system rather than responses to unexpected medical needs.

Exploitation of the system occurs most notably through the strategic use of NHI for high-cost elective procedures. For example, a total knee replacement, which costs over USD $50,000 in the United States, is available under Taiwan’s NHI system for just USD $5,000. Overseas residents could exploit this disparity by paying only a few months of back premiums, reaping significant financial benefits while contributing minimally to the system. Such practices not only strain the system financially, but also undermine public confidence in its fairness.

The case of Huang An (黃安), a 61-year-old Taiwanese entertainer residing in China, exemplifies this issue. Despite being known for his pro-China rhetoric, he consistently returns to Taiwan for healthcare, sparking outrage among Taiwanese citizens who view this as an abuse of national resources. Public sentiment is captured in comments such as “Wasting Taiwan’s medical resources” and “Stop coming back to take advantage of the resources of the Taiwan you despise.”

The problem has become institutionalized, with some overseas residents establishing regular patterns of returning for annual health screenings and non-emergency procedures. They effectively use the NHI as a low-cost alternative to private insurance in their country of residence. Some hospitals have even developed comprehensive international healthcare services that cater to both foreign and returning overseas residents, inadvertently legitimizing this systematic exploitation. These fraudulent reimbursement claims and selective use of NHI services during brief returns to Taiwan place disproportionate burdens on the system, highlighting the urgent need for reform.

Financial Sustainability and System Resilience

The reform’s elimination of the suspension mechanism is projected to generate an additional NTD $2.36 billion (USD $70.59 million) annually—a critical injection of funds as the system faces unprecedented demographic and technological challenges. An analysis by the National Health Insurance Administration reveals that by 2030, over 20 percent of Taiwan’s population will be aged 65 or older, potentially doubling per-capita healthcare expenditure compared to 2020 levels.

The financial impact of selective participation extends beyond direct healthcare costs. Managing the suspension-and-resumption processes requires significant administrative resources and operating costs—funds that could be better allocated to direct patient care and healthcare services. Moreover, the unpredictability of overseas resident utilization complicates budget planning and resource allocation, leading to inefficiencies in system management.

A comparison with private insurance alternatives underscores the value proposition of Taiwan’s NHI system. International private health insurance plans offering comparable coverage typically cost between USD $3,000 to $8,000 annually per person, while NHI premiums for most participants range from USD $300 to $1,200 annually. This dramatic cost difference reflects both the system’s efficiency and the importance of maintaining broad, consistent participation to sustain these favorable economics.

The Demographics and Healthcare Economics Challenge

Taiwan’s rapidly aging population presents unique challenges that make consistent contributions increasingly crucial. Current projections indicate that by 2040, there will be only 2 working-age citizens for every elderly person, compared to 4 in 2022. This demographic shift intensifies the need for stable funding sources, as healthcare utilization typically increases with age while the proportion of active contributors decreases.

Healthcare utilization patterns suggest that overseas residents who participate selectively in the NHI system often seek more complex medical interventions when they access care. When these residents do require hospital admission, their treatments tend to be more resource-intensive compared to those of domestic residents, potentially due to delayed medical care that allows conditions to become more severe or complicated.

Global Healthcare Integration and Soft Power

The NHI system has become an important element of Taiwan’s soft power and international standing. The system’s efficiency and comprehensive coverage have drawn study delegations from over 30 countries in the past decade alone. This reform strengthens Taiwan’s position as a global healthcare leader by addressing a significant vulnerability in the system’s design.

The reform also creates opportunities for enhanced international healthcare cooperation. This streamlined policy framework could facilitate future diplomatic initiatives for reciprocal healthcare arrangements with other nations. Such developments could potentially lead to improved healthcare access for Taiwanese citizens worldwide while strengthening Taiwan’s position in international healthcare partnerships.

Implementation Challenges and Solutions

The Taiwan Healthcare Reform Foundation (THRF, 台灣醫療改革基金會) has identified several critical implementation challenges that require careful attention. Drawing from the experiences of other countries, they recommend a phased approach to enforcement, beginning with enhanced communication and education efforts six months before the policy takes effect.

A key concern is the situation of overseas students and young professionals who may face genuine financial constraints. A graduated payment system could be developed that considers income levels and location of residence, similar to successful models used in France and Germany. This approach could maintain the principle of universal participation while acknowledging varying ability to pay.

The implementation plan could include establishing dedicated overseas service centers in major cities with significant Taiwanese populations, such as Los Angeles, New York, Vancouver, and London. These centers could facilitate premium payments and provide information about healthcare access options, addressing a major pain point in the current system.

Moral Imperatives and Social Responsibility

Taiwan’s NHI system represents a social contract, requiring all participants to contribute consistently to maintain equitable, high-quality healthcare for everyone. Expatriates, especially those with greater financial means, have a moral responsibility to support this system, as their contributions ensure its sustainability and fairness. Consistent participation funds critical public health measures, such as preventive care programs and routine screenings, which reduce long-term costs and improve health outcomes across all demographics.

Wealthier expatriates often benefit from multiple healthcare systems and possess greater resources, yet under the previous suspension policy, many avoided paying premiums while accessing Taiwan’s affordable and high-quality care during brief visits. This selective participation undermines the ethical principle of proportional contribution, where those with greater means help support the system for everyone. By contributing regularly, expatriates directly reinforce the NHI’s ability to deliver equitable services, especially to low-income and high-risk populations.

Participation in the NHI is about more than accessing care; it is a commitment to the collective welfare of Taiwanese society. Consistent contributions by expatriates signal their engagement with the values of fairness and solidarity that underpin the system. By supporting the NHI, they help preserve a model of universal healthcare that benefits current and future generations, strengthening the social compact that makes Taiwan’s healthcare system a global benchmark for equity and excellence.

Future Implications and Opportunities

Looking ahead, this reform positions Taiwan’s NHI system to address emerging healthcare challenges more effectively. The stability provided by consistent overseas contributions enables long-term planning for crucial investments in areas such as precision medicine, artificial intelligence applications in healthcare, and expanded preventive care programs.

The reform also creates opportunities for innovation in healthcare delivery. The National Health Insurance Administration could explore partnerships with international healthcare providers to establish a network of affiliated clinics in countries with large Taiwanese populations, potentially offering routine care services that could be covered under the NHI framework.

Conclusion

The elimination of the suspension mechanism represents a watershed moment in the evolution of Taiwan’s healthcare system. This reform not only addresses immediate fiscal and fairness concerns but also strengthens the foundation for future healthcare innovations and international cooperation. As global healthcare challenges become more complex, the success of universal healthcare systems increasingly depends on consistent participation and support from all citizens, regardless of residence.

For expatriates, this reform presents an opportunity to contribute to a system that has served as a model of efficient, equitable healthcare delivery. Their participation strengthens not just the financial basis of the system but also the social bonds that make universal healthcare possible. As Taiwan continues to navigate the challenges of an aging population and advancing medical technology, this renewed commitment to shared responsibility will prove crucial in maintaining and enhancing one of the world’s most successful healthcare systems.

The main point: Taiwan’s National Health Insurance system began implementing a major reform in December 2024 that eliminates the suspension-and-resumption mechanism for overseas residents. This change, prompted by a 2022 Constitutional Court ruling, requires all Taiwanese nationals to maintain premium payments regardless of where they live. The reform addresses systematic exploitation by overseas residents who previously used the system selectively for expensive procedures while contributing minimally. The change is expected to generate NTD $2.36 billion (USD $70.59 million) annually and strengthen the system’s sustainability as Taiwan faces demographic challenges from an aging population.

(Featured photo from Department of Information and Tourism,Taipei City Government)