The NHI waiver raises concerns

The Legislative Yuan has passed amendments to the Senior Citizens Welfare Act (老人福利法) that would waive National Health Insurance (NHI) premiums for most people aged 65 or older. Under the bill, advanced by Chinese Nationalist Party (KMT) and Taiwan People’s Party lawmakers and passed 60-39, the government would fully subsidize the premiums for people aged 65 or older whose income falls below the tax-filing threshold or whose income tax rate is less than 20 percent. The change essentially creates a universal waiver for people aged 65 or older, because most retirees have no taxable income. Medical associations have said that the shift could worsen generational imbalance and squeeze budgets for nurses’ salaries, rare-disease care and new drug coverage.

Critics have framed the bill as fiscal sabotage, pork-barrel politics or even an attempt by opposition lawmakers to destabilize the government. However, the debate raises a deeper question: How should Taiwan ration its finite healthcare resources?

Although the NHI has received international recognition for its efficiency, accessibility and health outcomes, growing financial pressure has raised concerns about its long-term stability. In 2024, Taiwan spent about 7.34 percent of GDP on national healthcare, significantly lower than the Organisation for Economic Co-operation and Development average for that year of 9.3 percent and the US’ 17.2 percent.

The Commonwealth Fund reported that budgetary constraints have contributed to significant workforce shortages in Taiwan. Hospitals struggle to recruit and retain nurses; doctors leave hospitals for cosmetic clinics where income is more predictable; and the NHI faces difficulty covering new, high-cost drugs.

Taiwan’s situation makes it clear that medical resources are finite. Indeed, all universal healthcare systems must ration care. Any politician who promises to always provide all forms of care to all people without bankrupting the system is simply lying. The question is what are the principles of ethical medical rationing?

Different countries have different approaches, but there are a few shared principles, such as maximizing clinical benefits, implementing measures to protect lower-income households and providing universal access to essential care while preserving individual choice.

The British National Institute for Health and Care Excellence evaluates the clinical benefits and cost-effectiveness of new treatments to inform coverage decisions. Germany’s system uses public funds to cover health insurance premiums for eligible unemployed people. Switzerland requires people to carry basic health insurance, while allowing them to purchase supplementary insurance for additional coverage.

These examples illustrate different ways of balancing clinical benefits, while helping lower-income people and protecting individual choice. Most systems value these principles but combine them in different ways, reflecting different priorities.

KMT lawmakers argue that elderly people are more likely to be financially vulnerable and therefore deserve help. However, age is not the same as poverty. If the goal is to protect lower-income people, why focus on age rather than directly target subsidies to those who need them? Taiwan already has income-based mechanisms; this bill bypasses them.

That leads to the issue of sustainability. The Ministry of Health and Welfare estimates that the amendment would cost NT$40 billion (US$1.23 billion) annually, which, if funded through premiums, would require people aged 20 to 64 to pay an additional NT$2,690 per person per year. If funded through taxes, each household would pay about NT$5,720 more annually. The estimated NT$40 billion would grow as Taiwan’s population ages. These numbers suggest that the new bill might be popular today, but less so as costs rise.

These estimates should inform executive responses, policy debates and broader public discussion.

The Executive Yuan should consider refusing to countersign this costly, under-deliberated bill. However, refusing to countersign risks being framed by opposition lawmakers as the central government opposing benefits for elderly people, deepening polarization.

To avoid this trap, the Executive Yuan should pair its response with an initiative to stimulate discussions between the state and civil society.

First, it should clarify the principles of medical fairness that have guided NHI policy — principles rooted in clinical need and long-term viability rather than blunt demographic categories such as age.

Second, it should propose alternative ways to support vulnerable groups and address unmet medical needs without destabilizing the system. Those could include expanding subsidies for new cancer drugs, improving coverage for rare-disease treatments or increasing support for low-income people through existing means-tested mechanisms.

Finally, the Executive Yuan should encourage broad public discussion among medical professionals, economists, patient groups and younger workers. Given the NHI’s funding shortfalls and the nation’s aging population, Taiwan needs an open debate about how to prioritize competing medical needs and secure the resources necessary to maintain the system’s fiscal integrity.

There is no need to mince words — the new bill is awful. However, the Executive Yuan should turn this into an opportunity for the public to seriously debate the fundamental issue: how society as a whole can build consensus about ethical and sustainable medical rationing.

Lo Ming-cheng is a professor of sociology at the University of California, Davis, whose research addresses civil society, political cultures and medical sociology.