EDITORIAL: Beware of politicians bearing gifts

The opposition-controlled Legislative Yuan on Wednesday last week passed the third reading of amendments to the Senior Citizens Welfare Act (老人福利法), which would require the central government to fully subsidize National Health Insurance (NHI) premiums for people aged 65 or older if their income falls below the tax filing threshold or is taxed at a rate of less than 20 percent.

Democratic Progressive Party (DPP) lawmakers opposed the measure, and Minister of Health and Welfare Shih Chung-liang (石崇良) warned that it would strain the NHI system’s finances and leave some disadvantaged people with less support. They also raised concerns that the amendment would remove the legal basis for other subsidies not covered by the NHI system, particularly for lower-to-

middle-income seniors who might not qualify for public assistance.

Chinese Nationalist Party (KMT) and Taiwan People’s Party (TPP) legislators defended the amendment, saying it shifts responsibility for seniors’ premiums to the central government’s social welfare budget, keeping the expense separate from the NHI fund. They argued that the Public Assistance Act (社會救助法) and other provisions already authorize subsidies for medical copayments and expenses, and that moving the premium burden away from local governments would free up money for other assistance.

However, their response does not address the policy’s most glaring flaw — it uses age and a broad tax criterion as a substitute for financial need. The 20 percent tax rate kicks in at NT$1.33 million (US$40,913) in annual net taxable income, meaning about 83 percent of people aged 65 or older would be covered. Shih added that about 30 percent of seniors in the affected tax bracket are still working and insured through their jobs, showing how little the tax threshold has to do with whether someone actually needs help. Healthcare subsidies should be means-tested, not extended to the vast majority of seniors based on age and a broad tax threshold.

Taiwan’s demographic circumstances make the policy particularly difficult to justify. People aged 65 and older make up more than one-fifth of the population, and that proportion is growing. The National Development Council projects that seniors would account for 37 percent of the population in 2045 and 50.4 percent by 2065. Meanwhile, the working-age population is shrinking, and Taiwan’s birthrate remains stubbornly low.

The government might be able to absorb the additional NT$40 billion annual expense in the near term, but how sustainable would that be in five or 10 years as the number of eligible seniors rises and the pool of contributors falls? It already faces mounting pressure to sustain NHI financing and address a litany of issues across the healthcare system, from nursing shortages to overcrowded hospitals and emergency departments. Expanding eligibility so widely without a sustainable funding plan could compound these problems and ultimately undermine the financial foundations of the healthcare system itself.

The policy would also deepen inequities by shifting disproportionate costs onto younger people. Shih said that people aged 65 or older pay an average of NT$9,912 a year in premiums, but use an average of 90,149 NHI points in services — more than nine times what they pay in. Children aged six and younger are the second-highest group of users of healthcare. Of course, these figures reflect the legitimate medical needs of these groups and are not a reason to begrudge them care. However, they also demonstrate the NHI system’s reliance on working-age contributors, who utilize far fewer services despite paying more.

As the labor force contracts over time, broad subsidies would become increasingly difficult to sustain without higher premiums, higher taxes or cuts to other public spending. Many younger adults already support their own children and aging parents, and shifting more of the cost onto a shrinking workforce could undermine the NHI system’s principles of ability to pay and intergenerational mutual assistance, deepening generational inequity.

As mentioned in yesterday’s editorial, “Beware of money-pit legislation,” the amendment’s convenient timing makes it hard to rule out political motivations. Older voters tend to be an important constituency for the pan-blue camp, and local elections are on Nov. 28. The choice of a threshold covering such a large share of seniors suggests that targeting those in genuine need is not the priority. By shifting the financial burden to the DPP-controlled central government, the KMT and the TPP can free up funds for local governments they control while campaigning on a popular promise to seniors.

Those with real financial need deserve assistance in paying for healthcare, but a truly sustainable system should rely on shared responsibility and targeted support — otherwise, future generations would be left footing an ever-growing bill.