Special Report: Health care in Taiwan

TAIPEI, Taiwan — Liu Hsiao-ling, a 58-year-old Taipei retiree, has Taiwanese friends who live in Chicago.

When they get so sick they need to see a doctor, they head for O'Hare and hop a plane for a 20-hour, cross-Pacific trip to Taiwan.

"The airline tickets are less expensive than getting treated in the U.S.," said Liu, as she sat in a hospital lounge in Taipei waiting to pick up her prescription. "And they say going to the doctor in Taiwan is much better than in America."

That's a damning indictment of America's overpriced, broken health care system — and a vote of confidence in Taiwan's.

So as politicians bicker in Washington over public options, "death panels," and all the other details of health care reform, this East Asian "tiger" may offer some useful lessons.

Taiwan has one of Asia's most highly-praised systems. Passed in 1995, it's a single-payer insurance system similar to Canada's. (Single-payer means only the government reimburses doctors and hospitals for the costs of health care).

Though far from perfect, its merits become clear in a few key statistics:

• Taiwan spends just 6.5 percent of its gross domestic product on health care; the U.S. spends more than 15 percent.
• Ninety-nine percent of Taiwan's 23 million population is covered; in the U.S., more than 45 million people remain uninsured.
• The administrative costs of Taiwan's system are a meager 1.5 percent, versus 20 to 30 percent for many U.S. insurance companies.

What it looks like

One misconception about "single-payer" plans like Taiwan's is that they eliminate free competition.

In fact, that's only true for the health insurance market, where the government becomes the dominant or only player. (In Taiwan, there is private insurance, but only for "gold-plated" plans targeting the wealthy, offering priority or tailored care better than what you can get through the national plan).

Health providers, on the other hand, work in a crowded market of both public and private facilities that compete fiercely for patients. The catch is, since reimbursement fees are standardized, doctors and hospitals don't compete on price.

It's like a town of a hundred hamburger joints, where the price of a hamburger is set at $1 — the restaurants would compete for customers based on how juicy, tasty and big their burgers are.