Information health policy 981207

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a presentation about the study on e-health policy, made in Taipei, 2009

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Information health policy 981207

  1. 1. Information and Health Care Policy: A Case of Taiwan By Yuntsai Chu Don-yun Chen 2009
  2. 2. Presenters <ul><li>Yuntsai Chou ( 周韻采 ) , PhD in Public Policy, George Mason University, USA </li></ul><ul><ul><li>Public Policy Analysis, Telecommunication Policy, Health Policy, Institutional Economics </li></ul></ul><ul><li>Don-yun Chen ( 陳敦源 ), PhD in Political Science, University of Rochester, USA </li></ul><ul><ul><li>Bureaucratic Politics, Democratic Governance, E-governance, Health Policy, Rational Choice Theory </li></ul></ul>
  3. 3. Preface <ul><li>All the limitations on moral hazard and adverse selection are weaker in health insurance. It is harder to identify individuals risks, and still harder to attribute them to behavioral choices. There is no market value for the human body and no possibility of abandoning one that is worn out and acquiring a new one. The lack of natural limit on costs… distinguishes health from other insurable risks. </li></ul><ul><li>- World Bank, 1993 </li></ul>
  4. 4. 1. Transparency International (TI) <ul><li>Sources of Corruption </li></ul><ul><ul><li>Political Corruption </li></ul></ul><ul><ul><li>Public Contracting </li></ul></ul><ul><ul><li>Construction and Infrastructures </li></ul></ul><ul><ul><li>Education Sector </li></ul></ul><ul><ul><li>Health Sector (2006”Corruption and Health”): The Problem of Asymmetric information and Regulatory Control </li></ul></ul><ul><ul><ul><li>Health Care Fraud </li></ul></ul></ul><ul><ul><ul><li>Informal Payments </li></ul></ul></ul><ul><ul><ul><li>Procurement and Distribution of Medicines </li></ul></ul></ul><ul><ul><ul><li>Physicians and Industry </li></ul></ul></ul>
  5. 5. 2. Government Interventions in Health <ul><li>Controlling agency costs by designing adequate incentive system to acquire voluntary compliance (with the Help of the NHI) </li></ul><ul><li>Publish Medical Quality Information </li></ul>(1) Occupational licensure. (2) Regulations on Medical and pharmaceutical industries. Asymmetric and Imperfect Information between and within patients & providers; post- experience goods 3 Insurance market selection bias (Adverse selection) 2 (1) Policies to enhance access to the care. (2) Policies to contain costs; Moral hazard (Co-payment, Fee schedules, global budgets and resource rationing). (3) “The road to rationing is paved with good intentions.” Legislation of compulsory social insurance. The NHI is characterized by: (1) Financed by government, employers, and insured. (2) Implemented by a single insurer controlled by government. Failure to treat induces negative externalities to public health (Poverty Alleviation) 1 2nd Order Govt. Intervention 1st Order Govt. Intervention Market Failures
  6. 6. 3. Basic Information for NHI in Taiwan <ul><li>Origin : The NIH Law passed in 1994, Launched in 1995 </li></ul><ul><li>Coverage : 99% of Taiwanese Population </li></ul><ul><li>Finance : Government, Employers and Insured. (1/3 for each) Yearly spending around 400 Billion NTD (2005), 12 billion USD. </li></ul><ul><li>Governing Structure : Single Insurer - Bureau of National Health Insurance </li></ul><ul><li>Reform Efforts : Raising premium is politically infeasible. Other administrative efforts are tried. For example, global budget is adopted in 2001. </li></ul>
  7. 7. 4. The Case of Taiwan’s National Health Insurance (NHI) NHI Act Passed Global Budget First Party Turn-over First Presidential Election NHI Launched 2G-NHI Planning Begun Political Events NHI Events 3.6 3.5 2.4 2.5 2.1 1.6 ENP 2005-2007 2002-2004 1999-2001 1995-1998 1992-1994 1989-1991 Year Sixth Fifth Forth Third Second First Legislative Yuan
  8. 8. Source: The Website of the DOH, http:// www.doh.gov.tw /statistic/
  9. 9. Reforming the Pharmaceutical Procurement Mechanism in Taiwan: An Appraisal of the Experience in Taipei City Hospital
  10. 10. Table One: The NHI Total and the Pharmaceutical Spending, 1998-2004 ($, in Billion of New Taiwan Dollars) Source: The DOH, http:// www.doh.gov.tw /statistic/ 24.90% 24.60% 24.40% 24.80% 25.40% 25.40% 24.80% (B)/(A) 15.70% 4.30% 6.90% 2.20% 3.10% 11.30% 12.90% Increase % 109 95 91 85 83 80 72 (B) Drug Spending 14.10% 3.30% 8.50% 4.80% 2.90% 8.80% 11.40% Increase % 438 384 371 342 326 317 291 (A) NHI Total 2004 2003 2002 2001 2000 1999 1998
  11. 11. Figure Three: Annual Pharmaceutical Purchases in Taiwan Unit: 100 Million NTD 32% 20% 48% 3%
  12. 12. 5. Citizen Conference in 2005 <ul><li>(Concerning the problem of raising premium) We have a consensus that the NHI should continue to exist but need drastic institutional reforms. Most of us say no to the option of raising premium because the institutional reforms should be done before premium raising. The most important spot for reform is between the Bureau of National Health Insurance (BNHI, the insurer) and the medical providers. More needed to be done to eliminate wastes… One of the participants said that the financial crisis is only symptom, the point to observe the symptom is not raising premium but to detect the causes of wastes and eliminate them… </li></ul>
  13. 13. 6. The “Black Hole” of Pharmaceutical procurement Figure Two: The Pharmaceutical Cost and its Revenue X : the cost of a single drug for the manufacture Y : the net revenue for the manufacture (i.e., the reasonable plus the abnormal profits in imperfect competition) Z : the price difference between the listed price and final sale price of a single drug, that is, the net revenue for the health provides (hospital, clinics and physicians) X+Y+Z = the listed price of a single pharmaceutical approved by the BNHI, namely, the reimbursement value a hospital obtains from the BNHI by filing its purchase. X Y Z A B C D C*
  14. 14. 7. The Reason for the Original Design <ul><li>The goal of government regulators is to design and implement the pharmaceutical scheme: </li></ul><ul><ul><li>To give enough Z for the conflict between the suppliers and providers to negotiate a reasonable C. </li></ul></ul><ul><ul><li>To squeeze out the “rent” between C* and C as the D can be lowered accordantly. </li></ul></ul><ul><ul><li>To maintain a reasonable profit (between B and C*) for the suppliers to invest in researches. </li></ul></ul><ul><li>Possible Loopholes: </li></ul><ul><ul><li>physicians or hospital administrator and drug manufactures plot together to benefit… </li></ul></ul><ul><ul><li>Who is setting the D ? </li></ul></ul>X Y Z A B C D C*
  15. 15. 8. Reform in Taipei City Hospital <ul><li>Motivations : </li></ul><ul><ul><li>(1) 2003 SARS event </li></ul></ul><ul><ul><li>(2) Budgetary crisis </li></ul></ul><ul><ul><li>(3) Market competition </li></ul></ul><ul><li>Legitimacy : City Council Passed “the Health Bureau Reorganization Act ” Three main goals: </li></ul><ul><ul><li>(1) Merging Ten City Hospitals </li></ul></ul><ul><ul><li>(2) Integrating Health Information System (HIS) </li></ul></ul><ul><ul><li>(3) Reforming Procurement Procedures </li></ul></ul><ul><li>Pharmaceutical Tendering System Reform : </li></ul><ul><ul><li>Before: Information Rents in the hand of physicians and Hospital administrators </li></ul></ul><ul><ul><li>After: (i) Open tendering system, (ii) Item limited to 1200 (before 1800), (iii) selection principle: Brand ( 學名 ) -> generic ( 成份 ) </li></ul></ul>
  16. 16. 9. The Outcome of The Reform (I) Table Four: The Pharmaceutical Profits of the United Hospital Unit: NT$ thousand Source: interim report by the United Hospital, 2005 28.99% 25.40% 24.14% 21.48% C/A 2.99% 11.12% 13.61% 16.94% Pharmaceutical Profitability (D/B) 40,205 179,543 210,779 450,000 Pharmaceutical Revenues (D) 1,303,196 1,434,869 1,338,414 2,205,758 Pharmaceutical Expense (C) 1,343,401 1,614,412 1,549,192 2,655,758 Pharmaceutical Income (B) 4,495,156 5,648,371 5,545,025 10,268,565 Total Income (A) Jan.~Jul. 2003 Jan.~Jul. 2004 Jan.~Jul. 2005 2005
  17. 17. 10. The Outcome of the Reform (II) Table Three: The Pharmaceutical Procurement in the Taipei United Hospital Source: interim report by the Health Bureau (2005) 1272 (100%) 1312 (100%) total 684 (53.8%) 699 (53.3%) Generic/ off-patent (domestic suppliers) 588 (46.2%) 613 (46.7%) Original/ patent 2005-2006 2003-2004 Items
  18. 18. 11. The Outcome of The Reform (III) <ul><li>Councilwoman: … Some physicians in the city hospital call me to ask why they need to change drugs. They have to learn new drugs and prescriptions skills. The elderly patients in the city hospital also file complains to me that they might be confused and misuse of drugs… </li></ul><ul><li>President: I am always wondering why city council pay so much attention on drugs? … </li></ul><ul><li>Councilwoman: We are protecting the health of our fellows citizen in the city. Please do not try to avoid answering my questions. I think that you and Mayor Ma are terminating our city hospital. </li></ul><ul><li>President: Since we launched the reform in the city hospitals, I face questions about pharmaceutical procurement from the city council almost everyday… </li></ul>
  19. 19. Conclusion <ul><li>Does the reform work? </li></ul><ul><ul><li>Yes, the problem of “information rents” are resolved. </li></ul></ul><ul><ul><li>No, the interest groups strike back… the 2007-2008 tendering is still pending because of resistance from the manufactures… </li></ul></ul><ul><li>Transparent and “exampled” effect of local government innovative reform: </li></ul><ul><ul><li>Positive : An Example for other public hospitals (central as well as local) </li></ul></ul><ul><ul><li>Positive : The Pharmaceutical Benefit Scheme for NHI (PBS) is setting the “D” from public hospital’s purchasing price. </li></ul></ul><ul><ul><li>Negative : Charges of Inequality competition and information transparency from the oversea manufactures. </li></ul></ul>
  20. 20. Further Questions <ul><li>Citizen Supports : Will citizen support the reform, as only local 0ff-patent drugs are purchased? Problem of Quality signal, professional domination, and “moral hazard” in the NHI. People’s choice. </li></ul><ul><li>Managing Politics : Can the “rent-seeking” path of the representative democracy be controlled? Especially, the conflict and coordination between central and local government. </li></ul><ul><li>Old Question : What is the “reasonable” profit for drug manufactures? Can we get it from reforming the tendering mechanism? This is where innovation come into the picture. Federalism is the lab for innovation. </li></ul>
  21. 21. Thanks for your Attention Questions are Welcomed
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