| Due to the plummeting birth rate in Taiwan, we have witnessed the widening gap between the increasing elderly population and the shrinking future labor population. Such gap becomes the cause to the deteriorating financial deficit of Taiwan’s National Health Insurance Program(hereinafter referred to as NHI), and therefore threatens the sustainability of this public health care system. In order to understand and analyze NHI’s financial sustainability, this study collects and compares data between the total NHI premiums announced by subordinate administrative units under Taiwan’s administration office and the medical expenses reimbursed. NHI sustainability is also examined in the current and future time frames in this study.This research will address the issue on how low birth rate in Taiwan impacts NHI’s financial sustainability with the following subtopics: 1. The developing trend of low birth rate in Taiwan and its impact on population structure. 2. The history and current status of NHI in Taiwan. 3. The impact of low birth rate on NHI’s financial sustainability. The study will elaborate on how an aging society poses a risk to the current and future national health care insurance system.Employee group insurance in Taiwan firstly launched in 1949, a practice setting foundation for the rise of NHI. Like the earlier group insurance system, NHI adopted a low premium rate policy, which became the source of NHI’s financial crisis and needs to be addressed in order to close NHI deficit. Starting in March 1995, NHI has been battling with long-run financial loss except for the first three years as well as 2013 and 2014, thanks to supplementary premiums charged to individuals and families. At this moment, low fertility phenomenon in Taiwan shows no sign of easing. Therefore, the national health insurance program may be put in deep peril if the current financial revenue mechanism stays the same.This paper studied official data and concluded the following four areas for analysis:1. Elderly population aged 65 and above has been continuing to grow annually, both in numbers and growth rates. The average medical expenses of this group are four times greater than the tmedical expenses of population under 64. That’s why NHI medical expenses have seen an explosive133% rise from 1996 to 2014. In 1996, the total expense amounted to 229 billion NTD. In 2014, the total expenses climbed to 519.4 billion NTD, which made an increase of 296.5 billion NTD. If the aging problem goes unstoppable, it’s expected the future national medical expenses will grow to 900 billion NTD.2. Currently, labor force population between age 15 to 65 grows stably. NHI premium revenues have seen a 126% increase from 1996 to 2014. In 1996, the total premium revenues amounted to 241.2 billion NTD. In 2014, the amount climbed to 545.1 billion NTD, which equals an increase of 303.9 billion NTD. However, the labor force population started to decline after 2015. With its current pace, it’s expected the total number of labor population will shrink to 15 million and 100 thousand by 2030, which is 87.13% of the total labor population in 2014. If the current financial revenues system stays unchanged, by then, the NHI premium rate needs at least 9% increase in order to sustain the financial feasibility of NHI. If that happens, the labor force population will shoulder greater burden of NHI premiums.3. NHI subsidiaries have also seen a soaring 232% increase from 1996 to 2014. In 1996, NHI subsidiaries were 33.5 billion NTD, and later grew to 111.2 billion NTD in 2014, which made an increase of 77.7 billion NTD. Ever-growing NHI subsidiaries will become the hurdle for the government to find the necessary financial resources to implement other policies. In the future, it’s foreseeable that NHI premium revenues and the total medical expenses will grow at the opposite position. We should not neglect such warning alarm.4. In 2014, the total premium revenues from the insured individuals and private agencies came at 344.5 billion NTD. When we take this number into perspectives, it’s easily to tell that the government had allocated a total NHI subsidiary amount of 199.6 billion dollars instead of 111.2 billion NTD as officially recorded. It means, 36.62% of the NHI premium revenues came from the government’s subsidiary measures. And the percentage will continue to rise if the government has to maintain the NHI system in life.This paper proposes that the government establish a NHI payment mechanism based on household total income in order to achieve the following to benefits. First, capital income can be accounted for the income basis so that the premium base can grow. Second, a NHI premium payment rate determined by the household total income will help multi-member families relieve payment burden. Such payment policy will also offer women of childbearing ages incentives to give more births that will help ease the low fertility phenomenon. It’s also suggested in this paper that the government establish a designated social medical reserve fund to save for the future. This fund will prevent a crushing NHI when the future labor force population fails to pay for the enormous medical expenses and the government also runs out financial resources to subsidize NHI. To save the NHI program, it’s imperative to implement the proposed measure. The first step toward progress is to find common ground to forsake the current NHI policy on No Accumulated Surplus. On the trend of an aging society, it’s predicted that a growing elderly population will enhance the financial burden on medical expenses, while a shrinking labor force will detriment the financial sources for NHI premium revenues. It’s our shared responsibility to find solutions to sustain the NHI program and help future generations to understand the crisis and take necessary measurements to prevent a falling NHI.
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