41 MARTINDALE CENTER FOR THE STUDY OF PRIVATE ENTERPRISE mentary premiums on nonpayroll income, successfully broadening the funding base and strengthening financial sustainability (Cheng, 2015). Similarly, the expansion of long-term care services has addressed the aging population, although workforce shortages, increased demand, and financial constraints remain (Chen & Fu, 2020). Taiwan’s capability to execute large-scale health policies was exemplified by its successful COVID-19 response that leveraged health-care infrastructure for early intervention, screening, technology integration, and cross-agency coordination (Hsieh et al., 2024). The current Executive Yuan led by the Democratic Progressive Party lacks a majority in the Legislative Yuan, which may complicate bipartisan efforts to pass health-care reforms (Dotson & Levine, 2024). Even so, Taiwan is well positioned to support its aging population by building on its successful public health strategies, strengthening existing policies, and developing new approaches for comprehensive and financially sustainable care. Increasing the budget The most direct approach to enhancing funding is through the NHI budget. As previously mentioned, the NHI accounts for approximately 6.3% of Taiwan’s GDP, which is relatively low compared to other high-income countries, where health-care spending often exceeds 10% of GDP (Cheng, 2024; Gusmano, 2023). Raising the budget to 8%, as proposed by Taiwan People’s Party presidential candidate Ko Wen-je, could significantly close funding gaps and supply resources necessary to meet health-care demands (Taiwan People’s Party, 2023). This adjustment would make certain that the NHI continues to deliver high-quality care while accommodating the aging population. Given the political obstacles to significantly greater premium rates, Taiwan must carefully analyze alternative funding sources. Taiwan could use added revenue from environmental taxes, such as carbon taxes, to fund the health-care budget. Carbon taxes, scheduled for an increase in 2025, provide a unique opportunity to enhance funding for the NHI. The new carbon tax will charge up to NT$300 per metric ton of carbon emissions from the biggest carbon emitters (Ministry of Environment, Taiwan, 2024). Primarily aimed at reducing carbon emissions, these taxes present an opportunity to generate substantial revenue quickly. Sweden, also facing an aging population, has some of the most successful carbon taxes in the world, contributing a significant amount of funding for social programs (Hildingsson & Knaggård, 2022). Taiwan’s ongoing plans to expand its carbon taxes allow allocating these funds to health care. This approach would simultaneously support environmental and public health priorities and create a supplemental funding mechanism. Broader tax reforms, such as raising consumption taxes and sin taxes, are other options. Japan’s decision to up the consumption tax from 8% to 10% in 2019 in response to rising health-care and social security costs is a model (Nakatani, 2019). Taiwan likewise could raise its consumption tax. The current consumption tax consists of a 5% value-added tax on standard goods and a gross business receipt tax, ranging from 0.1% to 25% (Lloyds Bank, 2025). Another revenue source is sin taxes on tobacco, alcohol, and sugary beverages, building on the existing taxes that fund LTC 2.0 to discourage unhealthy behaviors in addition to funding care. The Philippines used sin taxes on tobacco and alcohol to fund its universal PhilHealth program, thereby significantly increasing health-care spending, insurance coverage, and health-care infrastructure (Madore et al., 2015). Taiwan could adopt a similar approach, adjusting tax rates to local consumption trends and public health priorities. Adopting a tiered system Beyond exploring additional tax funding, Taiwan should consider formalizing its informal tiered healthcare system, wherein private insurance supplements NHI coverage. Formalizing this structure would improve financial sustainability while preserving universal access to care. In such a tiered approach, tier one would cover essential health-care services under NHI, guaranteeing universal access. Tier two would offer enhanced services, such as expedited specialist access or advanced treatments, through optional supplemental insurance. Tiers would centralize supplemental insurance options, strengthen transparency and accessibility, and generate revenue that can be used to fund universal coverage. Some policy advocates have proposed introducing a second layer to the NHI that would operate similarly to the Australian health-care system, which blends public and private options; citizens would purchase supplemental insurance coverage for services not covered under the NHI (Tsuei, 2024). Even though a tiered framework risks creating health inequities as wealthier individuals access premium services more easily, Taiwan can mitigate these concerns with coverage that remains robust and affordable.
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