Now, let us briefly discuss the government health insurance program. Unlike in the United States where market forces are stressed in the development and allocation of health resources, the government assumes responsibility for providing medical care services through its social insurance system. The existing public medical care insurance system, which has been of a universal nature since 1961, consists of five different plans for the reasons similar to the case of the public pension schemes. Among these five plans, the Association-managed Health Insurance Plan (AHIP), the Government-managed Health Insurance Plan (GHIP), and the National Health Insurance Plan (NHIP) are the three major ones, covering 87 percent of the population. Employees of large-scale enterprises are enrolled in AHIP, and those of small- or medium-sized businesses in GHIP. NHIP is the community health insurance for those not covered by any other public medical insurance plans. It is important to note that, compared with AHIP and GHIP, NHIP has a markedly older age structure for the following two reasons. First, a considerable proportion of NHIP members are farmers and self-employed workers whose average age is much higher than that for employees in general. Second, all employees, upon their retirement, are required to shift from their own occupation-specific plans to NHIP.
The contribution is shared by employees and their employers, and the government provides small subsidies to cover administrative and management costs. In the case of NHIP, however, a different amount of the premium is collected from each household, depending upon its annual income and assets. Because of these differences in the premium rates as well as in age structure among the medical plans, the financial foundation of NHIP, compared with the other four plans, is extremely weak, and the government must provide heavy subsidies to cover its deficits. To ease this financial burden on the government, the other four medical plans for employees have been required to make contributions to NHIP since 1984.
The proportion of national income allocated to medical care was only 3.4 percent in 1970, but grew to 5.3 percent in 1979, as displayed in Figure 3. Through a series of the cost containment policies implemented in the early 1980s, however, the proportion has been fluctuating around the 5-percent level in recent years, reaching 6.3 percent in 1995 (Social Insurance Agency, 1998).
