Asia exhibits great diversity in socio-political, cultural, and economic perspectives, with many countries transitioning from under-developed to rapidly developing economies. Healthcare financing models must adapt to these diverse contexts and the fast-changing economy. Types of health financing models include tax-funded systems, social health insurance (SHI), private health insurance (PHI), mandatory savings, and out of pocket payments. Luk (2020) emphasizes the significant impact of ageing population on Asian economy and the financial burden on families in her book, Ageing, Long-term Care Insurance and Healthcare Finance in Asia. Various chapters provide insights into the policy processes involved in formulating healthcare financing model to address the challenges posed by ageing population and the need for long-term care. This review summarizes the key contents from each chapter, highlighting the evolution of healthcare financing models in economically growing East Asian countries and territories.
China, the most populous country, operates under a model of socialism with market force, where the central government makes many decisions. In chapter 2, the author highlights the challenges in China’s multi-layered health insurance systems, including huge insurance fund deficits, inadequate financial protection for the insured, and insufficient medical protection for the elderly. The Urban Employee Basic Medical Insurances Funds face deficits, with 108 districts experiencing similar issues in the Urban Resident Basic Medical Insurance Funds. Factors contributing to these deficits include rising in health insurance coverage, an ageing population, and unreasonable growth of health expenditures driven by supplier-induced demand, high drug prices, and health insurance fraud by healthcare providers and physicians, being a common practice among doctors to increase their incomes. Out-of-pocket expenses remain a pressing issue, and the fragmented design of the social health insurance system fails to provide sufficient medical protection for the elderly. The author concludes that the Government needs to strengthen the primary care system through increased investment in infrastructure, education and training of primary care doctors, and promoting family practice contract services to stop patients bypassing primary health-care system and go to hospitals for more specialized consultations and higher insurance reimbursements.
Chapter 3 examines Hong Kong’s dual healthcare system which offers public-funded health services or user pay out-of-pocket and private health insurance options. Since the 1980s, rising healthcare expenditures have become a significant issue. The establishment of Hospital Authority (HA) improves management of public hospitals but also led to rapidly escalating costs. In November 1997, the Health and Welfare Bureau of Hong Kong Special Administrative Region commissioned a 15-member team of economists, public health specialists, physicians, and epidemiologists from Harvard University to assess the healthcare financing and delivery system and propose strategic options (Harvard Team, 1999). The team presented five options: (i) maintain the status quo, (ii) cap public healthcare expenditure, (iii) increase user payments, (iv) implement a Health Security Plan (HSP) and Saving Accounts for Long-Term Care (MEDISAGE), requiring both employers and employees to jointly contribute 1.5 to 2 percent of wages to the HSP for medical expenses and 1 percent for MEDISAGE for long-term care insurance at the age of 65, (v) create a competitive integrated system that adopted the HSP and MEDISAGE, reorganizing the HA into 12 to 18 regional Health Integrated Systems to provide preventive, primary, outpatient, and hospital care with the concept of ‘money follows the patient’ through the Health Security Fund, Inc. which pays standard rates to the chosen healthcare providers (Harvard Team, 1999).
Options (iv) and (v) aimed to tackle challenges of healthcare financing. However, major political parties, legislators, representatives of business communities, medical doctors, scholars, and the public reacted negatively to the Harvard Report, leading to the failure of the 1999 health financing reform. Subsequently, the Government introduced the Voluntary Health Insurance Scheme and Elderly Health Vouchers (EHV) Scheme, which were more acceptable as milder reform options. However, the fiscal sustainability of the free healthcare system remains a challenge. The author suggests placing more emphasis on preventive and community care, and expanding the EHV Scheme to reduce pressure on the free healthcare system. It was not until 2017 that the Government initiated a roadmap for primary healthcare in the policy speech.
Japan is renowned for its longevity of life. Chapter 4 details the long-term care insurance (LTCI) reform aimed to tackle the rapidly ageing population and rising healthcare costs for the elderly. Health insurance for the elderly was implemented in 1983 after the Health Care for the Aged Law was enacted in 1982. The law introduced a cross-subsidisation scheme among various health insurance plans to cover elderly medical cost and mandated that all elderly individuals pay fees for medical coverage. A pooled fund was created, receiving 10 percent from local governments and 20 percent from the national government. Copayments for the elderly were introduced to raise awareness about medical cost (Eto, 2000). Recognizing the growing need for elderly care, the government acknowledged the necessity for a comprehensive LTC system in the 1980s. However, it was not until mid-1990 that LTC was funded by social insurance, with financing split equally between premium contributions and general taxation.
Singapore has successfully utilized multi-layered insurance to ensure equitable healthcare access for the entire population, particularly vulnerable groups such as the elderly and those with serious conditions. It maintains a balance of contributions that avoids cross-subsidies while promoting self-reliance and accountability. Chapter 5 discusses the process of LTCI reform in Singapore. The Ministry of Health (MoH) appointed the ElderShield Review Committee (ERC), composed of policy entrepreneurs, to design CareShield Life. The ERC drew on experiences from Japan, South Korea, Germany, Switzerland, and the United States while engaging the public, community partners, and experts to create a technically feasible scheme. It promoted universal coverage and inclusivity, particularly for those with pre-existing disabilities and lower-income families.
In 1984, Singapore became the first country to introduce a universal, compulsory medical savings scheme called Medisave, creating individual accounts within the Central Provident Fund (CPF) to which all employees (citizens and Permanent Residents) contribute a portion of their monthly wages (Chiu et al., 2012). Medisave has been extended to cover personal or immediate family members’ day surgery and approved outpatient expenses (e.g., renal dialysis, radiotherapy) in all public healthcare institutions and approved private hospitals, up to the specific Medisave withdrawal limits. In 1999, a low-cost, risk-pooling medical insurance scheme called MediShield was implemented to provide financial protection against long-term and catastrophic illnesses that Medisave could not cover. MediShield was automatically offered on an opt-out basis to Singaporeans at their first Medisave contribution to CPF. Coverage later expanded to younger individuals, those over 92, and those with pre-existing health conditions, reaching 93 percent of the population in 2013. Premiums were set based on risk pooling within each specific age group, which results in higher premiums for the elderly. MediShield Life replaced the original MediShield in 2015, offering mandatory basic hospitalisation insurance with universal, lifelong protection for all citizens and permanent residents. Premiums were actuarially calculated based on age-based risk pooling to avoid intergeneration cross-subsidies and ensure sustainability.
In 1993, the Singaporean Government set up a medical endowment fund, Medifund to provide a safety net for lower-income patients who were unable to pay subsidized medical bills despite Medisave and MediShield. It started with a capital of S$200 million, increased by S$100 million annually from budgetary surplus (Phua and Yap, 1998). In 2022, ElderShield, a national severe disability insurance, was implemented to provide monthly payouts for individuals who were unable to perform certain daily activities. Premiums could be paid using Medisave accounts or cash, capped at S$600 per year per insured person.
Taiwan is an ageing society, expected to become super-aged by 2026 (Luk, 2020). Chapter 6 details the process of National Health Insurance (NHI) in Taiwan, which promotes redistributive equity, cost containment, and systemic efficiency. However, the NHI system faces significant challenges to the long-term fiscal sustainability due to ageing population, insurance coverage for patients with catastrophic illnesses, and the waste of medical resources. Three main reasons contributed to the NHI deficit: (1) a drastic rise in medical expenses; (2) illegal enrolment through fraudulent claims; (3) employer under-reporting income to lower operating cost and premiums (Wong, 2004). The Government needs to consider a third-generation reform, including the delivery and payment system to ensure financial sustainability to meet the growing health needs of an ageing population.
South Korea achieved universal health coverage through a highly fragmented, occupational-segmented social health insurance system. However, challenges such as insufficient risk and income pooling among the insured, serious inequality in premium contributions, and high out-of-pocket medical expenses persist. Changing political leadership and the 1997 Asian financial crisis created an opportunity for integrating the administrative and financial aspects of all health insurance societies into a single-managed health insurer. Chapter 7 examines this integration reform in South Korea. The National Health Insurance Service (NHIS) serves as the single insurer operating and managing the NHI, a compulsory social insurance scheme funded primarily by contributions from employers, employees, and the self-employed, based on the ability to pay. For the self-employed, premiums are calculated based on income, property value (e.g. house, vehicle) and other factors (e.g. age, gender). The NHI also received government subsidies from general taxes and tobacco surcharges. A single-payer system ought to address the problems of high out-of-pocket expenses, high per capita spending, and a deterioration of the quality of care. High out-of-pocket expenses are largely due to providers substituting uncovered services to increase revenue (Jeong, 2011). The government needs to strengthen the primary care system and gatekeeping mechanism to reduce healthcare costs and hospitalizations.
In Chapter 8, the author highlights the importance of fostering healthy ageing through maintaining and improving physical, social, financial, and spiritual wellness of older adults. This requires leadership, commitment, and strong engagement from diverse sectors and different levels of government. A positive perspective on ageing and a rights-based approach are essential for informing, engaging and consulting older adults in formulating policies that affect them.
Universal health coverage is not a panacea to resolve problems arisen from healthcare services, especially in long-term and aged care, due to rising healthcare expenditures and the increasing burden of chronic illnesses associated with longevity. This book has provided a very comprehensive analysis and deep insights into how different well-developed countries and territories in East Asia have developed different strategies and policies in healthcare reform to tackle the challenges of healthcare financing. Effective primary healthcare adopting inter-disciplinary approach, providing healthcare to meet the patients’ needs at various stages of their health journeys — delivered at the right time and place, by the right person, with the right clinical approach — would enable better community care and reduce expensive hospital care (Lee, 2025). This book has provided a critical analysis of various insurance schemes, guiding us toward evolving a scheme focusing on the provision of holistic, integrated and comprehensive community care. This understanding can enlighten us to acquire deeper understanding of how to influence policy formulation in healthcare financing within an effective healthcare system.
This book review is non-peer-reviewed content.
