Author: thedorsalcolumnist

As an addendum to my article titled Health and Taxes, during my research, a common thread appeared, insinuating that America’s health system has evolved rather than been created. What I mean by that is that healthcare in the United States, primarily led by the private sector, is heavily influenced by government incentive-based policies rather than being directly controlled. This is in opposition to other developed countries that attempt to implement a top-down health system. Yet both actors often have difficulty leaving defunct procedures and policies aside in their pursuit of progress. However, this raises the question of how a health system may operate if, instead of iterating, it were founded from a clean slate employing 21st-century healthcare reformation ideology? Cue German economist Uwe Reinhardt.

An Economist

The late Uwe Reinhardt was an internationally renowned economist with a special focus on health policy who laid the framework for most of what modern healthcare aspires to be today. Born in Osnabrück, Germany, in 1937, he graduated with a Bachelor of Commerce from the University of Saskatchewan, earned a Ph.D. in economics from Yale University, and was a professor of economic theory at Princeton University for nearly 50 years.[1]​ As a result of his prestige and research in the health care industry, he frequently served as an advisor to Congress for commissions related to physician payments, the Centers for Medicare and Medicaid Services, and the Department of Health and Human Services.

Reinhardt’s research specifically targeted healthcare spending and the U.S. health care system. He highly favored aspects of other systems’ simplicity and frequently criticized the “veil” around healthcare pricing as a barrier to true consumer-directed health care.[2]​ His doctoral thesis was published as a book titled Physician Productivity and the Demand for Manpower (CITE), with other publications in NEJM, JAMA, and BMJ. However, often cited as his seminal work is his 2003 paper titled It’s The Prices, Stupid: Why The United States Is So Different From Other Countries. In it, he was one of the first to thoroughly compare the United States’ healthcare system in terms of GDP percentage spent, and hypothesized multiple factors distancing it from other developed countries like the UK, Italy, Japan, and Canada. Reinhardt believed that the cost of U.S. healthcare did not equate to the quality expected from such prices. Factors such as physician salaries, medical equipment, and medications all were assessed to be more expensive than other countries’ equivalents with other sources discussed being the tendency for more aggressive inpatient treatment and systemic inefficiencies.[3]​

As a result of his findings, Reinhardt was fond of the single-payer systems of Canada, Europe, and Japan, which, by controlling the demand (or healthcare purchaser) rather than the supply, can force lower prices for the consumer. This is known as a monopsony, as opposed to a monopoly where one seller controls the supply, often forcing higher prices. In addition to controlling consumer prices, a single-payer system, he argues, decreases administrative requirements compared to our “highly fragmented and complex U.S. payment system.”[3]​

Having passed away in 2017, Uwe Reinhardt was described as “a moral compass for American health care” as a result of his many contributions, publications, and expertise.[1]​ However, it is his work near the turn of the century on a special advisory board that will shape a country.

A Country

Four years after the end of World War II, another war which had started decades prior came to an end. The Chinese Civil War lasted 22 years, from 1927 to 1949.[4]​ Neglecting a formal truce despite the chaos on the world stage around them, even in the midst of a Japanese invasion, the Nationalists led by Chiang Kai-shek fought against the Chinese Communist Party spearheaded by Mao Zedong in their war within a war.[5]​ Yet despite the homeland advantage, the economic and social pressures of World War II swayed the people of China towards the communist “People’s Republic of China,” forcing the Nationalists to retreat to the island province of Taiwan.[6]​ It is after this period, concomitant with the onset of the Korean War and the rise of anti-communist sentiment in America (the world’s predominant post-war superpower), that there was an interest in protecting this small fledgling island from the Chinese Communist Party’s reclamation. Over the next 30 years, stationing the US seventh naval fleet in the Strait of Taiwan, the signing of a mutual defense treaty, strategic economic reconstruction, and billions of dollars in aid mutually benefited Taiwan and the United States resulting[7]​ in the “Taiwanese Miracle,” an unmatched explosion of economic growth.[8]​ In 1987, martial law was finally lifted, allowing the dissolution of the single-party Taiwanese system and the creation of a multi-party democracy.[9]​

A Case for Change

With a new government, a new national identity, and a motivation to modernize, taking care of it’s people’s health became a priority for Taiwan, and an important campaign promise for the new democracy. Looking to the developed countries around it, not necessarily to identify a single entity to photocopy, but as evidence to build its own perfect fit, it commissioned the Council for Economic Planning and Development (CEPD) in 1988. The goals of the project were threefold. Taiwan’s new health insurance must: first, provide equal access to adequate health care for all citizens, second, control the cost at a reasonable level, and third, promote efficient use of healthcare resources. However exactly how to achieve these aims were referred to international experts of health policy, notably, Uwe Reinhardt serving a prominent role.[10]​

It is on this council, and documented specifically, that the CEPD recommended the implementation of a single-payer system controlling all payments “following Uwe Reinhardt’s advice.”[10]​ Interestingly enough, in contrast to the United Kingdom’s Beveridge model (see Health and Taxes), Reinhardt urged the government to keep its healthcare delivery system predominantly private, encouraging healthy competition between doctors and hospitals while retaining provider autonomy and patient choice.[11]​

It took a total of 6 years, but this new health system was implemented in 1995 for all 21 million citizens.[10]​ Taiwan fulfills goals targeted by Uwe Reinhardt, like a very low administrative cost at around 0.77% of the total insurance budget; this is in comparison to the extremely high relative administrative cost of America’s health spending at 13%.[11]​ Accessible care for all is also virtually achieved with a 99.93% enrollment rate as of 2025.[12]​

However, a great healthcare system does not come without a cost. In the original 1995 transliterated overview of Taiwan’s 1995 Health Care Reform by Tuang-liang Chiang, which cites Uwe Reinhardt’s role in the project, Chiang makes note of a burgeoning “financial crisis” in the program’s first year; payments quickly outpaced premiums.[10]​ It is true that historically, Taiwan’s national health insurance has spent more than it has brought in, rarely having a surplus. This is a potential consequence of single-payer systems, as noted by Uwe Reinhardt specifically. The government therefore raised taxes in an attempt to catch up with its rising costs.

Another fault in Taiwan’s system is that as of 2021, 38.8% of its national health expenditure (NHE) is household out-of-pocket spending.[12]​ This is in comparison to the developed country average of 13.8%. For reference, the United States spends 10.7% of NHE on out-of-pocket payments. At first glance, these numbers look striking but need to be considered in the context of each country’s NHE as a percentage of its gross domestic product for actual spending. Taiwan still only spends about 6.5% to 7.3% of its GDP on health expenditures, while the United States spends 17% to 18%.[13]​ The cause of this imbalance is hypothesized to be due to Taiwan’s strict budgetary guidelines often not covering new pharmaceuticals or cancer treatments, combined with a rapidly aging population. Reinhardt later suggested a fix in readjusting the country’s prioritization of existing resources to more necessary interventions in addition to allocating just 1-2% more of its GDP to health care.[14]​

Regardless, Taiwan’s national health insurance still boasts the best in the world with a health care index score of 87.1% in 2026, according to Numbeo, which creates a composite score based on user-contributed factors like skill/competency, wait times, and cost.[15]​ The people of Taiwan itself report a public satisfaction of more than 90% in 2024 compared to the mere 21% of a similar single-payer system in the United Kingdom.[12]​

Following Uwe Reinhardt’s contribution to the country of Taiwan in the early 1990s, he continued to serve as an advisory member of the country’s Science and Technology Advisory Group for decades. Eventually, in 2015, he was awarded the Presidential Order of Brilliant Star and, posthumously in 2018, the Medal for Professionalism in Health and Welfare. Reflecting on Taiwan’s universal health insurance conversion, Reinhardt published an article in the British Medical Journal in 2008 where he describes the event as surreal and suggests that America should be both humbled and inspired by such an eagerness to transform.[14]​

In conclusion, Taiwan’s health insurance system overhaul and Uwe Reinhardt’s contribution are evidence that meaningful systemic change is possible given the right circumstances: a willingness and the means to do so. If anything, a moral of the story can be derived that the wisest choice in many things is not to rely on one’s own understanding, but to seek out mentors who will lend advice and to learn from the mistakes of those who have come before.