In 1985, the government began the selection of 41 basic-level (township, village) Farmers' Associations for trial implementation of a farmers' insurance plan. Within three years the number of participating associations was 99, and it was decided to go to full implementation in July of 1989. But under the impetus of the May 20 farmers' demonstrations and raised popular expectations, the government has decided to move the date up to this October.

Nevertheless, there are still considerable differences between the government and farmers over the scope and financing of the program. We hope here to shed some light on these problems to help bring farmers and government closer.

We must keep in mind two principles. First, insurance is not welfare. It is a method of spreading risks to avoid financial crises at times of disaster. It should be self-supporting and not government subsidized. Second, farmers' insurance will be part of general health insurance, so attention must be given to how it will fit with the latter when the latter is implemented in 2000.

Much discussion has surrounded the scope: under current rules, only one person per household may take out a policy under the program. Since a household need not only have one farm worker, this restriction is opposed by farmers. The concern of the government is cost; it already covers 60 percent of the costs of the trial program, and expanding participation may overwhelm resources.

The restriction gave rise to the practice of taking out a policy for the member of the household most likely to have high medical costs, especially the elderly, leading to serious cost overruns. This in turn led the government to restrict first time policyholders to those under seventy, causing further dissatisfaction. The restriction has also given rise to the problem of adverse selection.

We believe that since general health insurance will soon be implemented, why not allow participation in the farmers' program by the household, with every adult (and eventually every child) taking out a policy? This will solve both the adverse selection problem and that of determining eligibility for the program.

Who will pay for this expanded coverage? In the current experimental stage, farmers pay forty percent, the farmers' association ten percent, and the government fifty percent. Because the budgets at the farmers' associations are tight, it has been decided to lower their contribution to five percent, with that of the farmers themselves going up to 45 percent. Nevertheless, some farmers wish to reduce their share to 35 percent, the same as for civil service insurance; however, since civil servants are paid by the government anyway, one cannot compare them to self-employed farmers. Moreover, under the principle that insurance is not welfare, the program should be entirely funded by participant contributions, without any government subsidization.

Will this not be too much of a financial burden? This problem should be discussed in the context of the scope of health insurance.

Many have the mistaken belief that health insurance means being able to see the doctor for free (as is currently the case for participants in the labor insurance plan). But this would lead to excessive use of medical resources, with a consequent rise in fees, and thus in insurance costs. Although the government recognizes this problem, changing to a system of partial payment by the patient has hit obstacles: during revision of the labor insurance law in 1987, the Legislative Yuan put revision of the payment plan on temporary hold.

In principle, insurance should be for serious illnesses and not minor ones. Because the number of minor illnesses is large, people could get back little more than they pay in, making insurance meaningless. Because the costs of treatment for minor illnesses are small, these could be absorbed by households without serious difficulty; insurance would be most effectively reserved for serious illnesses which could threaten a household's financial stability.

Under this principle, there should be a certain portion of costs to be absorbed by the patient, with an upper limit set based on income. If this is done, unnecessary treatment can be reduced, and both doctors' and insurance fees will stay down. As a result, making the farmers' insurance plan entirely self-supporting would not be an excessive burden on farm families.

Complete implementation of farmers' health insurance would be a major step forward for the social insurance system in the R.O.C. But the first step must be taken with care; we hope that farmers will understand the difference between insurance and welfare and support a system consistent with efficiency. At the same time we hope the government will design farmers' insurance with the ultimate goal of complete public health insurance in mind. Concretely speaking, the farmers' insurance plan should adopt the household rather than the individual as the target unit, adopt the principle that the program be funded by the farmers (with the government giving assistance to low-income households), and that a high proportion of the costs of treatment for minor illnesses should be borne by the patient.