An investigation of the factors affecting medical expenses: The case of Taiwan’s NHI implementation

Tsung-Yu Hsieh, Huai-I Lee and Yu-Ju Huang

Journal of Applied Finance & Banking, 2016, vol. 6, issue 6, 8

Abstract: This paper uses annual data for Taiwan from 1970 to 2003 to examine the factors affecting medical expenses. The results are as follows: (1) after the implementation of the National Health Insurance system, the average per capita health care spending increased significantly, by about 16%. (2) The income elasticity of health care spending is greater than 1, which means that it is a luxury good. This is in contrast with the findings of other Taiwanese studies, but supports the results in the foreign literature. (3) Increasing the number of physicians may cause “supply-induced demand†, but other explanatory variables may also affect this. (4) Taiwan has an aging population, and the proportion of ageing population has a positive correlation with health care expenditure. (5) Universal health insurance might lead to an ex post moral hazard.

Date: 2016
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