Mortality Differential and Social Insurance: A Case Study in Taiwan

Chih-Kai Chang, Jack C. Yue, Chian-Jing Chen and Yen-Wen Chen

North American Actuarial Journal, 2021, vol. 25, issue S1, S582-S592

Abstract: The mortality differential is important information for planning social insurance programs, such as health insurance and public pensions. It can be used to evaluate whether certain areas need more medical facilities and traffic infrastructure. The ignorance of mortality differentials can result in adverse selection and problems of pricing and liability. In this study, we use mortality models to estimate the mortality differentials of two social pension plans in Taiwan, National Pension Insurance (NPI) and Farmer Health Insurance (FHI), which account for more than one-third of the population of Taiwan (about 9 million). We compare the mortality profiles of the two pension groups in terms of economic status and geographic region. Empirical study leads to several policy implications, such as the feasibility of unifying the FHI and NPI systems, reallocating more premium subsidy according to mortality difference and corresponding annuity cost, and the antiselection effect in suburban areas with lower annuity costs and lower willingness to pay premiums.

Date: 2021
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DOI: 10.1080/10920277.2019.1651660

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