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

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  • Tsung-Yu Hsieh
  • Huai-I Lee
  • Yu-Ju Huang

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.

Suggested Citation

  • Tsung-Yu Hsieh & Huai-I Lee & Yu-Ju Huang, 2016. "An investigation of the factors affecting medical expenses: The case of Taiwan’s NHI implementation," Journal of Applied Finance & Banking, SCIENPRESS Ltd, vol. 6(6), pages 1-8.
    • Handle: RePEc:spt:apfiba:v:6:y:2016:i:6:f:6_6_8
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