Health care cost of floods: Evidence from Typhoon Morakot in Taiwan

Abstract

Using the difference-in-difference (DID) method, this study uses Typhoon Morakot, which occurred in August 2009, as an example to estimate the effect of flooding on health care cost burden. The main data source is the medical claims records of a cohort of three million patients in Taiwan’s National Health Insurance system. By examining flood-related physiological diseases and disaster-related mental illnesses, our results indicate that the increase in outpatient health care costs resulting from the flood caused by the typhoon is approximately NTD 8.95 billion (USD 280 million), equivalent to approximately 69% of the annual special budget for flooding prevention during the period 2006–2019 in Taiwan. Moreover, the increase in outpatient expenditure for mental illnesses is nearly 10 times that of physiological diseases. An important implication of our findings is that the cost of preventing natural disasters, such as floods, can be offset by saving health care costs, particularly for mental illnesses. Our results also suggest that in addition to providing safe drinking water and indoor residual spraying, offering continuous post-disaster mental health services can further save health care expenditures caused by natural disasters.