The demand for healthcare under Taiwan’s national health insurance: a count data model approach

Abstract

In this paper, we estimate the demand for healthcare and explore the recent determinants of healthcare utilization under Taiwan’s national health insurance. Price elasticity and quality elasticity are estimated in order to evaluate the effectiveness of the copayment policy and the possible quantity reduction owing to quality improvement under the Global Budget Payment System. Our empirical results demonstrate that, first, the price sensitivity of patients is not high enough, therefore resulting in an ineffectiveness of the copayment policy to reduce healthcare utilization and, second, the quality sensitivity of patients is high enough that providers should deliver a higher quality of care and reduce the follow-up treatments in order to avoid an overprovision of healthcare services as a result of the design of the Global Budget Payment System.