The determinants of health expenditures in Taiwan: modeling and forecasting using time series analysis

Abstract

In this study, the determinants of per capita health expenditures in Taiwan are investigated. Per capita health expenditures over the period from March 1996 to December 2006 are examined using autoregressive (AR) model in order to analyze whether prior health expenditures can explain current health expenditures. In particular, we examine the effects of both supply-and demand-side incentive mechanisms, i.e., the global budget payment system and the co-payment system, on health expenditures. We find the key determinants of Taiwan’s per capita health expenditures are the prior one month health expenditures, bed supply per capita, real gross domestic product (GDP) per capita and standardized mortality ratio (SMR). In addition, we also verified that the new copayment system could reduce health expenditures effectively. The ageing of population, which usually believed to influence health expenditures, is found to be non-significant. Moreover, the global budget payment system seemed to have an insignificant effect on controlling over utilization of medical resources.