As the international guidance for lipid control has evolved, the National Health Insurance Administration (NHIA) in Taiwan was requested to modify the current reimbursement criteria for initiation of lipid-lowering treatment. The study aims to evaluate the cost-effectiveness and the budget impact of the newly proposed reimbursement criteria on lipid-lowering drug from the NHIA’s viewpoint with a focus on the change of statins usage. In the new criteria, the cut-off points of low-density lipoprotein cholesterol (LDL-C) and total cholesterol for initiating lipid-lowering therapy for patients having diabetes or previous heart diseases (high risk group) have been lowered. A Markov decision model was constructed to examine the cost-effectiveness of the new criteria compared with the original ones. The efficacy of statins on coronary heart diseases (CHD) and stroke was obtained from the literature. The numbers of subjects who may be affected by these criteria changes and the LDL-C specific disease transition probabilities were obtained from a population-based survey conducted by the Taiwan Health Promotion Administration (HPA). Medical costs were derived from the NHI data. Both costs and health outcomes were discounted at 3%. The corresponding financial impact on NHI expenditure was also estimated. If the new criteria are applied, the number of subjects who fulfill the reimbursement criteria in the high risk group will be almost twice as many as before. This would lead to an great increase in the NHI expenditures for statins and monitoring costs, however, this could be offset by the treatment cost saved from the averted CHD and stroke cases. Therefore, the new criteria are a dominant strategy compared with the original criteria. Although the newly proposed reimbursement criteria would lead to an increase in drug expenditure of NHIA, it is expected to be a cost-saving strategy after taking into account the health benefit on preventing CHD and stroke.