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The spillover effect of National Health Insurance on household consumption patterns: Evidence from a natural experiment in Taiwan

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  • Sheu, Ji-Tian
  • Lu, Jui-fen Rachel

Abstract

While providing financial risk protection was one of the major aims of introducing a National Health Insurance (NHI) program in Taiwan in 1995, one may also wonder how the households may exploit resources freed up and available to them as a result of reduced exposure to risk due to health insurance. This paper aims at studying and evaluating the impact of social insurance on these differing household consumption patterns. A differences-in-differences estimation model was applied to a sample of 17,899 households from the 1993–2000 Taiwan Survey of Family Income and Expenditure to assess the NHI's impact. This effect was evaluated by the changes in the proportion of the consumption expenditure devoted to medical items and non-medical items in the post-NHI period (1996–2000) compared to the pre-NHI period (1993–1994). Our study found that spending related to the improvement of housing conditions (rental and water bills) had the most significant increase, 1.87% (in the share). Furthermore, examining the NHI impact across socioeconomic status (SES) strata (in terms of income and education levels), our study found that households with the lowest SES experienced the largest increase in spending share (2.16%) for rental and water bills, and the least drop (0.64%) on education items. Recognizing how households can exploit the potential benefits associated with NHI provision could enable the government to devise specific policy tools to facilitate better targeting of investment decisions with limited resources available for less well-off households.

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  • Sheu, Ji-Tian & Lu, Jui-fen Rachel, 2014. "The spillover effect of National Health Insurance on household consumption patterns: Evidence from a natural experiment in Taiwan," Social Science & Medicine, Elsevier, vol. 111(C), pages 41-49.
    • Handle: RePEc:eee:socmed:v:111:y:2014:i:c:p:41-49
    DOI: 10.1016/j.socscimed.2014.04.006
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    5. Chen, Hua & Ding, Yugang & Tang, Lin & Wang, Lizhen, 2022. "Impact of urban–rural medical insurance integration on consumption: Evidence from rural China," Economic Analysis and Policy, Elsevier, vol. 76(C), pages 837-851.

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