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Does a National Health Insurance System Enhance Quality of Care and Contain Cost?-An Empirical Investigation of the National Health Insurance System in Taiwan


  • Li Chang

    () (Department of Business Administration, Shih Hsin University, TAIWAN)

  • Chi-Ping Hou

    () (Department of Accounting, China University of Technology, TAIWAN)


The main purpose of this study is to examine: (1) The dynamic changes in cost containment and quality that have occurred under the National Health Insurance (NHI) program in Taiwan; (2) The trade-off effect relationship between cost and quality. This paper uses an empirical model to look at data from hospitals in Taipei between 1989 and 2004. The findings indicate that the NHI has led to poor cost containment and unimproved quality of care. In addition, it is to found that, after the NHI, there has been no trade-off between cost containment and quality. This suggests that a lack of market competition and an ineffective monitoring system have led to poor cost containment and quality. However, the negative relationship between cost and quality shows that the payment system should be link between cost and quality.

Suggested Citation

  • Li Chang & Chi-Ping Hou, 2011. "Does a National Health Insurance System Enhance Quality of Care and Contain Cost?-An Empirical Investigation of the National Health Insurance System in Taiwan," Review of Economics & Finance, Better Advances Press, Canada, vol. 1, pages 32-42, November.
  • Handle: RePEc:bap:journl:110503

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    References listed on IDEAS

    1. Milne, Robin G. & Torsney, Ben, 2003. "Financial incentives, competition and a two tier service: lessons from the UK National Health Service internal market," Health Policy, Elsevier, vol. 64(1), pages 1-12, April.
    2. Fu, Hwai-Hui & Tsai, Hsien-Tang & Lin, Ching-Wei & Wei, Duan, 2004. "Application of a single sampling plan for auditing medical-claim payments made by Taiwan National Health Insurance," Health Policy, Elsevier, vol. 70(2), pages 185-195, November.
    3. Melinda Muth & Lex Donaldson, 1998. "Stewardship Theory and Board Structure: a contingency approach," Corporate Governance: An International Review, Wiley Blackwell, vol. 6(1), pages 5-28, January.
    4. Hung, Jung-Hua & Chang, Li, 2008. "Has cost containment after the National Health Insurance system been successful: Determinants of Taiwan hospital costs," Health Policy, Elsevier, vol. 85(3), pages 321-335, March.
    5. Chang, Hsihui & Chang, Wen-Jing & Das, Somnath & Li, Shu-Hsing, 2004. "Health care regulation and the operating efficiency of hospitals: Evidence from Taiwan," Journal of Accounting and Public Policy, Elsevier, vol. 23(6), pages 483-510.
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    More about this item


    National Health Insurance; Cost containment; Quality;

    JEL classification:

    • I14 - Health, Education, and Welfare - - Health - - - Health and Inequality
    • I18 - Health, Education, and Welfare - - Health - - - Government Policy; Regulation; Public Health
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • H51 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Health


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