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An analysis of private health insurance purchasing decisions with national health insurance in Taiwan


  • Liu, Tsai-Ching
  • Chen, Chin-Shyan


The Taiwanese health insurance industry is just over 30 years old. Originally private and domestic, the industry underwent substantial institutional changes when it opened to foreign competition between 1987 and 1994 and when the Taiwanese government established national health insurance (NHI) coverage in 1995. Congruent with these changes, rapid growth occurred in the Taiwanese demand for private health insurance. In order to better understand the recent performance of the Taiwanese health insurance industry, the structure of the NHI system is described and then household decisions to purchase private health insurance are analyzed using a two-part (hurdle) model on 1998 Survey of Family Income and Expenditure data. Logistic and OLS regressions are used to examine the factors influencing the probability and amount of private health insurance purchased. Generally, factors affecting the probability of having insurance also influence the amount of insurance coverage purchased. Higher income and education levels are associated with increased probabilities and larger quantities of private insurance purchases. Married females, the employed, and household heads working in state-run enterprises are more likely to purchase private insurance than their counterparts. The probability of private insurance purchases varies by region, with northern Taiwanese households having higher odds of owning private insurance than non-northern households. Compared to those in rural villages, households in cities and towns are more likely to have private insurance. The likelihood of private insurance purchase also tends to rise with advancing age and larger family sizes. In addition, one important implication in the private health insurance market is highlighted. There is no complementarity between the public and private systems.

Suggested Citation

  • Liu, Tsai-Ching & Chen, Chin-Shyan, 2002. "An analysis of private health insurance purchasing decisions with national health insurance in Taiwan," Social Science & Medicine, Elsevier, vol. 55(5), pages 755-774, September.
  • Handle: RePEc:eee:socmed:v:55:y:2002:i:5:p:755-774

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    References listed on IDEAS

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    Cited by:

    1. Shin-Yi Chou & Jin-Tan Liu & Cliff J. Huang, 2004. "Health insurance and savings over the life cycle-a semiparametric smooth coefficient estimation," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 19(3), pages 295-322.
    2. Shin-Yi Chou & Jin-Tan Liu & James Hammitt, 2006. "Households’ precautionary behaviors—the effects of the introduction of National Health Insurance in Taiwan," Review of Economics of the Household, Springer, vol. 4(4), pages 395-421, December.
    3. Tan Andrew K. G. & Yen Steven T. & Hasan Abdul Rahman & Muhamed Kamarudin, 2014. "Demand for Life Insurance in Malaysia: An Ethnic Comparison Using Household Expenditure Survey Data," Asia-Pacific Journal of Risk and Insurance, De Gruyter, vol. 8(2), pages 1-26, July.
    4. Liu, Hong & Gao, Song & Rizzo, John A., 2011. "The expansion of public health insurance and the demand for private health insurance in rural China," China Economic Review, Elsevier, vol. 22(1), pages 28-41, March.
    5. Agar Brugiavini & Noemi Pace, 2016. "Extending health insurance in Ghana: effects of the National Health Insurance Scheme on maternity care," Health Economics Review, Springer, vol. 6(1), pages 1-10, December.
    6. Bolhaar, Jonneke & Lindeboom, Maarten & van der Klaauw, Bas, 2012. "A dynamic analysis of the demand for health insurance and health care," European Economic Review, Elsevier, vol. 56(4), pages 669-690.
    7. repec:kap:ijhcfe:v:17:y:2017:i:3:d:10.1007_s10754-017-9213-0 is not listed on IDEAS
    8. Chen, Chin-Shyan & Liu, Tsai-Ching & Lin, Herng-Ching & Tian, Wei-Hua, 2007. "The effect of Taiwan's National Health Insurance on infants' preventive care use and inpatient care use," Health Policy, Elsevier, vol. 80(3), pages 432-443, March.
    9. Shin, Jaeun, 2012. "Private health insurance in South Korea: An international comparison," Health Policy, Elsevier, vol. 108(1), pages 76-85.
    10. Pokhrel, Subhash & Snow, Rachel & Dong, Hengjin & Hidayat, Budi & Flessa, Steffen & Sauerborn, Rainer, 2005. "Gender role and child health care utilization in Nepal," Health Policy, Elsevier, vol. 74(1), pages 100-109, September.
    11. Agar Brugiavini & Noemi Pace, 2011. "Extending Health Insurance: Effects of the National Health Insurance Scheme in Ghana," RSCAS Working Papers 2011/27, European University Institute.
    12. repec:rss:jnljms:v1i12p1 is not listed on IDEAS
    13. Xiao-Hua Ying & Teh-Wei Hu & Jane Ren & Wen Chen & Ke Xu & Jin-Hui Huang, 2007. "Demand for private health insurance in Chinese urban areas," Health Economics, John Wiley & Sons, Ltd., vol. 16(10), pages 1041-1050.


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