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Health Care Payment Incentives: A Comparative Analysis of Reforms in Taiwan, Korea and China

  • Karen Eggleston
  • Chee-Ruey Hsieh

Payment incentives have significant consequences for the equity and efficiency of a health care system, and have recently come to the fore in health policy reforms. This paper first discusses the economic rationale for apparent international convergence toward payment systems with mixed demand and supplyside cost sharing. We then summarize the recent payment reforms undertaken in Taiwan, Korea and China. Available evidence clearly indicates that incentives matter, and that supply-side cost sharing in particular can improve efficiency without undermining equity. Further study and monitoring of quality and selection is warranted.

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Paper provided by Department of Economics, Tufts University in its series Discussion Papers Series, Department of Economics, Tufts University with number 0402.

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Date of creation: 2004
Date of revision:
Handle: RePEc:tuf:tuftec:0402
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  1. Simeon Djankov & Peter Murrell, 2002. "Enterprise Restructuring in Transition: A Quantitative Survey," Journal of Economic Literature, American Economic Association, vol. 40(3), pages 739-792, September.
  2. Ching-to Albert Ma, 1994. "Health Care Payment Systems: Cost and Quality Incentives," Papers 0047, Boston University - Industry Studies Programme.
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  4. McGuire, Thomas G., 2000. "Physician agency," Handbook of Health Economics, in: A. J. Culyer & J. P. Newhouse (ed.), Handbook of Health Economics, edition 1, volume 1, chapter 9, pages 461-536 Elsevier.
  5. Zeckhauser, Richard, 1970. "Medical insurance: A case study of the tradeoff between risk spreading and appropriate incentives," Journal of Economic Theory, Elsevier, vol. 2(1), pages 10-26, March.
  6. Cutler, David M. & Zeckhauser, Richard J., 2000. "The anatomy of health insurance," Handbook of Health Economics, in: A. J. Culyer & J. P. Newhouse (ed.), Handbook of Health Economics, edition 1, volume 1, chapter 11, pages 563-643 Elsevier.
  7. Randall P. Ellis & Thomas G. McGuire, 1993. "Supply-Side and Demand-Side Cost Sharing in Health Care," Journal of Economic Perspectives, American Economic Association, vol. 7(4), pages 135-151, Fall.
  8. Pope, Gregory C., 1990. "Using hospital-specific costs to improve the fairness of prospective reimbursement," Journal of Health Economics, Elsevier, vol. 9(3), pages 237-251, November.
  9. Joseph P. Newhouse, 1992. "Medical Care Costs: How Much Welfare Loss?," Journal of Economic Perspectives, American Economic Association, vol. 6(3), pages 3-21, Summer.
  10. Ellis, Randall P. & McGuire, Thomas G., 1990. "Optimal payment systems for health services," Journal of Health Economics, Elsevier, vol. 9(4), pages 375-396, December.
  11. Liu, Yuanli & Hsiao, William C. & Eggleston, Karen, 1999. "Equity in health and health care: the Chinese experience," Social Science & Medicine, Elsevier, vol. 49(10), pages 1349-1356, November.
  12. Yip, Winnie & Eggleston, Karen, 2004. "Addressing government and market failures with payment incentives: Hospital reimbursement reform in Hainan, China," Social Science & Medicine, Elsevier, vol. 58(2), pages 267-277, January.
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