An analysis of the growth of healthcare expenditure in Taiwan: Healthcare inflation, volume-intensity,and equity

Taiwan's healthcare expenditures have increased in recent years despite occasional periods of negative growth in national income. This study examined the contributions of price, population, and volume-intensity to the growth of healthcare spending, and the change in healthcare expenditure security across income groups. We followed the method of Schieber and Poulier to break down the growth of nominal national healthcare spending into increases in healthcare prices and population. Volume-intensity was calculated as a residual and was affected by aging of the population. Healthcare expenditure security was defined by the rate of National Health Insurance (NHI) coverage and the benefit-premium ratio, and was compared across income quartiles. All data were based on public government statistics and the Survey of Family Income and Expenditure. Results indicated that: (1) Since the beginning of the 21th century, nominal growth in health care spending has stayed around 4.49% and came mainly from health care inflation (2.43%) and population aging (1.68%). Volume-intensity grew sluggishly. (2) The NHI coverage rate declined from 68 to 66% with an increase in out-of-pocket spending. (3) In terms of the benefit-premium ratio, NHI remained generally pro-poor (5.27 to 5.05 times); however, disparity in healthcare security widened because the NHI benefit-premium ratio increased faster for the rich (2.13 to 2.33 times). We suggest that future NHI reform should focus on quality assurance, the effects of inflation, and equity in healthcare security. (Taiwan J Public Health. 2012; 1(1):1-10).