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The effects of selection and moral hazard in additional health insurance in a universal healthcare system: evidence from Taiwan

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    Abstract

    In this study, we investigate the effect of both voluntary private health insurance and compulsory social health insurance on the utilization of medical care services under Taiwan’s universal mandatory National Health Insurance scheme. Using data for all inpatient services rendered by a large tertiary medical center in Taiwan, we found evidence of advantageous selection into private health insurance. After controlling for this selection effect, we found substantial moral hazard in both voluntary and mandatory additional health insurance. We also found heterogeneity in the moral hazard effect, which varied depending on the kind of medical care utilized and the kinds of insurance benefits available to patient. This hospital-based study suggests that it is unlikely that additional private health insurance would reduce government spending on healthcare for the patients at our medical center. It might in fact contribute to inequality in healthcare among our patients of different social economic backgrounds as well as have some fiscal spillover effect on the National Health Insurance program, if similar of studies of the other medical centers across Taiwan were to corroborate our findings.

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    Data availability

    The data that support the findings of this study are available from the corresponding author upon reasonable request.

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    Acknowledgements

    We thank the Editor-in-Chief and two anonymous reviewers for their helpful comments on an earlier draft. We are grateful for the financial support from the National Science and Technology Council (Grant Numbers NSTC 112-2410-H-992-037, MOST 110-2410-H-992-015).

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    Authors and Affiliations

    1. Department of Risk Management and Insurance, National Kaohsiung University of Science and Technology, Add: No. 1, University Rd., Yenchao Dist., Gaoxiong, 824005, Taiwan

      Chaohsin Lin & Shuofen Hsu

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    1. Chaohsin Lin
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    2. Shuofen Hsu
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    Correspondence to Shuofen Hsu.

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    Conflict of interest

    The authors declare no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.

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    The study was conducted according to the guidelines of the Declaration of Helsinki, and the authors of this manuscript attest that they have complied with the ethical guidelines for authorship and publishing in the journal. The need for IRB approval was waived because the protocol only involves secondary analysis of existing data that do not contain identifiable private information. There was no human subject experimentation.

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    Lin, C., Hsu, S. The effects of selection and moral hazard in additional health insurance in a universal healthcare system: evidence from Taiwan. Geneva Pap Risk Insur Issues Pract (2024). https://doi.org/10.1057/s41288-024-00333-0

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    • DOI: https://doi.org/10.1057/s41288-024-00333-0

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