Abstract
This study divides health care expenditures into observable effects and structural shifts to explore the impacts of population ageing and high technology on the growth in outpatient service, inpatient service, and prescription drug expenditures in a health care system that has experienced a shift in payment schemes from a cost-based to a global budget system. By using the quantile decomposition method to examine data from Taiwan, the study shows that, in the short run, all expenditures exhibit an increasing trend in the higher percentiles. In the long run, an observable effect dominates the growth of health care expenditures. Specifically, population ageing leads to the growth of prescription drug expenditures in the higher percentiles. The adoption of high technology drives the growth of the top outpatient and inpatient service expenditures. These results suggest that while the government health care agency aims to control health care expenditures, improving the management of high-cost patients is likely to be one important avenue to improving the effectiveness of the cost control policy.
Funding source: Ministry of Science and Technology
Award Identifier / Grant number: MOST 105-2410-H-006 -003 -MY2
-
Research funding: This work is supported by Ministry of Science and Technology MOST 105-2410-H-006 -003 -MY2.
References
Addis, A., and N. Magrini. 2002. “New Approaches to Analysing Prescription Data and to Transfer Pharmacoepidemiological and Evidence-Based Reports to Prescribers.” Pharmacoepidemiol & Drug Safety 11 (8): 721–6.10.1002/pds.785Search in Google Scholar
Benstetter, F., and A. Wambach. 2006. “The Treadmill Effect in a Fixed Budget System.” Journal of Health Economics 25 (1): 146–69. https://doi.org/10.1016/j.jhealeco.2005.04.004.Search in Google Scholar
Berndt, E. R. 2001. “The U.S. Pharmaceutical Industry: Why Major Growth in Times of Cost Containment?” Health Affairs 20 (2): 100–14.10.1377/hlthaff.20.2.100Search in Google Scholar
Berndt, E.R. 2002. “Pharmaceuticals in U.S. Health Care: Determinants of Quantity and Price.” Journal of Economic Perspectives 16 (4): 45–66.10.1257/089533002320950975Search in Google Scholar
Blinder, A. S. 1973. “Wage Discrimination: Reduced Form and Structural Estimates.” Journal of Human Resources 8: 436–55, https://doi.org/10.2307/144855.Search in Google Scholar
Carreras, M., P. Ibern, and J. M. Inoriza. 2018. “Ageing and Healthcare Expenditures: Exploring the Role of Individual Health Status.” Health Economics 27 (5): 865–76. https://doi.org/10.1002/hec.3635.Search in Google Scholar
Chandra, A., and J. Skinner. 2012. “Technology Growth and Expenditures Growth in Health Care.” Journal of Economic Literature 50 (3): 645–80. https://doi.org/10.1257/jel.50.3.645.Search in Google Scholar
Chen, B., and V. Y. Fan. 2015. “Strategic Provider Behavior under Global Budget Payment with Price Adjustment in Taiwan.” Health Economics 24: 1422–36. https://doi.org/10.1002/hec.3095.Search in Google Scholar
Cheng, T. M. 2019. “Health Care Spending in the US and Taiwan: A Response to It’s Still the Prices, Stupid, and a Tribute to Uwe Reinhardt.” Health Affair Blog, https://doi.org/10.1377/hblog20190206.305164.Search in Google Scholar
Cheng, S. H., C. C. Chen, and W. L. Chang. 2009. “Hospital Response to a Global Budget Program under Universal Health Insurance in Taiwan.” Health Policy 92: 158–64. https://doi.org/10.1016/j.healthpol.2009.03.008.Search in Google Scholar
Chernichovsky, D., and S. Markowitz. 2004. “Aging and Aggregate Costs of Medical Care: Conceptual and Policy Issues.” Health Economics 13: 543–62. https://doi.org/10.1002/hec.844.Search in Google Scholar
Chernozhukov, V., I. Fernandez-Val, and B. Melly. 2013. “Inference on Counterfactual Distributions.” Econometrica 81 (6): 2205–68.10.2139/ssrn.1235529Search in Google Scholar
Chien, H. Y., J. J. Ko, Y. C. Chen, S. H. Weng, W. C. Yang, Y. C. Chang, and H. P. Liu. 2013. “Study of Medication Waste in Taiwan.” Journal of Experimental and Clinical Medicine 5 (2): 69–72. https://doi.org/10.1016/j.jecm.2013.02.003.Search in Google Scholar
Chou, S. Y., J. T. Liu, and J. K. Hammitt. 2004. “National Health Insurance and Technology Adoption—Evidence from Taiwan.” Contemporary Economic Policy 22 (1): 26–38. https://doi.org/10.1093/cep/byh003.Search in Google Scholar
Cutler, D. M., and M. McClellan. 1996. “The Determinants of Technological Change in Heart Attack Treatment.” In NBER Working Paper No. 5751.10.3386/w5751Search in Google Scholar
de Meijer, C., O. O’Donnell, M. Koopmanschap, and E. van Doorslaer. 2013. “Health Expenditure Growth: Looking beyond the Average through Decomposition of the Full Distribution.” Journal of Health Economics 32: 88–105. https://doi.org/10.1016/j.jhealeco.2012.10.009.Search in Google Scholar
Denton, F. T., A. Gafni, and B. G. Spencer. 2002. “Exploring the Effects of Population Change on the Costs of Physician Services.” Journal of Health Economics 21: 781–803. https://doi.org/10.1016/s0167-6296(02)00013-9.Search in Google Scholar
DiNardo, J., N. Fortin, and T. Lemieux. 1996. “Labor Market Institutions and the Distribution of Wages, 1973–1992: A Semiparametric Approach.” Econometrica 64: 1001–44. https://doi.org/10.2307/2171954.Search in Google Scholar
Dormont, B., M. Grignon, and H. Huber. 2006. “Health Expenditure Growth: Reassessing the Threat of Aging.” Health Economics 15: 947–63. https://doi.org/10.1002/hec.1165.Search in Google Scholar
Dunn, A., B. Whitmire, A. Batch, L. Fernando, and L. Rittmueller. 2018. “High Spending Growth Rates for Key Diseases in 2000–14 were Driven by Technology and Demographic Factors.” Health Affairs 37 (6): 915–24. https://doi.org/10.1377/hlthaff.2017.1688.Search in Google Scholar
Eggleston, K., and B. M. Yang. 2009. “Physicians and Pharmacists in Comparative Historical Perspective: The Case of South Korea.” In Prescribing Cultures and Pharmaceutical Policy in the Asia Pacific, edited by K. Eggleson, 47–59. Baltimore, MD: Stanford Shorenstein Asia-Pacific Research Center Series with Brookings Institution Press.Search in Google Scholar
Fan, C. P., K. P. Chen, and K. Kan. 1998. “The Design of Payment Systems for Physicians under Global Budget—An Experimental Study.” Journal of Economic Behavior & Organization 34: 295–311. https://doi.org/10.1016/s0167-2681(97)00052-8.Search in Google Scholar
Felder, S., M. Meier, and H. Schmitt. 2000. “Health Care Expenditure in the Last Months of Life.” Journal of Health Economics 19: 679–95. https://doi.org/10.1016/s0167-6296(00)00039-4.Search in Google Scholar
Feldman, R., and F. Lobo. 1997. “Global Budgets and Excess Demand for Hospital Care.” Health Economics 6: 187–96. https://doi.org/10.1002/(sici)1099-1050(199703)6:2<187::aid-hec259>3.0.co;2-w.10.1002/(SICI)1099-1050(199703)6:2<187::AID-HEC259>3.0.CO;2-WSearch in Google Scholar
Firpo, S., N. Fortin, and T. Lemieux. 2009. “Unconditional Quantile Regressions.” Econometrica 77 (3): 953–73.10.3386/t0339Search in Google Scholar
Firpo, S. P., N. M. Fortin, and T. Lemieux. 2018. “Decomposing Wage Distributions Using Recentered Influence Function Regressions.” Econometrics 6 (2): 28. https://doi.org/10.3390/econometrics6020028.Search in Google Scholar
Fortin, N., T. Lemieux, and S. Firpo. 2011. “Decomposition Methods in Economics.” In Handbook of Labor Economics, edited by D. Card, and O. Ashenfelter, 1–102. Amsterdam: Elsevier.10.3386/w16045Search in Google Scholar
Franch, E. B., J. McCauley, M. Aragon, P. Bakx, M. Chalkley, S. H. Chen, B. J. Christensen, H. Chuang, A. Côté-Sergent, M. De Nardi, E. Fan, D. Échevin, P. Y. Geoffard, C. Gastaldi-Ménager, M. Gørtz, Y. Ibuka, J. B. Jones, M. Kallestrup-Lamb, M. Karlsson, T. J. Klein, G. de Lagasnerie, P. C. Michaud, O. O’Donnell, N. Rice, J. S. Skinner, E. van Doorslaer, N. R. Ziebarth, and E. Kelly. 2017. “End-of-Life Medical Spending in Last Twelve Months of Life is Lower than Previously Reported.” Health Affairs 36 (7): 1211–7, https://doi.org/10.1377/hlthaff.2017.0174.Search in Google Scholar
Gavrilov, L. A., and N. S. Gavrilova. 1991. The Biology of Human Life Span: A Quantitative Approach. New York, United States: Harwood Academic Publisher.Search in Google Scholar
Gerdtham, U. G., and D. Lundin. 2004. “Why Did Drug Spending Increase during the 1990s? A Decomposition Based on Swedish Data.” Pharmacoeconomics 22 (1): 29–42.10.2165/00019053-200422010-00003Search in Google Scholar
Gerdtham, U. G., J. Søgaard, F. Andersson, and B. Jonsson. 1992. “An Econometric Analysis of Health Care Expenditure: A Cross-Section Study of the OECD Countries.” Journal of Health Economics 11: 63–84. https://doi.org/10.1016/0167-6296(92)90025-v.Search in Google Scholar
Gerdtham, U. G., M. Johannesson, and B. Jönsson. 1993. “Drug Spending and New Drug Introductions: The Swedish Experience.” PharmacoEconomics 13 (2): 215–25. https://doi.org/10.2165/00019053-199304030-00006.Search in Google Scholar
Gerdtham, U. G., B. Jönsson, M. MacFarlan, and H. Oxley. 1998. “The Determinants of Health Expenditure in the OECD Countries: A Pooled Data Analysis.” In Health, the Medical Profession, and Regulation, Vol. 6, edited by P. Zweifel, 113–34. New York, NY: Springer.10.1007/978-1-4615-5681-7_6Search in Google Scholar
Getzen, T. E. 1992. “Population Aging and the Growth of Health Expenditures.” Journal of Gerontology 47: S98–104. https://doi.org/10.1093/geronj/47.3.s98.Search in Google Scholar
Häkkinen, U., P. Martikainen, A. Noro, E. Nihtilä, and M. Peltola. 2008. “Aging, Health Expenditure, Proximity to Death, and Income in Finland.” Health Economics, Policy and Law 3: 165–95. https://doi.org/10.1017/s174413310800443x.Search in Google Scholar
Hitiris, T., and J. Posnett. 1992. “The Determinants and Effects of Health Expenditure in Developed Countries.” Journal of Health Economics 11: 173–81. https://doi.org/10.1016/0167-6296(92)90033-w.Search in Google Scholar
Hsieh, C. R., and F. A. Sloan. 2008. “Adoption of Pharmaceutical Innovation and the Growth of Drug Expenditure in Taiwan: Is It Cost Effective?” Value in Health 11 (2): 334–44.10.1111/j.1524-4733.2007.00235.xSearch in Google Scholar
Hsu, W. C., and Y. P. Hsu. 2016. “Patterns of Outpatient Care Utilization by Seniors under the National Health Insurance in Taiwan.” Journal of the Formosan Medical Association 115 (5): 325–34. https://doi.org/10.1016/j.jfma.2015.12.001.Search in Google Scholar
Huang, Y., and Y. Yang. 2009. “Pharmaceutical Pricing in China.” In Prescribing Cultures and Pharmaceutical Policy in the Asia Pacific, edited by K. Eggleson, 205–22. Baltimore, MD: Stanford Shorenstein Asia-Pacific Research Center Series with Brookings Institution Press.Search in Google Scholar
Iizuka, T. 2007. “Experts’ Agency Problems: Evidence from the Prescription Drug Market in Japan.” The RAND Journal of Economics 38 (3): 844–62. https://doi.org/10.1111/j.0741-6261.2007.00115.x.Search in Google Scholar
Iizuka, T. 2009. “The Economics of Pharmaceutical Pricing and Physician Prescribing in Japan.” In Prescribing Cultures and Pharmaceutical Policy in the Asia Pacific, edited by K. Eggleson, 47–59. Baltimore, MD: Stanford Shorenstein Asia-Pacific Research Center Series with Brookings Institution Press.10.2139/ssrn.1156608Search in Google Scholar
Iizuka, T. 2012. “Physician Agency and the Adoption of Generic Pharmaceuticals.” The American Economic Review 102 (6): 2826–58. https://doi.org/10.1257/aer.102.6.2826.Search in Google Scholar
Lee, Y. C., M. C. Yang, Y. T. Huang, C. H. Liu, and S. B. Chen. 2006. “Impacts of the Cost Containment Strategies on Pharmaceutical Expenditures of the National Health Insurance in Taiwan 1997–2003.” PharmacoEconomics 24 (9): 891–902. https://doi.org/10.2165/00019053-200624090-00006.Search in Google Scholar
Lee, Y. C., K. H. Huang, and Y. T. Huang. 2007. “Adverse Pharmaceutical Incentive and Providers’ Behavior: The Emergence of the GP-Owned Gateway Pharmacies in Taiwan.” Health Policy and Planning 22: 427–35. https://doi.org/10.1093/heapol/czm035.Search in Google Scholar
Leu, R. E. 1986. “The Public-Private Mix and International Health Care Costs.” In Public and Private Health Services: Complementarities and Conflicts, edited by A. J. Culyer, and B. Jönsson, 41–63. Hoboken, NJ: Blackwell Scientific Publications.Search in Google Scholar
Liu, Y. M., Y. H. K. Yang, and C. R. Hsieh. 2009. “Financial Incentives and Physicians’ Prescription Decisions on the Choice between Brand-Name and Generic Drugs: Evidence from Taiwan.” Journal of Health Economics 28: 341–9. https://doi.org/10.1016/j.jhealeco.2008.10.009.Search in Google Scholar
Liu, Y. M., Y. H. K. Yang, and C. R. Hsieh. 2012. “Regulation and Competition in the Taiwanese Pharmaceutical Market under National Health Insurance.” Journal of Health Economics 31: 471–83. https://doi.org/10.1016/j.jhealeco.2012.03.003.Search in Google Scholar
Liu, Y. M., and C. R. Hsieh. 2014. “Profit-Seeking Behavior of Medical Providers and Generic Competition in the Pharmaceutical Market: Evidence from Taiwan.” The B.E. Journal of Economic Analysis & Policy 14 (1): 241–75. https://doi.org/10.1515/bejeap-2013-0066.Search in Google Scholar
Liu, Y. M. 2020. “Understanding Profit Margins of Medical Providers from Prescription Drugs: Evidence from Taiwan.” International Health 12 (4): 272–80. https://doi.org/10.1093/inthealth/ihz072.Search in Google Scholar
Lu, J. R., and T. L. Chiang. 2011. “Evolution of Taiwan’s Health Care System.” Health Economics, Policy and Law 6: 85–107. https://doi.org/10.1017/s1744133109990351.Search in Google Scholar
Ministry of Health and Welfare (MHW). 2015. National Health Expenditure 2015. https://dep.mohw.gov.tw/DOS/lp-2830-113.html (accessed January 13, 2021).Search in Google Scholar
Ministry of Health and Welfare (MHW), R.O.C. (Taiwan). 2012. Statistical Annual Report of Medical Care, National Health Insurance. Ministry of Health and Welfare. https://dep.mohw.gov.tw/DOS/np-1982-113.html (accessed March 7, 2020).Search in Google Scholar
Ministry of Health and Welfare (MHW), R.O.C. (Taiwan). 2015. National Health Expenditure 2015. Ministry of Health and Welfare. https://dep.mohw.gov.tw/DOS/lp-2830-113.html (accessed January 13, 2021).Search in Google Scholar
Ministry of Health and Welfare (MHW), R.O.C. (Taiwan). 2019. Statistical Annual Report of Medical Care, National Health Insurance. Ministry of Health and Welfare. https://www.mohw.gov.tw/dl-70641-33764b1d-b662-4c0c-b01a-e57bd6949084.html (accessed October 17, 2021).Search in Google Scholar
Morgan, S. G. 2002. “Quantifying Components of Drug Expenditure Inflation: The British Columbia Seniors’ Drug Benefit Plan.” Health Services Research 37 (5): 1243–66.10.1111/1475-6773.01058Search in Google Scholar
Mukherjee, B., H. T. Ou, F. Wang, and S. R. Erickson. 2011. “A New Comorbidity Index: The Health-Related Quality of Life Comorbidity Index.” Journal of Clinical Epidemiology 64 (3): 309–19. https://doi.org/10.1016/j.jclinepi.2010.01.025.Search in Google Scholar
National Health Insurance Administration (NHIA). 2005. Professional Monitoring Measures of Hospital Global Budget 2005. https://www.nhi.gov.tw/DL.aspx?sitessn=292&u=LzAwMS9VcGxvYWQvT2xkRmlsZS9OaGlQdWJXZWIvcmVzb3VyY2UvV2ViZGF0YS9BdHRhY2hfNDMyMl8xXzk0MDgyNS0zLnBkZg%3D%3D&n=QXR0YWNoXzQzMjJfMV85NDA4MjUtMy5wZGY%3D&ico%20=.pdf (accessed January 22, 2021).Search in Google Scholar
National Health Insurance Administration (NHIA). 2017. 2017–2018 National Health Insurance Annual Report, 36–9. https://ws.nhi.gov.tw/001/Upload/293/RelFile/Ebook/English.pdf (accessed August 12, 2022).Search in Google Scholar
Newhouse, J. P. 1992. “Medical Care Costs: How Much Welfare Loss?” The Journal of Economic Perspectives 6 (3): 3–21. https://doi.org/10.1257/jep.6.3.3.Search in Google Scholar
Oaxaca, R. 1973. “Male–Female Wage Differentials in Urban Labor Markets.” International Economic Review 14: 693–709. https://doi.org/10.2307/2525981.Search in Google Scholar
O’Connell, J. 1996. “The Relationship between Health Expenditures and the Age Structure of the Population in OECD Countries.” Health Economics 5: 573–8. https://doi.org/10.1002/(sici)1099-1050(199611)5:6<573::aid-hec231>3.0.co;2-l.10.1002/(SICI)1099-1050(199611)5:6<573::AID-HEC231>3.0.CO;2-LSearch in Google Scholar
Organization for Economic Co-operation and Development (OECD). 2014. OECD Health Statistics. http://www.oecd.org/els/health-systems/oecd-health-statistics-2014-frequently-requested-data.htm (accessed January 22, 2021).Search in Google Scholar
Peden, E. A., and M. S. Freeland. 1995. “A Historical Analysis of Medical Spending Growth, 1960–1993.” Health Affairs 14 (2): 235–47. https://doi.org/10.1377/hlthaff.14.2.235.Search in Google Scholar
Scitovsky, A. A. 1985. “Changes in the Costs of Treatment of Selected Illnesses.” Medical Care Research and Review 23 (2): 1245–57. https://doi.org/10.1097/00005650-198512000-00004.Search in Google Scholar
Scitovsky, A. A., and N. McCall. 1976. Changes in Treatment Costs for Selected Illnesses, 1951–1964–1971. Washington DC: US Department of Health Education and Welfare, National Center for Health Services Research.Search in Google Scholar
Schmid, C. P. R. 2017. “Unobserved Health Care Expenditures: How Important is Censoring in Register Data?” Health Economics 26 (12): 1807–12. https://doi.org/10.1002/hec.3504.Search in Google Scholar
Schwartz, W. B. 1987. “The Inevitable Failure of Current Cost-Containment Strategies: Why they can Provide Only Temporary Relief.” Journal of the American Medical Association 257 (2): 220–4. https://doi.org/10.1001/jama.1987.03390020086032.Search in Google Scholar
Seshamani, M., and A. Gray. 2004a. “Ageing and Health-Care Expenditure: The Red Herring Argument Revisited.” Health Economics 13: 303–14. https://doi.org/10.1002/hec.826.Search in Google Scholar
Seshamani, M., and A. Gray. 2004b. “A Longitudinal Study of the Effects of Age and Time to Death on Hospital Costs.” Journal of Health Economics 23: 217–35. https://doi.org/10.1016/j.jhealeco.2003.08.004.Search in Google Scholar
Shang, B., and D. Goldman. 2008. “Does Age or Life Expectancy Better Predict Health Care Expenditure?” Health Economics 17: 487–501. https://doi.org/10.1002/hec.1295.Search in Google Scholar
Showstack, J. A., S. A. Schroeder, and M. F. Matsumoto. 1982. “Changes in the Use of Medical Technologies, 1972–1977.” New England Journal of Medicine 15: 124–33. https://doi.org/10.1056/nejm198203253061203.Search in Google Scholar
van Baal, P., and A. Wong. 2012. “Time to Death and Forecasting of Macro-Level Health Care Expenditures: Some Further Considerations.” Journal of Health Economics 31: 876–87. https://doi.org/10.1016/j.jhealeco.2012.08.003.Search in Google Scholar
Word Health Organization (WHO). 2020. Global Health Expenditure Database: Current Health Expenditure. https://data.worldbank.org/indicator/SH.XPD.CHEX.GD.ZS(accessed January 22, 2021).Search in Google Scholar
Zweifel, P., S. Felder, and M. Meiers. 1999. “Aging of Population and Health Care Expenditure: A Red Herring?” Health Economics 8: 485–96. https://doi.org/10.1002/(sici)1099-1050(199909)8:6<485::aid-hec461>3.0.co;2-4.10.1002/(SICI)1099-1050(199909)8:6<485::AID-HEC461>3.0.CO;2-4Search in Google Scholar
© 2022 Walter de Gruyter GmbH, Berlin/Boston