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A common challenge faced by the healthcare systems in many low- and middle-income countries is the substantial unmet mental healthcare needs, or the large gap between the need for and the provision of mental healthcare treatment. This paper investigates the potential causes of this treatment gap from the perspective of economics. Specifically, we hypothesize that people with mental illness face 4 major hurdles in obtaining appropriate healthcare, namely the high nonmonetary cost due to stigma, the high out-of-pocket payment due to insufficient public funds devoted to mental health, the high time costs due to low mental healthcare resource availability, and the low treatment benefit due to slow technology diffusion. We use China as a study setting to show country-specific evidence. Our analysis supports the above theoretical argument on the 4 barriers to access, which in turn sheds light on the effective approaches to mitigate the treatment gap. Four policy options are then discussed, including an information campaign for mental health awareness, increasing public investment in primary mental healthcare resources, transforming the healthcare system towards an integrated people-centered system and capitalizing on e-health technologies.

Mental health conditions such as depression is a rapidly rising epidemic and a major contributor to the overall global burden of disease. In addition to the direct medical costs and indirect economic costs that falls into the traditional boundary of disease burden estimation, many social costs associated with depression are hidden yet important. This paper provides empirical evidence on the existence of two hidden costs associated with depression: negative impact on social trust and life satisfaction. Based on the data obtained from 2012 China Family Panel Studies, our estimated results indicate that individuals who have a high tendency for depression or depressive symptoms are less likely to trust other people, and they also have significantly lower life satisfaction than their counterparts who are relatively mentally healthy. Given that trust is an important component of social capital, which in turn is an important input to foster economic growth in general and innovation in particular, the reduction in trust induced by the increasing prevalence of depression imposes a significant cost to the society in terms of poor economic performance. Similarly, as life satisfaction has been widely recognized as an important measure of well-being, our study also highlights that the increase in the prevalence of depression leads to a reduction in the well-being that individual can enjoy. All these costs are real, but did not receive sufficient attention in the previous research. The contribution of our research is to shed light on the existence of these hidden costs and to quantify the magnitude of such costs in the context of China.

China's fast economic growth in the past decades is accompanied by a rapid epidemiological transition from communicable to non-communicable diseases (NCDs). An important yet often neglected NCD is mental disorder, which accounts for 14% of global disease burden but has been paid relatively little research attention in China. This paper uses a nationally representative dataset to investigate the prevalence and correlates of depression and depressive symptoms among the adult population in China. Our results indicate that the prevalence rate of depression, estimated with the Center for Epidemiologic Studies Depression Scale (CES-D), is high (37.9% for depressive symptoms and 4.1% for depression) and unevenly distributed across regions and subpopulations. Specifically, women, older people and those who live in the central/western and rural areas are more likely to be depressed. We also find significant socioeconomic gradients in mental health: higher education and income levels are associated with lower likelihood of depression, especially among the lower socioeconomic groups. Our results indicate the urgent need for depression prevention and treatment in China (particularly in the economically less developed regions) through the expansion of primary mental health care resources and a reduction of socioeconomic inequalities.

As the world has moved toward the era of non-communicable diseases, whether the individuals are in a capable position to accurately evaluate their own health status has an important implication on disease prevention in particularly and population health outcome in general. In this paper, we address four important questions surrounding the accuracy of health perception: (1) to what extent that individuals can make an accurate evaluation on their own health status; (2) what are the major factors influencing health misperception if any; (3) what are the causal directions between health behavior and health perception; and (4) whether individuals can learn and update their self-evaluation on health status over time and whether such learning is productive in that it mitigates the health misperception. Specifically, we use a longitudinal data set obtained from Taiwan that covers six waves of survey over about twenty-year period to compare the ex ante subjective perception on health and the ex post mortality hazards. Our results suggest that over one third of the survey respondents are not performing well in the evaluation of their own health status. We also find that smokers are more likely to have an optimistic bias on their own health assessment as compared to nonsmokers. After controlling for the simultaneous causality problem, we find a causal effect of individuals' misperceptions on continuing smoking, but not vice versa. In addition, our results show that individuals update their subjective perception on health over time through the learning from personal health shocks and the provision of public information on smoking hazards. Although the learning process tends to be overshooting among smokers, it is beneficial to mitigate the optimistic bias. We also find the evidence that personal health shock has a stronger impact on updating behavior than public information, indicating that personal experience is a more effective channel through which to correct the bias in health perception, compared to the provision of public information, such as anti-smoking campaign.

To assess the characteristics and incidence of medical litigation in China and the potential usefulness of the records of such litigation as an indicator of health-care quality.We investigated 13 620 cases of medical malpractice litigation that ended between 2010 and 2015 and were reported to China's Supreme Court. We categorized each case according to location of the court, the year the litigation ended, the medical specialization involved, the severity of the reported injury, the type of allegation raised by the plaintiff - including any alleged shortcomings in the health care received - and the outcome of the litigation.The annual incidence of medical malpractice litigation increased from 75 in 2010 to 6947 in 2014. Most cases related to general surgery (1350 litigations), internal medicine (3500 litigations), obstetrics and gynaecology (1251 litigations) and orthopaedics (1283 litigations). Most of the reported injuries were either minor (1358 injuries) or fatal (4111 deaths). The most frequent allegation was of lack of consent or notification (1356 litigations), followed by misdiagnosis (1172 litigations), delay in treatment (1145 litigations) and alteration or forgery of medical records (975 litigations). Of the 11 014 plaintiffs with known litigation outcomes, 7482 (67.9%) received monetary compensation.Over our study period, the incidence of litigation over potential medical malpractice increased in China. As many of the cases related to alleged inadequacies in the quality of health care, records of medical malpractice litigation in China may be worth exploring as an indicator of health-care quality.Évaluer les caractéristiques et l'incidence des litiges médicaux en Chine et l'utilité potentielle des données disponibles sur ces litiges en tant qu'indicateurs de la qualité des soins de santé.Nous avons étudié 13 620 actions en justice liées à de mauvaises pratiques médicales, qui se sont terminées entre 2010 et 2015 et ont été portées à la connaissance de la Cour suprême de Chine. Nous avons classé chaque action en justice en fonction de l'emplacement du tribunal saisi, de l'année de résolution du litige, de la spécialité médicale impliquée, de la gravité du préjudice signalé, du type d'allégation de la partie demanderesse (y compris des insuffisances dans les soins dispensés) et de l'issue du litige.L'incidence annuelle des actions en justice liées à de mauvaises pratiques médicales est passée de 75 cas en 2010 à 6 947 en 2014. La plupart de ces affaires étaient liées à la spécialité de chirurgie générale (1 350 litiges), à la médecine interne (3 500 litiges), à la médecine obstétrique et gynécologique (1 251 litiges) et à la médecine orthopédique (1 283 litiges). Dans la majorité des cas, les préjudices signalés ont été mineurs (1 358 blessures mineures) ou fatals (4 111 décès). L'allégation la plus souvent avancée a été une absence de consentement ou d'information (1 356 cas), suivie par une erreur de diagnostic (1 172 cas), un retard dans la mise en place du traitement (1 145 cas) et l'altération ou la falsification des dossiers médicaux (975 cas). Sur les 11 014 parties demanderesses impliquées dans les actions en justice dont nous connaissons l'issue, 7 482 (67,9%) ont perçu une indemnisation financière.Sur la période que nous avons étudiée, l'incidence des actions en justice liées à de potentielles mauvaises pratiques médicales a augmenté en Chine. Étant donné que de nombreuses affaires portent sur des inadéquations potentielles de la qualité des soins de santé, les données disponibles sur les actions en justice liées aux mauvaises pratiques médicales en Chine pourraient éventuellement être exploitées en tant qu'indicateurs de la qualité des soins de santé.Evaluar las características y la incidencia de litigios médicos en China y la posible utilidad de los registros de dichos litigios como un indicador de la calidad de la atención sanitaria.Se investigaron 13 620 casos de litigios por negligencias médicas que acabaron entre 2010 y 2015 y se enviaron al Tribunal Supremo de China. Cada caso se categorizó según la ubicación del tribunal, el año de finalización del litigio, la especialidad médica implicada, la gravedad del daño denunciado, el tipo de denuncia planteada por el demandante (incluida cualquier deficiencia de la atención sanitaria recibida) y el resultado del litigio.La incidencia anual de los litigios por negligencias médicas aumentó de 75 en 2010 a 6 947 en 2014. La mayoría de los casos estaban relacionados con cirugía general (1 350 litigios), medicina interna (3 500 litigios), obstetricia y ginecología (1 251 litigios) y ortopedia (1 283 litigios). La mayoría de los daños denunciados fueron o menores (1 358 daños) o mortales (4 111 mortales). La denuncia más frecuente fue la ausencia de consentimiento o notificación (1 356 litigios), seguida del diagnóstico equivocado (1 172 litigios), el retraso del tratamiento (1 145 litigios) y la alteración o falsificación de registros médicos (975 litigios). De los 11 014 demandantes con resultados de litigación conocidos, 7 482 (67,9%) recibieron una compensación económica.Durante el periodo de estudio, la incidencia de los litigios por posibles negligencias médicas aumentó en China. Dado que muchos de los casos estaban relacionados con la denuncia de deficiencias en la calidad de la atención sanitaria, puede ser necesaria una exploración de los registros de litigios por negligencias médicas en China a modo de indicador de la calidad de la atención sanitaria.تقييم خصائص الدعاوى القضائية للحالات الطبية في الصين ومدى تأثيرها بالإضافة إلى الفوائد المحتملة لسجلات مثل تلك الدعاوى القضائية كمؤشر لجودة الرعاية الصحية.قمنا بالتحري عن 13,620 حالة من حالات الدعاوى القضائية المتعلقة بالإهمال الطبي التي انتهت في الفترة بين 2010 و2015 وتم إبلاغ المحكمة العليا الصينية بشأنها. كما قمنا بتصنيف كل حالة وفقًا لموقع المحكمة، وتاريخ انتهاء الدعوى القضائية، والتخصص الطبي المعني، وشدة الإصابة المبلغ عنها، وموضوع الدعوى الذي أثاره المدعي – بما في ذلك أي قصور مزعوم في الرعاية الصحية المقدمة – ونتيجة الدعوى القضائية.ارتفع المعدل السنوي للدعاوى القضائية المتعلقة بالإهمال الطبي من 75 حالة في عام 2010 إلى 6947 في عام 2014. وكانت أغلب الحالات تتعلق بالجراحة العامة (1350 دعوى قضائية)، والطب الباطني (3500 دعوى قضائية)، وأمراض النساء والتوليد (1251 دعوى قضائية) وطب العظام (1283 دعوى قضائية). كما كانت أغلب الإصابات المبلغ عنها إما طفيفة (1358 إصابة) أو قاتلة (4111 حالة وفاة). وكانت الدعاوى القضائية الأكثر شيوعًا تتعلق بعدم موافقة المريض أو إبلاغه (1356 دعوى قضائية)، يتبعها التشخيص الخاطئ (1172 دعوى قضائية)، والتأخير في العلاج (1145 دعوى قضائية)، وتغيير السجلات الطبية أو تزويرها (975 دعوى قضائية). من بين 11,014 مدعيًا من أصحاب الدعاوى القضائية المفصول فيها، حصل 7482 (67.9‏%) منهم على تعويض مالي.على مدى فترة الدراسة، ارتفع معدل الدعاوى القضائية في الصين فيما يتعلق بالإهمال الطبي وارد الحدوث. ونظرًا لأن العديد من الحالات تتعلق بأوجه القصور المزعومة في جودة الرعاية الصحية، فقد تكون سجلات الدعاوى القضائية المتعلقة بالإهمال الطبي في الصين جديرة بالاستكشاف باعتبارها مؤشرًا على جودة الرعاية الصحية.旨在评估中国医疗诉讼的特征和发生率以及使用此类诉讼的记录作为医疗护理质量指标的潜在作用。.我们调查了在 2010 至 2015 年间结案并呈报给中国最高法院的 13 620 件医疗事故诉讼案例。 我们根据法院所在地、诉讼结案年份、涉及的医疗规范、呈报损害的严重程度、原告提起的指控类型（包括接受的医疗护理中被指控的任何不足）以及诉讼结果对各案件进行了分类。.医疗事故诉讼的年发生率由 2010 的 75 例增加到 2014 年的 6947 例。大多数案例与普通外科（1350 例）、内科（3500 例）、产科及妇科（1251 例）以及骨科（1283 例）有关。 大多数呈报损害的程度为轻微（1358 件）或致命（4111 件）。 最常见的指控是未征得同意或通知（1356 例），其次是误诊（1172 例）、延误治疗（1145 例）以及医疗记录变更或造假（975 例）。 在已知诉讼结果的 11 014 名原告当中，7482 (67.9%) 人获得了金钱赔偿。.在研究期间，中国潜在医疗事故诉讼的发生率有所增加。 由于许多案例均与指控医疗护理质量不足有关，因此，将中国的医疗事故诉讼记录作为一项医疗护理质量指标进行探究可能很有价值。.Дать оценку характерным особенностям и частоте инициирования судебных разбирательств по медицинским делам в Китае и потенциальной применимости записей о таких судебных разбирательствах в качестве показателя качества медико-санитарного обслуживания.Авторы изучили 13 620 случаев судебных разбирательств по делам о недобросовестной медицинской практике, которые завершились в период между 2010 г. и 2015 г. и о которых было сообщено в Верховный суд Китая. Каждый случай был классифицирован в зависимости от местоположения суда, года завершения судебного разбирательства, вовлеченной медицинской специальности, степени тяжести заявленной травмы, типа выдвинутых истцом обвинений, включающих какие-либо обвинения в неполноценности оказываемых медико-санитарных услуг, и результата судебного разбирательства.Годовая частота инициирования судебных разбирательств по делам о недобросовестной медицинской практике увеличилась с 75 разбирательств в 2010 году до 6947 в 2014 году. Большинство случаев было связано с разделом общей хирургии (1350 разбирательств), внутренних болезней (3500 разбирательств), акушерства и гинекологии (1251 разбирательство) и ортопедии (1283 разбирательства). Большинство заявленных травм были легкой степени тяжести (1358 травм) или смертельными (4111 смертей). Наиболее часто выдвигались обвинения в отсутствии согласия или официального уведомления (1356 разбирательств), постановке неправильного диагноза (1172 разбирательства), несвоевременном предоставлении лечения (1145 разбирательств) и изменении или подделке медицинских записей (975 разбирательств). Из 11 014 истцов, участвовавших в судебных разбирательствах с известными результатами, 7482 (67,9%) получили денежную компенсацию.В течение исследуемого периода частота инициирования судебных разбирательств по делам о возможной недобросовестной медицинской практике в Китае возросла. Поскольку многие судебные разбирательства были связаны с вменяемой в вину неудовлетворительностью медико-санитарного обслуживания, может быть целесообразным исследовать возможность применения записей о судебных разбирательствах по делам о недобросовестной медицинской практике в Китае в качестве показателя качества медицинской помощи.

The new round of health care reforms in China achieved significant initial results. New and emerging problems coinciding with the deepening of the reforms, however, require further institutional changes to strengthen the competition mechanism and promote public hospital efficiency. This paper provides a conceptual framework and preliminary assessment of public hospital competition in China. Specifically, we distinguish between two closely related concepts – competition and privatization, and identify several critical conditions under which hospital competition can be used as a policy instrument to improve health care delivery in China. We also investigate the current performance and identify several unintended consequences of public hospital competition – mainly, medical arms race, drug over-prescription and the erosion of a trusting relationship between patients and physicians. Finally, we discuss the policy options for enhancing the internal competition in China’s hospital market, and conclude that public investment on information provision is key to reaping the positive outcomes of pro-competition policies.

Background Medical education is critical and the first step to foster the competence of a physician. Unlike developed countries, China has been adopting a system of multi-tiered medical education to training physicians, which is featured by the provision of an alternative lower level of medical practitioners, or known as a feldsher system since the 1950s. This study aimed to illustrate the impact of multi-tiered medical education on both the equity in the delivery of health care services and the efficiency of the health care market. Methods Based on both theoretical reasoning and empirical analysis, this paper documented evidence upon those impacts of the medical education system. Results First, the geographic distribution of physicians in China is not uniform across physicians with different educational training. Second, we also find the evidence that high-educated doctors are more likely to be hired by larger hospitals, which in turn add the fuel to foster the hospital-center health care system in China as patients choose large hospitals to chase good doctors. Third, through the channels of adverse selection and moral hazard, the heterogeneity in medical education also imposes costs to the health care market in China. Discussion Overall, the three-tiered medical education system in China is a standard policy trade-off between quantity and quality in training health care professionals. On the one hand, China gains the benefit of increasing the supply of health care professionals at lower costs. On the other hand, China pays the price for keeping a multi-tiered medical education in terms of increasing inequality and efficiency loss in the health care sector. Finally, we discuss the potential policy options for China to mitigate the negative impact of keeping a multi-tiered medical education on the performance of health care market.

Due to its fast economic growth and lifestyle changes, China is experiencing a rapid epidemiological transition from communicable to noncommunicable diseases (NCDs). Mental disorder such as depression is an important yet often neglected NCD and is becoming a growing cause of disability, suicides, and disease burden. This paper provides the first nationally representative estimate of the medical cost attributable to depression and depressive symptoms among the adult population in China. On the basis of the 2012 China Family Panel Studies survey, our results indicate that these mental health conditions have significant impacts on the individual medical expenditure, and they jointly contribute to 14.7% of total personal expected medical spending in China, with depression and depressive symptoms accounting for 6.9% and 7.8%, respectively. Given that patients with mental illness face multiple psychological and institutional barriers in seeking appropriate treatment, the high depression-induced medical costs may be primarily driven by the cost-shifting effect from mental health care to general health care, as mental disorders often coexist with other NCDs such as diabetes and hypertension. As an implication, our study calls for an urgent reform of China's mental health and insurance systems to remove the policy-induced obstacles for the access to mental health care resources.

The geographic maldistribution of health care resources is one of the most persistent characteristics of health care systems around the world. Based on China’s provincial-level panel data in 1949-2010, this paper empirically investigates whether the geographic distribution of health care resources is convergent or divergent in the long run and whether the rapid economic growth contributes to reducing the regional disparity in health care resources in China. Using a dynamic convergence model that controls unobserved provincial heterogeneity and spatial dependence, the empirical results provide much support for β-convergence in that the provinces with lower initial values of health care resources, including the densities of physicians and hospital beds, are seen to grow faster and to catch up with the provinces with higher initial stocks. In addition, we find that GDP per capita has a significant and non-linear impact on the convergence rate of health care resources, providing support for a Kuznets curve in China’s health sector. That is, the inequality in the distribution of health care resources follows an inverted “U” shape as income increases over time. An important implication of our study is that economic growth per se provides a built-in stabilizer to mitigate health inequality through the convergence of health care resources across regions in the long run.

Promoting competition between brand-name and generic drugs has long been recognized as an approach adopted to save on health care costs. However, there are substantial variations in the extent of the generic competition across countries. This study empirically estimates the determinants of the generic market share in Taiwan, where medical providers are in a position to profit directly from the sale of prescription drugs. Our empirical results point out that the profit-seeking behavior of medical providers plays an important and dominant role behind generic competition in the pharmaceutical market. As a result, there is a positive association between the generic-to-brand price ratio and the generic market share in Taiwan’s pharmaceutical market, which contrasts with the conventional empirical finding that the relationship between the generic-to-brand price ratio and generic market share is negative. An important implication of our study is that the profit-seeking behavior of medical providers undermines the policy effectiveness of using generic competition as the cost containment strategy in the health care market.

This paper empirically investigates the relationship between the health care expenditure of end-of-life patients and hospital characteristics in Taiwan where (i) hospitals of different ownership differ in their financial incentives; (ii) patients are free to choose their providers; and (iii) health care services are paid for by a single public payer on a fee-for-services basis with a global budget cap. Utilizing insurance claims for 11 863 individuals who died during 2005–2007, we trace their hospital expenditures over the last 24 months of their lives. We find that end-of-life patients who are treated by private hospitals in general are associated with higher inpatient expenditures than those treated by public hospitals, while there is no significant difference in days of hospital stay. This finding is consistent with the difference in financial incentives between public and private hospitals in Taiwan. Nevertheless, we also find that the public–private differences vary across accreditation levels. Copyright © 2013 John Wiley & Sons, Ltd.

This paper estimates the labor supply functions for health care professionals in China using Census-based data in 2005. The rapid economic growth and population aging in China led to a substantial increase in the demand for health care services and the derived demand for health care professionals in recent years. However, the increase in the supply of doctors and nurses lags behind the growth in demand, raising the question of whether the excess demand should be met by expanding the health care manpower or by inducing the existing personnel to work more hours through wage increase. Our findings indicate that wage rate adjustment has a significant impact on the length of working time among the self-employed practitioners (with an estimated short-run elasticity of 0.575), while the labor supply of hospital employees is inelastic due to their fixed payment scheme. Instead, hours worked in the employee group are related to non-wage factors such as asset holdings and the hospital ownership type. An important policy implication of our study is that adjustments of labor compensation methods and hospital ownership structure are potentially effective approaches for coping with the excess demand for health care professionals and improving the quality of health care in China.

A considerable number of studies have sought to examine the determinants of elderly health. Nevertheless, few of them incorporate a life-course perspective to analyze the dynamics of transition for both health conditions and their predictors. We utilize a nationally representative longitudinal data set of 4007 Taiwanese aged 60 or over and employ discrete-time duration models to investigate the association between annual mortality and its potential risk factors over a nearly twenty-year period (1989–2007). We place particular emphasis on the inherently dynamic character of Grossman's model, and specifically on how public and private health investment shape the personal health outcome over time. Our results support the hypothesis that depreciation rates depend on personal characteristics. In addition, we find that the dynamic profiles of both public and private health investment significantly influence the elderly mortality. An important implication of our study is that implementing universal health insurance and tobacco control programs are effective channels through which the government improves personal health.

This article investigates the determinants of the prices of pharmaceuticals and their impact on the demand for prescription drugs in the context of Taiwan's pharmaceutical market where medical providers earn profit directly from prescribing and dispensing drugs. Based on product-level data, we find evidence that the profit-seeking behavior of the medical providers in the prescription drug market transfers the force of competition from the unregulated wholesale market to the regulated retail market and hence market competition still plays an important role in the determination of the regulated price. We also find that the profit-seeking behavior plays a similar role to advertising in that it increases the brand loyalty and hence lowers price elasticity. An important implication of our study is that the institutional features in the pharmaceutical market matter in shaping the nature of pharmaceutical competition and the responsiveness of pharmaceutical consumption with respect to changes in price.

Objective To provide an overview of the use of biologics in Taiwan, including the access to new biologics, the impact of this access on the growth of health-care expenditure, and the utilization patterns. Methods We first conducted a market-level analysis to investigate the availability of global biologics in Taiwan as well as the growth and concentration of aggregate spending on biologics. We then conducted a patient-level analysis to investigate the costs and utilization patterns for selected new biologics. Results We found that the concentration index is such that the 20 leading biologics in Taiwan account for more than 90% of the total spending on biologics. In our patient-level study on four biologics, the annual cost of treatment per patient ranged from NT$100,000 to NT$400,000. The prevalence rate of the user was between 6.5 and 37.2 per 100,000 of population. The treatment costs were inversely related to the prevalence rate of users. We also found that physicians in larger and public hospitals were more likely to prescribe new biologics to their patients compared with their counterparts practicing in smaller and private hospitals. In addition, we found that physicians were more likely to prescribe biologics to patients with more severe diseases and higher comorbidities. Conclusions We conclude that public spending on biologics in Taiwan is highly targeted toward about 20 products with higher annual expenditures and growth rates and that the utilization of these biologics is targeted at a small number of patients. In addition, the access to these costly biologics is not uniform among patients in a country with universal coverage for prescription drugs.

This paper tests the hypothesis of whether or not financial incentives affect a physician's prescription decision on the choice of generic versus brand-name drugs within a system in which physicians prescribe and dispense drugs. By using data obtained from Taiwan and focusing on diabetic patients, our empirical results provide several consistent findings in support of the hypothesis that profit incentives do affect the physician's prescribing decision, suggesting that physicians act as imperfect agents. An important implication of our findings is that rent seeking for profit margin between the reimbursement and the acquisition price instead of reducing costs is the major driving force behind generic substitution. As a result, the providers instead of the payers or consumers reap the financial benefits of generic substitution.

Goals To estimate the direct medical costs involved in the treatment of chronic hepatitis B (CHB) patients in Taiwan from a public resource perspective. Background Taiwan is a hepatitis B virus (HBV)-hyperendemic area that has considerable expertise in conducting hepatitis studies. To date, however, these studies have focused on basic science or clinical research associated with hepatitis B, and little attention has been paid to the social and monetary consequences of treatment and vaccination programs in Taiwan. Study Total per-patient annual costs were calculated for each of five disease states associated with hepatitis B infection. Method Claims data of National Health Insurance in 2000 were used to identify patients with CHB and to estimate breakdown costs of their medical usage. Medical costs included hospital admissions and outpatient visits, with fees being reimbursed by the National Health Insurance system and patient co-payments. Results The average total costs per patient for each disease state in the year 2000 were as follows: CHB without cirrhosis, 4905 new Taiwan dollars (NT dollars); compensated cirrhosis, NT 6,574 dollars; decompensated cirrhosis, NT 36,621 dollars; hepatocellular carcinoma, NT 95,741 dollars; and liver transplantation, NT 199,725 dollars. These values indicate that, as the disease progresses, the cost of medical care increases significantly. Conclusion The total inpatient cost for CHB infection in Taiwan for the year 2000 was almost NT 800 million dollars, which accounts for approximately 1% of the total inpatient expenditure. CHB is a significant burden on the Taiwanese healthcare system that could be limited by slowing or reversing liver disease progression.

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

I. INTRODUCTION The health hazards of cigarette smoking have been widely recognized since the 1960s. This recognition has caused cigarette consumption in most developed countries to fall steadily over the past 30 years. The declining demand for cigarettes in developed countries has forced multinational cigarette manufacturers to turn to other markets. U.S. trade policy has played an important role in these marketing efforts. In the name of free trade and under the threat of retaliatory trade sanctions (Section 301 of the 1974 Trade Act), Japan, Taiwan, South Korea, and Thailand all have opened their doors to American cigarettes during the past decade (Chaloupka and Laixuthai, 1996). Given the substantial health consequences of smoking, this open-door policy has created several concerns. The first concern is whether cigarette imports increase overall cigarette consumption. Based on annual data of 10 Asian countries, Chaloupka and Laixuthai (1996) found that per capita cigarette consumption increased an average of 10% in 1991 among the four Asian countries that opened their doors to imports. However, few if any empirical studies have investigated the impact of cigarette imports in individual countries. Given the evidence that imports have resulted in significant increases in cigarette smoking on average, another question is whether government policies to discourage smoking are effective. Around the world, governments have used a number of alternatives to try to control cigarette smoking (Warner, 1990). Developed countries, e.g., have long used cigarette taxation to reduce consumption. The effectiveness of taxation, which depends on the price elasticity of cigarette demand, has been widely recognized in empirical literature (Chaloupka and Warner, 1999). However, literature on price elasticities for cigarette demand is largely based on data from developed countries. Whether taxation would be as effective in newly industrialized or less developed countries remains unclear. In addition to increasing cigarette excise taxes, governments regulate the sale of cigarettes, particularly by requiring warning labels on cigarette packs and in advertising. Additionally, they provide information directly on the adverse effects of smoking. Following these approaches, Taiwan began requiring warning labels on cigarette packaging and in advertising after it opened the market to cigarette imports in 1987.(1) In response to the marketing campaigns of foreign tobacco manufacturers, the Taiwanese government, along with many private organizations, has sponsored antismoking media campaigns. However, it has not been well understood until now whether these antismoking policies have a significant impact on overall cigarette consumption in Taiwan. The purpose of this paper is to provide empirical evidence of the demand for cigarettes, using time-series cigarette sales data for Taiwan for the years 1966-1995. The focal points of this paper are (1) to estimate the price elasticity of cigarette demand in Taiwan, (2) to estimate the impact of opening the cigarette market, (3) to evaluate the impact of antismoking policies on cigarette consumption, and (4) to investigate whether imported and domestic cigarettes are substitutes. Section II contains the empirical framework for our analysis. Section III describes the data and the variables. Section IV analyzes the empirical results. Further discussion and conclusions follow in section V. II. EMPIRICAL FRAMEWORK In the standard economic literature, the demand function for goods is derived from the utility-maximizing model. Under this framework, consumers' demand for goods depends on their income as well as the price of the good. As mentioned above, cigarette smoking is a major health hazard. Since the early 1960s, governments and nonprofit agencies in developed countries have mounted extensive media campaigns to educate the public about the effects of smoking. …

This study contributes to the understanding of the decision to quit smoking by taking into account the learning of new risk information. The specific hypothesis tested is that smokers learn new risk information and hence create an incentive to quit from their own experience. Probit models are estimated for the decision to quit smoking based on longitudinal data obtained from Taiwan. It is shown that health risk, measured by the observed change in health status over the period between two surveys, has a relatively substantial positive effect on the probability of quitting smoking. In addition, the results indicate that schooling has a significantly positive effect on the probability of quitting. These findings are consistent with the predictions of a Bayesian learning framework and suggest that the risk information obtained from individual experience, which is the sole source of information available to smokers in most developing countries, plays the same role that public information does.

As the population ages, the number of people living with Alzheimer's disease (AD) has been increasing over time. Between 1999 and 2006, four new AD drugs were approved for insurance coverage in Taiwan.We investigate the heterogeneous influences of adopting these new drugs on healthcare expenditures. We also evaluate whether the adoption of pharmaceutical innovation creates any "offsetting" effect in the sense that an increase in one component of the health care costs is offset by the decrease in the other components of health care costs.AD patients are defined in this study as those who are diagnosed with ICD-9-CM code 331.0. Based on longitudinal insurance claims data, we identify 1,088 AD patients whose first diagnosis occurred between 1997 and 2007. After excluding the period before each patient's AD diagnosis, 4,629 patient-year observations are found to constitute an unbalanced panel data set used in this study. We employ the correlated-random-effects quantile regression (CREQR) method to explicitly control for the unobserved heterogeneity and to consider the heterogeneous influences of adopting new drugs on different points of the conditional distribution function of health expenditures.Our empirical findings are consistent with previous evidence that the adoption of pharmaceutical innovation is costly. To be specific, the expenditure-increasing effect is mainly reflected by the increase in expenditure on drugs in the outpatient sector. In addition, we find evidence of a significant offsetting effect in the sense that new-drug users tend to make less use of inpatient services. As a result, the net effect of adopting pharmaceutical innovation is heterogeneous across AD patients: the use of new drugs is expenditure-increasing for patients whose health care costs are distributed below the 75th quantile; by contrast, the use of new drugs is expenditure-neutral above the 75th quantile, that is, the increase in the drug costs is almost completely offset by the decrease in the inpatient expenditure.The adoption of pharmaceutical innovation for treating AD is associated with a significant offsetting effect for higher cost patients. Our results also show that the CREQR method supplements the traditional ordinary least squares (OLS) method to provide interesting information beyond the conditional mean of the distribution. In our study, CREQR estimates suggest that the marginal impact of adopting pharmaceutical innovation on health care costs is heterogeneous across AD patients.Given that the impact of adopting new AD drugs on health care costs is not uniform among patients, current payment regulations that impose simple clinical criteria to decide the eligibility of using new drugs, that is, a policy that adopts one size to fit for all, may become an access barrier to realizing the potential benefits of pharmaceutical innovation.Another potential source of the offsetting effect is that adopting new AD drugs may be beneficial to the reduction in the cost of long-term care. This is an important avenue for future research.

This article uses survey data obtained from Taiwan to investigate consumer perceptions of smoking risks and the linkage of these perceptions to smoking behavior. In our analysis, two equations are estimated: (1) risk perception, and (2) smoking probability. The simultaneity problem in estimating risk perception and smoking probability is also considered. Overall, the results indicate that the risk perceptions of cigarette smoking are substantially overestimated and that these risk perceptions in turn, have a significantly negative effect on smoking probability. Also, the results suggest that the determinants of risk perception are consistent with the predictions of a Bayesian learning framework.

This paper empirically investigates the relationship between the health care expenditure of end-of-life patients and hospital characteristics in Taiwan where (i) hospitals of different ownership differ in their financial incentives; (ii) patients are free to choose their providers; and (iii) health care services are paid for by a single public payer on a fee-for-services basis with a global budget cap. Utilizing insurance claims for 11 863 individuals who died during 2005-2007, we trace their hospital expenditures over the last 24 months of their lives. We find that end-of-life patients who are treated by private hospitals in general are associated with higher inpatient expenditures than those treated by public hospitals, while there is no significant difference in days of hospital stay. This finding is consistent with the difference in financial incentives between public and private hospitals in Taiwan. Nevertheless, we also find that the public-private differences vary across accreditation levels.

This paper empirically investigates the relationship between the health care expenditure of end-of-life patients and hospital characteristics in Taiwan where (1) hospitals of different ownership differ in their financial incentives; (2) patients are free to choose their providers; and (3) health care services are paid for by a single public payer on a fee-for-services basis with a global budget cap. Utilizing insurance claims for 11,863 individuals who died during 2005-2007, we trace their hospital expenditures over the last 24 months of their lives. We find that end-of-life patients who are treated by private hospitals in general are associated with higher inpatient expenditures than those treated by public hospitals, while there is no significant difference in days of hospital stay. This finding is consistent with the difference in financial incentives between public and private hospitals in Taiwan. Nevertheless, we also find that the public-private differences vary across accreditation levels.

Although the technological change in medicine has been widely recognized as the major driver of rising healthcare costs, there is very little research that directly estimates this effect. This paper uses both a single-equation and a simultaneous equations approach to empirically investigate the interactive relationship between technological innovation and the growth of health expenditure in the context of the pharmaceutical market in Taiwan. Based on observing 182 therapeutic groups between 1997 and 2006, we find evidence to support the argument that technological innovation and health expenditure are simultaneously determined as technological innovation and the growth of health expenditure are endogenous rather than exogenous. Specifically, we find that therapeutic groups associated with higher pharmaceutical expenditure are likely to attract more new products to the market. Meanwhile, therapeutic groups with more new products are associated with higher pharmaceutical expenditures. An important implication of the paper is that the cost containment policy will not only affect the growth of health expenditure, but will also affect the progress of technological innovation in the health sector.

In recent years, a substantial amount of technological progress in medicine has taken the form of pharmaceutical innovation. This paper uses the launch of a series of new drugs designed for treating type 2 diabetic patients as an example to investigate the determinants that affect the diffusion of new medical technology. Based on prescription-level data that are obtained from the national health insurance program in Taiwan, we find that the probability of prescribing new drugs declines as more competing products enter the pharmaceutical market. Meanwhile, physicians are less likely to prescribe new drugs to treat their patients as the provider market becomes less concentrated. These results suggest that the providers' incentives for cost reduction dominate incentives for quality improvement as markets become more competitive and hence an increase in market competition is associated with a decrease in the diffusion of new drugs. As a result, access to new drugs is not uniform among patients in a country with universal coverage for prescription drugs. An important implication of our study is that profit-seeking behavior among providers can become an access barrier to new medical technology.

Objectives To investigate the impact of adopting pharmaceutical innovations on the growth of pharmaceutical expenditures, focusing specifically on Taiwan's experience. Methods We first provide a descriptive analysis of cost impacts of introducing new drugs into Taiwan's national formulary using data from Taiwan. We then use a statistical method to decompose the growth of pharmaceutical expenditures during 1997–2001 into three components: 1) treatment expansion; 2) treatment substitution; and 3) price effect. By incorporating the estimated benefit from prior studies, we calculate the incremental cost-effectiveness ratio for new drugs as a whole. Results We find that from 1997 to 2001 public expenditures on pharmaceuticals grew 57%. The primary drivers of this expenditure growth were treatment expansion and treatment substitution. Prices declined by 18%. Cost per life-year gained resulting from introduction of new drugs was US$1053 (in 2003 dollars) from the perspective of the public payer and US$1824 from the perspective of society as a whole. Conclusions Overall, our analysis provides evidence with previous studies that the drug reimbursement price is not the primary driver of increased spending. Rather the introduction of new drugs into the formulary leading to expansion of treatment, expansion and substitution of the new drugs for existing drugs may increase spending. Although the adoption of pharmaceutical innovation is costly, the estimated benefit of adopting pharmaceutical innovation generally far exceeds the cost, indicating that the adoption of pharmaceutical innovation is on the whole worthwhile.

The pharmaceutical industry worldwide is a rapidly burgeoning industry contributing to growth of gross domestic product and employment. Technological change in this field has been very rapid, with many new products being introduced. For this reason in part, health care budgets throughout the world have increased dramatically, eliciting growing pressures for cost containment. This book explores four important issues in pharmaceutical innovations: (1) the industry structure of pharmaceutical innovation; (2) incentives for correcting market failures in allocating resources for research and development; (3) competition and marketing; and (4) public evaluation of the benefits and costs of innovation. The lessons are applicable to countries all over the world, at all levels of economic development. By discussing existing evidence this book proposes incentive arrangements to accomplish social objectives.

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.

This paper uses a measure of health knowledge of smoking hazards to investigate the determinants of health knowledge and its effect on smoking behavior. In our analysis, two equations are estimated: smoking participation and health knowledge. The simultaneity problem in estimating smoking behavior and health knowledge is also considered. Overall, the estimated results suggest that anti-smoking campaigns have a significantly positive effect on the public's health knowledge, and this health knowledge in turn, has a significantly negative effect on smoking participation. The health knowledge elasticities of smoking participation are −0.48 and −0.56 for all adults and adult males, respectively.

South Korea, Singapore and Taiwan are well known as export-oriented developmental states which for decades employed industrial policy to target particular industries for government support. In the past fifteen years, these three countries all identified the biopharmaceutical industry as a strategic sector. This article explores, through economic analysis, the rationale for this decision and the strategies chosen for linking into the global bio-economy with the objective of catching up in biopharmaceuticals. The paper identifies three comparative advantages enjoyed by these countries in the biopharma sector: (1) public investments in basic research; (2) private investments in phase 1 clinical trials; and (3) a potentially significant contract research industry managing latter-stage clinical trials. Governments employ a range of industrial policies, consistent with these comparative advantages, to promote the biopharmaceutical industry, including public investment in biomedical hubs, research funding and research and development (R&D) tax credits. We argue that the most important feature of the biopharmaceutical industry in these countries is the dominant role of the public sector. That these countries have made progress in innovative capabilities is illustrated by input measures such as R&D expenditure as share of gross domestic product, number of patents granted and clinical trials, and volume of foreign direct investment. In contrast, output indicators such as approval of new chemical entities suggest that the process of catching up has only just commenced. Pharmaceutical innovation is at the stage of mainly generating inputs to integrated processes controlled by the globally incumbent firms.

This paper uses a direct measure of information to empirically investigate the determinants of consumer health information and the linkage of the information to demand for preventive care. In our analysis, two equations are estimated: (1) health information and (2) demand for preventive care, which includes health information as an endogenous explanatory variable. Overall, the results show that more and better health information increases the probability that the elderly will use preventive care. This result, in combination with the finding that health information is not uniform among the elderly, suggests that poor information can become an access barrier to preventive care.