Catastrophic Payment and Fairness in the Contribution to Medical and Long-term Care Cost

Abstract

Cost containment policy is regarded as pivotal in the face of threatened financial sustainability due to aging and low fertility, while the discussion on contribution fairness and protection against household’s catastrophic payment to healthcare service has been left behind. Using the microdata derived from the most recently available microdata of the National Survey of Family Income and Expenditure, we assessed the prevalence of catastrophic payment due to healthcare services expenditure, and contribution fairness according to the household’s ability to pay. Our estimation indicated that the current system effectively protect against catastrophic payment due to medical services covered by the public medical insurance scheme, though the non-ignorable portion of households, especially with low capacity pay and higher long-term care demands faced the catastrophic impact of wider healthcare service expenditures. Fairness in financial contribution was well reserved thanks to the recently improved progressivity in direct tax contribution, though the regressivity in out-of-pocket copayment and social insurance premium payment was strong. The results indicated that the policy discussion on the healthcare financing should consider the potential impact of selective copayment rate rising in older households and stagnated economy due to COVID-19.