Background: Unequal geographical distribution of medical care resources and insufficient healthcare coverage have been two long-standing problems with Taiwan's public health system. The implementation of National Health Insurance (NHI) attempted to mitigate the inequality in health care use. This study examines the degree to which Taiwan's National Health Insurance (NHI) has reduced out-of-pocket medical expenditures in households in different regions and varying levels of income. Methods: Data used in this study were drawn from the 1994 and 1996 Surveys of Family Income and Expenditure. We pooled the data from 1994 and 1996 and included a year dummy variable (NHI), equal to 1 if the household data came from 1996 in order to assess the impact of NHI on household out-of-pocket medical care expenditures shortly after its implementation in 1995. Results: An individual who was older, female, married, unemployed, better educated, richer, head of a larger family household, or living in the central and eastern areas was more likely to have greater household out-of-pocket medical expenditures. NHI was found to have effectively reduced household out-of-pocket medical expenditures by 23.08%, particularly for more affluent households. With the implementation of NHI, lower and middle income quintiles had smaller decreases in out-of-pocket medical expenditure. NHI was also found to have reduced household out-of-pocket medical expenditures more for households in eastern Taiwan. Conclusion: Although NHI was established to create free medical care for all, further effort is needed to reduce the medical costs for certain disadvantaged groups, particularly the poor and aborigines, if equality is to be achieved.
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