There are three major findings of this study that are worthy to be discussed. Firstly, the implementation of national health insurance in Taiwan has been associated with a noticeable improvement of the distribution of all three types of key health care providers. In Figure 1, the Gini coefficients of western medicine physician show relative little improvement before the implementation of NHI, but declined after the introduction of NHI. The significance of this change is further confirmed by the statistical tests shown in Table 2. The findings in this study are consistent with those from other studies[1, 25].
Two factors are most likely to explain why NHI in Taiwan had created a more even geographic distribution of western medicine physicians. One factor is the universal coverage nature of NHI. It has increased and equalized medical care affordability or purchasing power of the patients in Taiwan. Before the advent of NHI, people with adequate health care purchasing power were more likely living in the metropolitan or urban areas. This in turn might have attracted more health care providers to locate in those areas. After the installation of national health insurance with a coverage rate of 96%, NHI provides almost all patients with similar ability to pay for health care services around the country. As a result, effective demand is no longer strongly concentrated in the metropolitan or urban areas. This change may have attracted health care providers to move into previously underserved areas. This phenomenon suggests that, in order to enhance a more even supply of physicians, policy makers may want to increase as well as equalize the purchasing power of the consumers so that the demand-pull effect can enhance or redirect the supply of key health care providers to the needy areas throughout the country.
The other factor is the financial incentives that NHI has provided to physicians, especially for the western medicine physicians. For example, in 1996, NHI fees for physician visits were made 19-33% higher than the Labor Insurance fee schedule under the pre NHI period[9, 29]. Physician fees (all three types of physicians) for providing ambulatory and emergency services were also higher than those of providing inpatient services. For example, in 1996, the reimbursement rate for ambulatory visit increased from NT $245 to $333 per visit after the implementation of NHI, representing 17–34 % higher than the inpatient physician fees. This might have created a strong financial incentive for all three types of physicians to practice in their own clinics rather than in a hospital. This is because under the close-hospital system in Taiwan the hospital-based physicians, who are the employees of the hospital, have to share the reimbursed revenue with the hospital; whereas the clinic-based physicians, who are the owner of the clinic, can receive full incremental reimbursement from NHI’s change in fee scheme. As a result, providers who practice in hospitals have not obtained the same rate increase as the clinic-based providers.
In addition, under the tax codes, 72% of NHI’s reimbursement is tax exempt and the remaining 28% is taxable income, regardless of the location where a physician practices. This tax treatment tends to favour all three types of physicians practicing in non-urban areas where the living and practice costs are generally much lower than those costs in urban areas. Thus, the tax incentive is likely to induce health care providers practice in rural area.
The second major finding is that the extent of equality distribution improvement although varied in magnitudes, the trend is toward closer to one another for the western medicine physicians, dentists, and Chinese medicine physicians as a result of the implementation of the NHI program. The improvement of the distribution of dentists was the highest among the three types of health providers in Taiwan. This was because the mal-distribution of dentists was the most serious among the three before NHI. The Gini coefficients of dentists (see Figure 1) although are still the highest among the three types of physicians, it became close to that of the western medicine physicians after the implementation of NHI. The geographic distribution of Chinese medicine physicians has also improved more than that of the western medicine physicians. This phenomenon could possibly be explained by the theory of resources dependence. This theory maintains that an individual or an organization will seek to develop linkage with other organizations possessing resources that are critical to their survival and development. Dentists and Chinese medicine physicians usually care for less urgent and less fatal patients. They are less dependent on advanced medical equipments and infrequently refer their patients to hospitals. In contrast, western medicine physicians in clinics are able to care for patients with complex or urgent medical conditions by referring them to hospitals Therefore, western medicine physicians are expected to be more dependent on hospitals for their practice, compared to dentists and Chinese medicine physicians. Thus, more western medicine physicians tend to practice in urban areas within hospitals or in their clinics nearby hospitals than their dentists and Chinese medicine physicians counterparts. Another possible explanation is the “spill-over effect”. Toyokawa and Kobayashi found that the increasing supply of dentists in Japan supports the “spill-over” hypothesis, which predicts geographic diffusion of dentists toward less competitive area. In contrast, increasing the number of physicians had resulted in more concentrated geographic distribution of physicians in urban areas.
The third finding is that we found there was a fluctuation in the improvement of distribution of western medicine physicians after NHI. Figure 3 shows that, after 1997 the growth rate of hospital-based physicians was much faster than that of clinic based physicians. One way of interpreting this pattern may be that the mal-distribution of physicians had even more deteriorated after 1997. However, the statistical test results in Table 2 indicate an improvement of physician distribution after NHI, even though the growth of hospital-based physicians seemed faster than that of clinic-based physicians. This means that, the western medicine physicians distributed more evenly while more physicians were working in the hospital. This seemingly contradictory phenomenon suggests there could be an increase in the number of hospitals or hospital beds in under served areas in Taiwan.
In fact, our yearly prefecture-specific data (too much to be presented in this article) indicate that the number of hospitals relocated to under served areas was indeed gradually increasing after NHI, particularly after 1997 to cash in the NHI’s guaranteed reimbursement to the hospitals for outpatient consultations. In other words, hospital-based physicians were increasing after NHI, and more of those physicians had worked at hospitals in under served remote areas after NHI. A more even allocation of hospitals has contributed to a more even distribution of physicians. Therefore, directing more hospitals to open in medically under-served areas and/or increasing beds of existing hospitals in those areas can increase the equalization of the distribution of physicians by attracting more physicians to practice in under-served areas.
This study has several limitations. First, the effects of possible cross substitutions between western medicine and Chinese medicine physicians are not evaluated in this study. Cross substitutions might have affected the distribution of western medicine physicians. However, even if the effect of the substitution factor did occur, it is likely to only strengthen the results of this study. This is because, according to the findings of this study, the Chinese medicine physicians have been more evenly distributed after NHI than the western medicine physicians and dentists. This may give a stronger competition pressure towards western medicine physicians and cause a negative impact on the distribution equality of western medicine physicians. Even so, we still have observed a significant decrease of the distribution inequality of western medicine physician after NHI.
Secondly, analyzing the overall western medicine physician population distribution is only one measurement. This study did not indicate which specialists are more likely to be influenced by an insurance reimbursement scheme or health policy. In fact, after implementing the NHI program, there is also a significant distribution imbalance of medical specialists such as OB/GYN and others. Therefore, when relevant data are available, further research could examine the relationship between geographic distribution of specialized physicians and NHI.