Previous research has looked only at the impact of national health insurance (NHI) financing burdens on income distribution. In this study, health benefits and the welfare gain from risk reduction are included in the distributional effect framework. Taiwan's NHI system is examined in comparison to the pre-NHI system in terms of income distribution. A microsimulation model, based on the 1994 Family Income and Expenditure Survey in Taiwan Area (conducted by Executive Yuan), is used to allocate financing burdens on households and, at the same time, simulate the expected welfare gains derived from health care and risk reduction.;By only looking at financing burdens, NHI increases income inequality by 1.2% in terms of Atkinson's index. By taking its funding and benefits into account, NHI reduces income inequality by 4.3% of Atkinson's index by providing both universal insurance coverage and a uniform benefit package, which is allocated on the basis of presumed medical need. The progressivity of the distribution of health benefits offsets the regressivity of the distribution of financing burdens. However, NHI also creates greater welfare loss from moral hazard.;Under the income definition that takes into account (1) health costs, (2) health benefits, and (3) the welfare gain from risk reduction, based on the assumption of constant absolute risk aversion, NHI decreases income inequality by 6.5% of Atkinson's index. Under the same income definition but based on the assumption of constant relative risk aversion, NHI decreases income inequality by 12.5% of Atkinson's index.;The results show that although the distribution of financing burdens under NHI is a little more regressive than that under pre-NHI, the progressive distribution of health benefits and the even more progressive distribution of welfare gain from risk reduction, resulting from universal insurance coverage and a comprehensive and uniform benefit package, not only offsets the regressivity of financing burdens but also creates vast net social welfare gains, causing the low-income to be better off without asking the high-income to sacrifice much of their welfare.
展开▼