Effects of global budgeting on the distribution of dentists and use of dental care in Taiwan

Health Services Research, Dec, 2004 by Ya-Seng A. Hsueh, Shoou-Yih D. Lee, Yu-Tung A. Huang

Cost-containment and equitable access to health services have been longstanding concerns among health policymakers (Carr-Hill 1994; Davis 1991; Smith and Sheldon 2000). As the demand for health care continues to grow and the financial incentives that influence health professionals' choice of practice location remain differentiated geographically (Johnston and Wilkinson 2001 ; Kobayashi and Takaki 1992), the significance of these issues is likely to extend into the foreseeable future. However, because of the rapid rise of health care cost in many countries since the 1970s, cost containment has dominated the agenda of health policy, often at the expense of commitment to ensuring equal access to health services.

Among the variety of cost containment mechanisms that have been experimented, global budgeting has assumed increased popularity and appeared to be effective in arresting the untamed growth of health care expenditures in many Organization for Economic Cooperation and Development (OECD) and Asian countries (Carr-Hill 1994; Chu 1992; Detsky et al. 1990; Detsky, Stacey, and Bombardier 1983; Henke, Munay, and Ade 1994; Lave, Jacobs, and Markel 1992; Redmon and Yakoboski 1995; Wiley 1992). A study by the U.S. General Accounting Office in 1991 estimated that global budgets in certain countries had lowered inflation-adjusted spending on health care services by 9 to 17 percent. Examining the trend of pharmaceutical expenditures in Germany, Ulrich and Wille (1996) found that compared with the reference price system for expenditure control, the introduction of global budgeting in 1993 had a more effective and lasting cost-containment impact. More recently, Leonard et al. (2003) compared the case-based approach in Austria with the global budgeting approach in Canada in terms of the impact on hospital care and found that Austrian inpatients stayed longer in hospitals than Canadian inpatients.

Despite this preliminary evidence, the literature on global budgeting is mostly descriptive and prescriptive. Rigorous empirical assessment of the effects of global budgeting remains scarce (Wolfe and Moran 1993). Furthermore, existing studies are limited to global budgets for medical care (including hospital and physician services) and pharmaceutical coverage. How effective global budgeting is in relation to the control of dental care cost is largely unknown. This study is intended to fill the gap by examining the impact of global budgeting on dental care cost using data collected in the Taiwanese National Health Insurance System, which recently underwent the process of introducing global budgets into the dental care sector. Also in a departure from previous studies that focused solely on the cost-containment outcomes of global budgeting, this study assesses the impact of global budgeting on the distribution of dental health manpower and dental care utilization.

The experience in Taiwan may further our understanding of the impact of global budgeting for three reasons. First, dental care is seldom included as part of the benefit package in countries that provide public or national health insurance (NHI). Even less common is the administration of dental care expenditure through a global budgeting mechanism (with Germany being another exception), thus limiting our understanding of the cost and utilization of dental care in a government-controlled health insurance system. Second, supply side cost control mechanisms, such as global budgeting, may have unintended consequences for health service availability. The Taiwanese system adopts an explicit redistributive design that sets a different budget cap for each health insurance region on a per capita basis. Understanding whether the design results in more or less equitable distribution of health manpower and health care utilization would be of interest to health policymakers. Third, the enactment of Taiwanese NHI preceded the implementation of global budgets by more than three years. The lag enables us to separate the confounding effect of national health insurance from the redistributive effects of global budgeting on dentist supply and dental care utilization.

TAIWANESE GLOBAL BUDGETING SYSTEM

The Act of National Health Insurance in Taiwan specifically required the adoption of a global budgeting system in health care reimbursement. Implementation of the reimbursement system began in July 1998, more than three years after the enactment of Taiwanese NHI in March 1995. Similar to those of OECD countries such as Canada, Germany, and France, the global budgets in Taiwan are specific to different sectors of the health care delivery system. The implementation was incremental: first for dental care in July 1998, second for Chinese traditional medicine in July 2000, third for office-based medical care in July 2001, and lastly for hospital care in July 2002 (Cheng 2003).

The global budgeting system is designed to replace a national fee-for service payment system that was in place since the installation of NHI. The budget process takes the form of negotiation between the funding source and the health care sector to which the budget is applied. The negotiation is conducted in a committee, with representatives from the Bureau of National Health Insurance (the sole insurer), health provider associations, labor unions, employer groups, as well as health insurance experts and academic researchers. Every year, a fee negotiation committee under the supervision of the Department of Health negotiates and sets the total health care budget to be spent in the following year for the specific sector. The budget is then divided and allocated to six health insurance regions according to the relative size of the region's population. The insurance regions are groupings of adjacent administrative areas, formed by the Bureau of National Health Insurance to divide the nation into six regions with similar population and geographical sizes (Figure 1). Within each region, NHI reimbursed dental care expenditures are capped by the allocated budget and the cap is binding.