To control the increasing prices of medical materials and to give the public more options when making healthcare decisions, the Ministry of Health and Welfare is to address a controversy over capping out-of-pocket co-payments by improving price transparency. The idea is that price transparency would promote competition and drive down prices.
Growing expenditures on medical materials is not unique to Taiwan. Did other nations solve the problem by implementing price transparency rules?
Imagine someone buying a new car. Since it is at the buyer’s expense, they are concerned about the price, so they gather lots of information, compare vehicles, test drive and make cost analyses.
However, the “market mechanism” for self-financed medical materials offers extremely little space for cost-effective decisionmaking. Medical expertise is needed and there are legal restrictions on advertising. People thus become heavily reliant on the advice of physicians.
So what are the benefits of price transparency?
Medical expenditures in the US are higher than in any other country, and it has long tried to reduce the cost of medical materials through price transparency.
However, according to a 2008 economic analysis on the transparency of medical material pricing in Health Affairs, a well-known journal on medical policy, pricing transparency might on one hand help patients make decisions, but on the other hand facilitates price-fixing among hospitals or device providers, which reduces price competition.
Moreover, because self-financed medical materials might be paid for by insurance companies, patients might not want to know the prices differences.
The analysis concluded that pricing transparency leads to price reductions only when four conditions are met.
First, there are price disclosures. The cost of gathering information is high, but can be reduced by price disclosures.
Second, the disclosed price is the current market price.
Third, there is competition among hospitals. Competitive pressures make hospitals more willing to share the benefits of cost savings with patients.
Fourth, the differences in hospital procurement prices are not mainly decided by procurement volumes.
These conditions might not be met in the context of all medical materials, and price-fixing might increase due to limited availability of certain products and services.
Some countries have strategies similar to the National Health Insurance Administration’s (NHIA) plan. For example, since February, India has been implementing price caps on medical materials, and medical material prices may not increase by more than 10 percent within one year.
India might go even further than the NHIA’s plan and considers regulating margins between wholesale and retail prices of medical materials, restricting it to 30 percent, which led to a US-India trade dispute.
Another example is in the US. Since last year, US hospitals have been required to publish the prices of all medical services on their Web site. Due to the complexity and length of the price lists, one news outlet said that “unless you’re a machine, good luck reading the prices.”
Given these trends, it is necessary to consider whether the main policy concern in Taiwan, a rich nation with universal health insurance coverage, should be to focus on low prices?
Chen Chih-hsiung is a professor and director of National Chiao Tung University’s Institute of Technology Law.
Translated by Lin Lee-kai
The conflict in the Middle East has been disrupting financial markets, raising concerns about rising inflationary pressures and global economic growth. One market that some investors are particularly worried about has not been heavily covered in the news: the private credit market. Even before the joint US-Israeli attacks on Iran on Feb. 28, global capital markets had faced growing structural pressure — the deteriorating funding conditions in the private credit market. The private credit market is where companies borrow funds directly from nonbank financial institutions such as asset management companies, insurance companies and private lending platforms. Its popularity has risen since
The Donald Trump administration’s approach to China broadly, and to cross-Strait relations in particular, remains a conundrum. The 2025 US National Security Strategy prioritized the defense of Taiwan in a way that surprised some observers of the Trump administration: “Deterring a conflict over Taiwan, ideally by preserving military overmatch, is a priority.” Two months later, Taiwan went entirely unmentioned in the US National Defense Strategy, as did military overmatch vis-a-vis China, giving renewed cause for concern. How to interpret these varying statements remains an open question. In both documents, the Indo-Pacific is listed as a second priority behind homeland defense and
Every analyst watching Iran’s succession crisis is asking who would replace supreme leader Ayatollah Ali Khamenei. Yet, the real question is whether China has learned enough from the Persian Gulf to survive a war over Taiwan. Beijing purchases roughly 90 percent of Iran’s exported crude — some 1.61 million barrels per day last year — and holds a US$400 billion, 25-year cooperation agreement binding it to Tehran’s stability. However, this is not simply the story of a patron protecting an investment. China has spent years engineering a sanctions-evasion architecture that was never really about Iran — it was about Taiwan. The
After “Operation Absolute Resolve” to capture former Venezuelan president Nicolas Maduro, the US joined Israel on Saturday last week in launching “Operation Epic Fury” to remove Iranian supreme leader Ayatollah Ali Khamenei and his theocratic regime leadership team. The two blitzes are widely believed to be a prelude to US President Donald Trump changing the geopolitical landscape in the Indo-Pacific region, targeting China’s rise. In the National Security Strategic report released in December last year, the Trump administration made it clear that the US would focus on “restoring American pre-eminence in the Western hemisphere,” and “competing with China economically and militarily
RSS