Out-of-pocket expenditures on traditional and Western medicine in Taiwan

Coexistence of traditional and modern medicine is common in Asian countries. This paper investigates out-of-pocket expenditures on traditional medicine, traditional medical service, and Western medicine by households in Taiwan. Using a national sample of 13,765 households, the three expenditure equations are estimated with a censored system procedure. Effects of socio-demographic variables are explored by calculating marginal effects on probabilities and levels of medical expenses. Different types of medical expenditures are correlated. Households with higher income and more aging members use more traditional medicine than others, as do households in agricultural sector and in urban areas. In addition, households living in rural areas relative to those in the cities are more likely to use and also spend more on traditional service. Regional disparity of health care utilization is found. Higher income households spend more on traditional medicine, likely due to the fact that patients usually pay out-of-pocket for herbal materials needed in preparation of traditional medicine. To ensure equity in health care utilization, establishment of hospitals and clinics in rural areas should be considered.