2 Health Care System
All residents are covered by UHI. The co-insurance rate ωj
(or out-of-pocket
ratio, 1 − ωj
) depends on age. According to the current rule, the co-insurance
rate is 30% for those under age 70, 20% for those between 70 and 74, and 10% for
those aged 75 and above. Because medical expenditures increase with age, the
average out-of-pocket ratio is approximately 15%. The current UHI premium
cannot fully sustain the UHI system, and we observe that 25% of the total UHI
cost is financed by general government revenue (i.e., ψ = 25%).