As the co-payment rate is almost homogenous across all regions in Taiwan in spite of the hospital size and because patients are impressed that a large hospital would offer a higher quality of medical care and thus prefer to wait in a large hospital, the denial of service in large hospitals and capacity inefficiency in small hospitals as a consequence take places. Indigenous communities located in remote areas, in contrast, face more difficulty in accessing medical services and thus people claim that the equality criteria (or objectives) for medical services may be sacrificed especially in those isolated remote regions even though BNHI (Bureau of National Health Insurance) emphasize to practice health insurance reforms in aiming at (1) More Fairness in Financial Contribution, (2) Better Quality in Medical Services, and (3) More Efficiency in Operations (BNHI, 2006). In this paper we propose a ”new” medical system that consists of two parts: (1) the flexible co-payment rates including zero copayment rate for impatient cares and full rate for ambulatory cares, and (2) an incentive to medical providers based on residents’ health status improvements. The proposed incentive to medical providers based on the health status of a specified and contracted community may encourage the creation of a better health and supportive environment. The implementation of the suggested medical system can reach social optima, mitigate capacity inefficiency, reduce social inequity, and improve medical care quality.
