Mortality Differential and Social Insurance: A Case Study in Taiwan

Abstract

The mortality differential is important information for planning social insurance programs, such as health insurance and public pensions. It can be used to evaluate whether certain areas need more medical facilities and traffic infrastructure. The ignorance of mortality differentials can result in adverse selection and problems of pricing and liability. In this study, we use mortality models to estimate the mortality differentials of two social pension plans in Taiwan, National Pension Insurance (NPI) and Farmer Health Insurance (FHI), which account for more than one-third of the population of Taiwan (about 9 million). We compare the mortality profiles of the two pension groups in terms of economic status and geographic region. Empirical study leads to several policy implications, such as the feasibility of unifying the FHI and NPI systems, reallocating more premium subsidy according to mortality difference and corresponding annuity cost, and the antiselection effect in suburban areas with lower annuity costs and lower willingness to pay premiums.

ACKNOWLEDGMENTS

We appreciate the insightful comments from the editor and two anonymous reviewers, which helped us to clarify the context of our work.

Correction Statement

This article has been republished with minor changes. These changes do not impact the academic content of the article.

Discussions on this article can be submitted until October 1, 2020. The authors reserve the right to reply to any discussion. Please see the Instructions for Authors found online at http://www.tandfonline.com/uaaj for submission instructions.

Notes

1 The International Actuarial Association (IAA) set up a Mortality Task Force, which transformed into the Mortality Working Group in November 2009. It focuses on the study of global mortality and the trends of future mortality, as well as how mortality affects insurance products and the social security system.

2 The Population Issues Working Group (PIWG) and the Mortality Working Group (MWG) of the IAA hosted a seminar on current developments in aging and mortality in April 2017. The seminar topics covered important current issues such as whether current levels of mortality improvements are slackening off, whether we have the right assumptions regarding mortality at high ages, and how mortality is likely to change in the future and what might drive these changes.

Additional information

Funding

This research was supported in part by a grant from the Ministry of Science and Technology in Taiwan, MOST 108-2410-H-004-076.