The Failure of Financial Incentive? The Seemingly Inexorable Rise of Cesarean Section

Two policy interventions in Taiwan aiming to slow the growth of cesarean delivery utilization were respectively implemented in 2005 and 2006. The first policy provided financial incentives to encourage vaginal delivery by setting a global fee for obstetric services and in essence increasing the reimbursement for vaginal delivery up to the same level of cesarean section. The second policy aimed to reduce the demand for elective cesarean procedure by employing a copayment when cesarean section is not medically indicated. This paper examines the impact of financial incentives of both the supply and the demand side on the use of utilization of cesarean section using data from the 2003-2008 National Health Insurance Research Database. We found that while the overall trend of cesarean utilization did not seem to respond to the interventions, the policies did have significant impact on its elective use. Financial incentives for the providers do matter, and policy interventions, such as a fee change, are still important strategies to consider in reducing the over-utilization of cesarean section.