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Social health insurance was introduced with the 1977 National Health Insurance Act, which provided industrial workers in large corporations with health insurance. The program was expanded in 1979 to include other employees, such as government employees and private teachers. This program was thereafter progressively rolled out to the general public, finally achieving universal coverage in 1989. Despite being able to achieve universal healthcare coverage, this program resulted in more equity issues within society as it grouped people into different categories based on demographic factors like geographical location and employment type. These different groups ultimately received different coverage from their respective healthcare providers.

The healthcare system was initially reliant on not-for-profit insurance societies to manage and provide the health insurance coverage. As the program expanded from 1977 to 1989, the government decided to allow different societies to provide coverage for different sections of the population in order to minimize government intervention in the health insurance system. This eventually produced a very inefficient system, which resulted in more than 350 different health insurance societies. A major healthcare financing reform in 2000 merged all medical societies into the National Health Insurance Service.

The insurance is funded by contributions, government subsidies, and tobacco surcharges and the National Health Insurance Corporation is the main supervising institution. The program gives the same amount of medical expenses and reimbursements for all citizens, regardless of how much they are paid. It administers longer term care services for the elderly.[5] The National Health Insurance started to develop deficits starting in 1996, when the total health expenditures exceeded the total income. The government has been raising the insurance premiums to make up for the deficit, but many health policy experts predict that the increase will not solve the deficit.[6] About 54% of health expenditure is met by the National Health Insurance Service. The remaining 46% is mostly met by out of pocket contributions. Healthcare expenditure is around 7.2% of GDP, and has increased from $64 billion in 2009 to $113 billion in 2015.[7]