Although being regarded as a prominent representative by other countries, the current health insurance system of Taiwan is actually faced with fierce financial bankrupt crisis. A second-generation health insurance draft is proposed by the government in 2004 to improve this financial deficit. Nevertheless, it is still not accepted by the national Legislative Yuan due to political issues. According to the report of Department of Health, there are six major problems in the current health insurance system as following:1. financial unbalanced, 2. unfair insurance fee design, 3. lack of connection between revenue and expenditure, 4. disorganized allocation of medical resources, 5. fail to disclosure the medical information to the public and 6.unreasonable payment standard. The second generation health insurance adopts the strategy that the fee for one household is dependent on the family income. The adaptive system aims at increasing insurance revenue and pressing the subsidy arrears of local government. The ultimate goal is to replace the lump sum payment approach with the service-quality based payment scheme and to reduce the payment for unreasonable medicine price. By comparing the developing progress of health insurance systems in the United Kingdom, German, Canada and the United States, this study inspected the problems of the current and second generation health insurance systems in Taiwan. Several improvement alternatives accommodate the situation of Taiwan were proposed as well. We suggested that conjunctive utilization of the principle of user charge and the income-based household fee design should be applied to increase the revenue of health insurance while maintain social fairness. Adaptive law should be modified or legislated to provide legality for the administrators to press the subsidy arrears of local government. The price of expenditure for medical service could be based on the basis suggested by the union of doctors and pharmacists. But this payment should be re-examined by experts and disclosure to civilians in order to achieve an acceptable standard. The payment procedure should be carried out using internet payment systems to save administration expenditures as well as to improve the service quality and information disclosure of health insurance.