The new National Health Insurance (NHI) program of Taiwan that was implemented in 1995 now covers Chinese medicine ambulatory care. A major concern of this coverage is whether and how much the NHI will affect the demand for Chinese medicine. Moreover, the relationship between the demand for Chinese and modern Western medicine is likely to affect the net change in the demand for both. This study, based on a national sample interview, examines whether the demand for Chinese medicine ambulatory care is a complement or a substitute for ambulatorycare in modern Western medicine. Based on theresults of this study, the authors also try to predict the future demand for Chinese medicine ambulatory care. Results from this study suggest that there is little evidence that the demand for ambulatory care in Chinese medicine and modern Western medicine are related, as was shown by the low cross elasticity (-0.005) between the two. Furthermore, the data indicates that there is a low price elasticity of demand for Chinese medicine, which suggests that relying on cost-sharing alone to prevent the overuse of Chinese medicine ambulatory care may not be very effective. Another new finding of this study is that time, which has a higher elasticity of demand than price, is an important factor in predicting demand for Chinese medicine.