A Study of Vietnam’s Healthcare System
Before 1986, the Vietnamese government adopted the planned economy model with highly centralized planning and state-ownership of capital and means of production. Under this economic and political model, Vietnam suffered severe problems such as serious food shortages, huge black market, high criminal rates, and thousands of people illegally fleeing out of the country. Facing the escalating problems, the government initiated a “Doi moi” (renovation) reform package in 1986 based on partial administrative decentralization, opened the Vietnamese economy, and allowed some freedom and flexibility. After more than twenty years of Doi Moi, economic growth in Vietnam has been rapid and sustained, averaging around 7-8% a year, and Vietnam is on the way to transit from a low-income to a middle-income country. Along with other economic achievements, the Vietnamese health care system is also in the middle of significant transformation in term of the quality and quantity of health care services provided, the emergence of a health insurance system, and deregulation in some service areas.
The main purpose of this hub is to assess some achievements of the Vietnam's health care system since Doi moi.
Overview of Vietnam's Health Care Indicators
In comparison to other countries in the same economic position, Vietnam's health care indicators outperform the average, and they continue to improve at an increasing rate. In terms of life expectancy adjusted for years lost to disabilities, Vietnam ranks 116 among 191 members of the World Health Organization. Vietnam's average life expectancy was 71 years old in 2012. Progress in controlling vaccine-preventable diseases, such as measles, diphtheria and tetanus, has been rapid as well; polio was completely eradicated in 1996. The total fertility rate fell from 3.8 in 1992 to 1.8 in 2012, below replacement level. The under-five mortality rate for both sexes was 23 per 1000 births. As of 2012, there were 1,184 hospitals nationwide with 180,000 beds, or 20.1 beds per 10,000 persons on average. In 2012, the average number of medical doctors, physicians and pharmacists increased to 11.6 doctors per 10,000 persons, up 100% compared with 2002’s level. Besides this, the number of nurses, pharmacists, technicians, and midwives has also increased.
In spite of the achievements, in the study "Vietnam's Health Care System: A Macroeconomic Perspectives", Susan Adam pointed out that Vietnam still faced several serious challenges in the health sector, including several problems that previous policies had not yet resolved such as the incidence of HIV/AIDS, the considerable differences in health indicators across region, income and ethnicity.
Some Healthcare Indicators (2012)
Total population (million)
Total fertility rate (per women)
Life expectancy at birth (years)
Under-five mortality rate (per 1000 live birth)
Incidence of malaria (per 100,000 population)
Prevalence of HIV (per 100,000 population)
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Analysis of Healthcare Expenditure
In term of spending on health care, data suggest that on average, in 2012, a person in Vietnam spent around $234 on health care, and healthcare spending made up around 6.6% of GDP. More than half of the spending was private spending and the patients paid the entire amount out of their pocket. The amount of spending on health care remained almost unchanged for the past few years, although the share of government spending on health care has increased recently at local level. Public spending on health care in Vietnam is regressive. The richer households receive larger share than poorer household, corresponding to the disparities in health indicators across region, income and ethnicity. The main source of inequality in health care spending emerges from the out-of -pocket spending. The poor also result to self-medication and local informal physicians more than make hospital visits and receive complete treatment. They also rely heavily on the usage of over-the-counter medicine.
Impacts of Deregulation on Health Economy
Health services in Vietnam were previously delivered only by the central government. The Ministry of Health Care was the only agent distributing and providing health care services, and medicine. However, after Doi moi, private companies are allowed to join the health care market, reducing the abilities of the Minister of Health Care to control the health economy activities. Deregulation provided incentives for doctors and nurses who work in the public hospitals to open their own private facilities. The biggest health care centers are public hospitals, and most private hospitals only operate in urban areas, and provide specialized care. Also, as pointed out by Trivedi in his research "Patterns of Health Care Utilization in Vietnam: Analysis of 1997-1998 Vietnam Living Standards Survey Data", the deregulation of the pharmaceutical industry entailed a remarkable growth of private pharmacies as the single most important source of drugs for self-medication. He also claimed that, "contacts with pharmacies, both public and private, became the most important type of contact between the provider and patient, while at the same time the role of the commune health center declined".
The Introduction of Vietnam's Health Insurance System
In 1992, a national health care insurance program was initiated in Vietnam, and started to take effects in early 1993. The program is sponsored by the government, including a compulsory national health insurance program and two voluntary ones. The compulsory national health insurance program formally consists of two separate programs, and the first one is social health insurance for the formally employed workers. This program is financed by payroll tax of 3%, to which, the employers contribute 2%, and the employees contribute 1%. The second program is the health care funds for the poor. This program covers about 18% of the total population including the poor, ethnic minorities in mountainous areas, and people in special circumstances (Ekman). In addition, children under the age of 6 are provided with free health care at the public health care centers. The compulsory part of the health insurance, targeting those who are self-employed, farmers and students show very little success. Recently, some universities start requiring health insurance as part of the compulsory college fees. The government also spends a lot of money to attract farmers to join the program. However, due to the limited of media use and transportation in Vietnam, a large part of the population is still unaware of the national insurance program and its benefits. Overall, about half of the population benefit from some form of health insurance or prepayment. The health insurance system has a positive impact on making health care more accessible and affordable.
In addition, in 1998, Vietnamese government launched the Hunger Education and Poverty Reduction program, focusing on poverty reduction, agriculture and resettlement, gave support to citizens with difficulties, and assisted poor household’s production activities, income increase, hunger eradication and access to more health care for the poor. Under this program, the poor communes get a resource allocation to invest in a local infrastructure project of their choice, out of a menu of options including roads, health centers, schools, irrigation systems, water supply systems. The aim of the program is to assist needy community. However, there exist a lot of criticisms over the program regarding to the fairness of the fund distribution, and problem of corruption involved.
Evaluation of the Healthcare Insurance System in Vietnam
In assessing the financial sustainability status of the health care system in Vietnam, Ekman focuses on assessing the issues of moral hazard, adverse selection and supplier-induced demand. In term of moral hazard, there is little evidence to conclude that moral hazard has a big effect on increasing cost of health care. Since in Vietnam, health care is considered a luxury, and there are many of unmet health care needs, the introduction of health insurance actually increases utilities for consumers. The problem of adverse selection is a more serious problem in Vietnam. Evidence shows that spending per members of the health insurance programs increases constantly from 2003 to 2006. Supplier-induced demand is also much of a concern. Recently, the government implements more strict rules regarding the process of checking pre-existing conditions before accepting new members into the program. The government also encourages people joining the voluntary health insurance program, making insurance mandatory to certain sector of employment, and open up the insurance market for some private companies.
Employing an empirical approach to assessing the effectiveness of Vietnam's national health insurance, Trivedi develops an econometric model using aggregate health care expenditures as the dependent variable. He concludes that there is a negative association between being females, and minority and having insurance. As far as the effect of adverse selection, the result from the statistic model suggests that there is also a statistically significant relation between being a smoker, a number of days of illness, and injury and having insurance as well, indicating that the insurance program admits a large number of "bad" members. Insurance may be served as the first step in seeking health care for some members.
Although with the introduction of health insurance combining with other programs, Vietnam has made a significant progress in providing access to a larger percentage of the population, Vietnam is challenged with the continuous deficit budget for insurance. Also, Vietnam needs to do further health insurance reform to find the way to cover the insured, accounting for half of the population.
After the Doi moi was initiated, there has been significantly improvement in the Vietnamese's health care system. The increase in the level of economic well being plays an important role in improving the quality of other aspects of the economy, particularly the health economy system. The introduction of the national health insurance program obviously helps more people have access to health care. However, the roles of private healthcare providers in Vietnam needs further development, since they have a lot of potentials to make the market more competitive and provide better health care service.
Adam, Suan. "Vietnam'sHealth Care System: A Macroeconomic Perspective." International Money Fund (2005).
Ekman, Bjorn and Nguyen Thanh Liem. "Health Insurance Reform in Vietnam: A review of recent developments and future challenges." (2008).
Trivedi, Pravin. "Petterns of Healthcare Utilization in Vietnam: Analysis of 1997-1998 Vietnam Living Standard Survey Data." (2002).
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