Health financing

Fact sheet

Key facts

• In 2010, Viet Nam's total health spending was about 7% of GDP
• Of this sum, public spending accounted for 3% of GDP, with the balance represented by private spending, mainly in the form of out-of-pocket payment.
• In 2010, direct providers’ budget subsidies accounted for 24% of total health expenditure, while health insurance spending accounted for 17%.
• According to a law approved by the National Assembly, effective from 2009, the poor and children under 6 receive a government full subsidy for their insurance premiums.
• Health-insurance coverage reached 60% of the population in 2010 and 63% as of June 2012. The government aims to cover 75% of the population by 2015 and over 85% by 2020.
• People who work in the informal economy or who live in rural areas are mostly not covered.

The situation

• Viet Nam is facing significant cost escalation in health care expenditures. A WHO-Ha Noi Medical University study showed that in 2010, 2.5% of households were impoverished and 3.9% of households were facing financial catastrophe, due to health payments.
• The health financing system relies on a mix of tax-based funding, social health insurance, and household out-of-pocket payments (OOP). In 2010, OOP accounted for more than 50% of total health expenditure, which is one of the main causes for catastrophic expenditures.
• To mitigate the negative impact of OOP, the government has chosen insurance as a financing mechanism to provide access to health care and protect households from financial risk. Since 2009, the poor and children under 6 are covered with a full government subsidy. The government also provides a partial subsidy for schoolchildren and near-poor (people whose income is above but close to poverty line), while salaried workers make their own compulsory contributions.

Challenges

• Further health insurance enrolment seems difficult. The current mode of registration and enrolment is based on individuals and not on families, resulting in a fragmented system. Workers' dependents are not registered and so not covered. Compliance by employers to insure salaried workers is still low, health insurance coverage among schoolchildren and the near-poor is not as high as expected, while government reinforcement of the law is not very effective.
• The fund pooling and risk sharing is not based on clearly defined risk equalization. Thus, in the context of a passive, retrospective payment method, the use of funds favours wealthier areas and bigger tertiary providers.
• Provider payment method is based on fee for service, which encourages providers to over-supply. The patient benefit package and the list of medicines is too general, too broad, and is not based on cost-effectiveness criteria.
• Medicine prices are not regulated. The bidding process is decentralised and is made at the individual provider’s level, resulting in a large variation of prices for the same drug within a province and across provinces.

WHO's response

WHO focuses on four main areas:

• Development and institutionalization of National Health Accounts. This work provides a basis for tracking health expenditures from both internal and external sources, and provides an information base to inform policy makers on how much the country spends on health, who pays, who benefits, and the impact.
• Development and improvement of the social health insurance system, focusing on expansion and effectiveness of the insurance coverage – i.e., the benefits and the cost that the system truly covers. The work focuses on improving the current provider payment mechanism, monitoring key system performance indicators, efficiency and equity of resource use, health insurance policy development, and governance of the system. A strong health insurance system can contributes to strengthening the overall national health system.
• Capacity building for Government counterparts in the area of health financing, through structured courses and collaborative work to address technical issues.
• Raising awareness among policy makers about the linkages between poor health, poverty and economic growth, and the cost of health care for the poor, so that well informed and coherent health and economic policies will be made, contributing to national health goals.