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Dynamics of health insurance ownership in Vietnam, 2004 – 06

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  • Trong-Ha Nguyen
  • Suiwah Leung

Abstract

Vietnam is undertaking health financing reform in an attempt to achieve universal health insurance coverage by 2014. Changes in health insurance policies have doubled the overall coverage between 2004 and 2006. However, close examination of Vietnam Living Standard Surveys during this period reveals that about one fifth of the insured in 2004 dropped out of the health insurance system by 2006. This paper uses longitudinal data from VHLSS 2004 and 2006 to investigate the characteristics of those who joined and those who left the health insurance system. We model the static and dynamic health insurance choices allowing for heterogeneity of choices. The results from both static and dynamic models highlight the importance of income and education in determining the movement in or out of a particular scheme. The results from the static models of health insurance determinants show significant adverse selection in the current health insurance system where individuals with bad health are more likely to be insured. The findings from the dynamic models of health insurance ownership also suggest that the current health insurance system entails significant adverse selection where people with worse health are more likely to join or stay in and less likely to move out of the system. Some policy implications to increase coverage and to maintain financial sustainability of the health insurance system are drawn.

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Paper provided by Centre for Economic Policy Research, Research School of Economics, Australian National University in its series CEPR Discussion Papers with number 643.

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Date of creation: Aug 2010
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Handle: RePEc:auu:dpaper:643

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Keywords: health insurance; adverse selection; Vietnam;

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  1. Thomas C. Buchmueller & Agnès Couffinhal & Michel Grignon & Marc Perronin, 2002. "Access to Physician Services: Does Supplemental Insurance Matter? Evidence from France," NBER Working Papers 9238, National Bureau of Economic Research, Inc.
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  3. Amy Finkelstein & James Poterba, 2004. "Adverse Selection in Insurance Markets: Policyholder Evidence from the U.K. Annuity Market," Journal of Political Economy, University of Chicago Press, vol. 112(1), pages 183-208, February.
  4. Akerlof, George A, 1970. "The Market for 'Lemons': Quality Uncertainty and the Market Mechanism," The Quarterly Journal of Economics, MIT Press, vol. 84(3), pages 488-500, August.
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  6. Cameron, A. Colin & Trivedi, Pravin K., 1991. "The role of income and health risk in the choice of health insurance : Evidence from Australia," Journal of Public Economics, Elsevier, vol. 45(1), pages 1-28, June.
  7. Joseph P. Newhouse, 1996. "Reimbursing Health Plans and Health Providers: Efficiency in Production versus Selection," Journal of Economic Literature, American Economic Association, vol. 34(3), pages 1236-1263, September.
  8. Jowett, M. & Contoyannis, P. & Vinh, N. D., 2003. "The impact of public voluntary health insurance on private health expenditures in Vietnam," Social Science & Medicine, Elsevier, vol. 56(2), pages 333-342, January.
  9. Ellis, Randall P. & McGuire, Thomas G., 1986. "Provider behavior under prospective reimbursement : Cost sharing and supply," Journal of Health Economics, Elsevier, vol. 5(2), pages 129-151, June.
  10. Hurd, Michael D. & McGarry, Kathleen, 1997. "Medical insurance and the use of health care services by the elderly," Journal of Health Economics, Elsevier, vol. 16(2), pages 129-154, April.
  11. Barsky, Robert B, et al, 1997. "Preference Parameters and Behavioral Heterogeneity: An Experimental Approach in the Health and Retirement Study," The Quarterly Journal of Economics, MIT Press, vol. 112(2), pages 537-79, May.
  12. Ettner, Susan L., 1997. "Adverse selection and the purchase of Medigap insurance by the elderly," Journal of Health Economics, Elsevier, vol. 16(5), pages 543-562, October.
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