Does health insurance matter in the hospital? New evidence from patient-level medical records in Vietnam

Vietnam has achieved several Millennium Development Goals of the United Nations including child mortality reduction and maternal health improvement. The government of Vietnam aims to further improve health in Vietnam by expanding its public health insurance system originally introduced in 1993. Since health insurance is an essential tool to prepare for unexpected health shocks, the government plans to provide a public insurance system to cover eighty percent of its population by 2020. However, whether having health insurance is beneficial remains unclear and controversial. Some recent studies find positive impact of health insurance, while others argue that the quality of its services has been low due to limited coverage. In contrast to previous papers on Vietnam's health policy that use data from nationwide Vietnam Household Living Standard Survey, this research uses more detailed, randomly-selected, patient-level medical records from Viet Duc University Hospital, the largest public surgical hospital in Vietnam. Using precise information on each patient's treatment history and usage of health insurance, this paper provides new empirical evidence on the effect of health insurance. Regression analysis shows that insurance helps patients stay 1.6 days longer in hospital and pay 48.6 percent less for their treatments than uninsured counterparts. This study also finds that financial burden between the insured and uninsured patients is larger in rural provinces than in the capital-city Hanoi, suggesting the significant advantages of health insurance for people in under-developed areas with fewer public hospitals. These new findings from patient-level information in Vietnam contribute to the growing literature on health insurance policies in developing countries and are particularly informative when governments plan to introduce nationwide public health-insurance systems.