Moving toward Universal Coverage of Health Insurance in Vietnam: Barriers, Facilitating Factors, and Lessons from Korea

Limited ability to afford contributions by a large portion of population

The 25 entitlement groups are classified into four categories based on contribution payment methods: 1) contributions are paid through wage and social allowances, 2) contributions are paid by the government, 3) contributions are shared between the government and individuals, and 4) contributions are paid by individuals. Among those, the government pays contribution for 35.3% of the population (the poor, children-under-six) and supports from 30%-70% of contribution for 22.9% of the population (the near-poor, students). Only half of the third categories are covered with health insurance even though they are partially supported by the government (Table 1). The amount that they have to pay to be insured is still expensive compared to their income because the contribution is calculated based on the minimum salary, not on the ability-to-pay mechanism.

Table 1
Insured population by enrollment category

• Click for larger image

Adverse selection, low benefits, and low quality of services covered by health insurance

Apart from those who have limited ability to afford the contribution, the fourth category (Table 1) is composed of individuals/households who are financially better-off and receive no financial support from the government for their contribution. This category accounts for more than 20% of the population, which is as large as the amount of salary worker. However, only 21.1% of them are insured, and mostly they are insured only when they are sick (14, 15). These people perceive the enrollment contribution as too expensive to justify the expected benefits of insurance coverage (16). Despite of the fact that almost 80% of health services listed in the technical guideline of the Ministry of Health are covered by health insurance, medical services which do not have the exact names as listed would not be reimbursed. Such a technical guideline is not regularly updated, resulting in many services, which are not necessary high-tech services, not being covered by health insurance. In addition, patients do not satisfy with services covered by health insurance receives for low quality of care, long waiting time, and informal payment in the form of gift or cash to health staff (17). These factors militate against the willingness to enroll in National Health Insurance scheme.

Non-comprehensive legal system on health insurance

The legal framework on health insurance in Vietnam has been developed but yet far to be comprehensive. According to the Law, health insurance is managed at provincial level, asking for provincial rules and regulations to operate health insurance based on the Law. However, many provinces do not develop their regulations and guidelines, resulting in loose compliance of enterprises, organization, and individuals regarding health insurance enrollment. Also, the lack of legal and operational guidelines from central government reduces the synchronization of health insurance management nationally.

Low level of computerized administrative infrastructure

Although residents are managed through the identification card and number system, management is heavily manual and has not been computerized. In the health sectors, health services are not coded by number and are not managed through a computer system, which resulted in manual review, payment claiming inaccuracy, and reimbursement delay.

Enrollment fragmentation

Enrollment is on an individual basis and is quite fragmented (12). The dependents are narrowly defined with spouse, parents, and children. However, dependents must live in the same residence with the insured (18). Under the situation of such a weak, non-computerized administrative infrastructure, it is very hard to identify dependents, especially in the informal sectors. Furthermore, additional contributions for the dependents must be paid for them to be insured, making the enrollment of these groups even more difficult.

Similarities: level of income

Economic growth is crucial in implementing national health insurance. A greater level of income increases not only the capability to contribute to prepaid health insurance of enterprises and citizens but also tax revenues for higher government subsidies (20). Korea first introduced health insurance in 1963 when the country was recovering from the Korean War with a GNI per capita of USD 209. The mandatory scheme started in 1977 when the GNI per capita increased to USD 1,012 (25).

The socio-economic crisis in Vietnam in the late 1980s resulted in several health care reforms, including the introduction of national health insurance in 1992 when GNI per capita was USD 200. The Health Insurance Law in 2008 expanded the mandatory scheme of health insurance nationwide when GNI per capita was USD 1,030. Although Vietnam has higher GNI levels at important milestone (Table 2), GNI per capita of the two countries are very similar.

Table 2
Main indicators comparison at specific milestones

• Click for larger image

Similarities: ability to administer

Run by the government, a national health insurance program requires sufficiently skilled officers with capacities in book-keeping, banking, and information processing (20). While the introduction and expansion of health insurance nationwide was carried out by political decision, the overall designing and administrating of the program in Korea was delegated to civil servants. Historically, Korea and Vietnam chose civil servants on ability based on national examination and long-term training. Other countries historically appointed civil servants or provided no training mechanism. These days, both Vietnam and Korea have a well-organized local administrative system for the purpose of national security and resident management. Both countries have the resident certificate system where each citizen has an identity number for public administrative related activities, including health insurance management. Moreover, both Korea and Vietnam experienced a period of voluntary health insurance before transferring to the compulsory scheme, equipping basic health insurance related skills for civil servants (25).

Similarities: solidarity

The national health insurance scheme is a cross-subsidized system that requires a certain level of social solidarity so that the better-off are willing to share financial risks with the worse-off (20). Korea is a homogeneous country with only one major ethnic group and a strong sense of nationalism and nation pride. Also, Korea used to be an agriculture country where "unionism" plays an important role in the living environment. Promoting the risk-sharing concept through the message of "sharing the financial burden with those who lack the ability to pay for healthcare services" was very successful in Korea due to solidarity. The concept was quickly accepted in Korea, while in communities with an emphasis on individualism, like Latin America countries, such a concept was unadoptable (26). Although Vietnam is not a homogeneous country, solidarity has been a crucial social value in developing socialism in Vietnam. Moreover, having an agriculture culture for a long time in history, the risk-sharing concept is largely acknowledged as the power of the nation.

Similarities: political leadership

Political leadership has been a key factor in developing health insurance by pushing political legitimization, mobilization of resources, and decision-making. Taking power through a coup d'etat in 1961, the Korean military administration was forced to develop social security system to stabilize domestic affairs and compete with its rival North Korea, who was developing socialism. The government established a sufficient legal framework and mobilized capable technocrats to develop and implement health insurance policy. With a strong political will, a top-down approach was implemented oppressing some key interest group such as medical providers (22).

Vietnam has only one political party, the communist party, which is the ruling party. Vietnam is one of few countries following socialism, in which a social safety net is always of top priority. More than once, the government of Vietnam has expressed the attempt to achieve universal coverage of health insurance. Therefore, Vietnam and Korea share the political motivation as well as the political environment of not having an opposing political party while developing health insurance.

Differences: distribution of population

Urban areas with better infrastructure and higher density of healthcare facilities make the operation of health insurance more well-organized and well-managed (20). During the 1960s, the urban population in Korea accounted for 30% of the whole population and quickly increased to 50% in the 1970s and to 70% in the 1980s. The baby boom period in Korea occurred in the late 1960s and resulted in a plentiful of labor force for the country by the late 1980s. The speed of industrialization and urbanization in Vietnam is slower than that of Korea, with a rural population of 78% in 1994 and 70% in 2009 (27). However, Vietnam has larger proportion of eligible workers contributing health insurance through wages, which ensures stable revenue for health insurance. In 2009, an amount of 20.3% of Vietnamese population was salary workers (28) while this number was 15.5% in Korea in 1988 (30).

Differences: structure of the economy

Covering the informal sector population has always been a challenge to any national health insurance system (20), therefore, a larger portion of the formal sector is desirable to enlarge coverage and collect contributions. In line with the development of health insurance, the labor force of Korea also kept increasing enormously from 50% of the population in the 1960s to 60% in 1977 and 70% in the 1990. The portion of the informal economic sector dramatically decreased from 60% in the 1960s to 42% in 1977 and 20% in 1990.

Vietnam has a rich source of labor with 74.5% of the population in 2009 between ages 16 and 60 yr (28). The portion of wage employment increased from 19% in 1998 to 33.4% in 2009 (28). Industrialization has decreased the share of employment in the agriculture sector from 70% in 1996 to 47.6% in 2009 and increased the share in the industrial and service sectors from 11.2% in 1990 to 52.4% in 2009 (28). Each year the labor market creates an additional 1.5 million formal sector jobs in the industry and service sectors. Although the structural changes in of the Vietnamese economy are slower than that of Korea, a similar trend is observed.

In summary, Vietnam poses sufficient internal forces (economic, politics, cultural, and social factors) to pursue national health insurance typology. What Vietnam needs at the moment is a suitable strategy, which should be referred to the experience of Korea as the country posed many similar conditions with Vietnam when developing national health insurance.

Mandatory enrollment and active social marketing

The failure of voluntary health insurance in Korea suggests that Vietnam needs a mandatory enrollment strategy. The current voluntary scheme of health insurance in Vietnam should be substituted by a mandatory scheme to achieve universal coverage and avoid adverse selection (15, 30). Apart from being legitimated by law, voluntary agreement among the population is of no less importance. Therefore, the government of Vietnam put "social marketing" as the top priority. Currently, "social marketing" strategy in Vietnam is passive, whereas insurers stay in the office and wait for citizens to come to them. Therefore, many people do not know where to go to register and how to pay for contributions. On the contrary, Korea implemented an active social marketing strategy in which health insurance agents visited each household to introduce the benefit of being insured and the process of enrollment. Mass media was effectively utilized with advertisement, public debate, and even soft dramas to encourage enrollment.

Unit of eligibility

Enrollment in Korea is on family-based with a generous scope of dependents. Accordingly, any family members who produce no income are eligible regardless of places of residency within the territory (31, 32). Therefore, in a short period of time, a large number of people (almost 34% of the population) in the informal sector were insured through this channel. In the context of the high informal sector in Vietnam, a more expanded unit of eligibility would help expand the population coverage in a timely manner as well as reduce fragmentation.

Design of contribution and benefit scheme

One of the main barriers of achieving universal coverage in Vietnam is the limited affordability of a large portion of the population to health insurance contribution. Contribution for salary workers is shared between employers and employees; however, contributions for the independents are fully on the burden of the workers. Contribution for non-worker is individually fixed at 4.5% of minimum salary of the civil servant regardless of the living location (rural or urban), and economic status (rich or poor). This imposes an unequal contribution burden and makes health insurance expensive, especially to the near-poor. On the contrary, contribution in Korea is designed on family basis under the principle of ability-to-pay based on income for salary workers and income and asset evaluation for non-workers. Dependents pay no additional contribution. Asset evaluation is calculated on income (taxed-income) and property (house, car, etc.). However, with a non-computerized administrative infrastructure like Vietnam, the design of contribution for the informal sector of Korea is too complicated to apply. Rather the payroll bracket system of Taiwan would be more applicable to Vietnam.

Although expanding the benefit coverage is one of the priorities of the government of Vietnam, a selection must be made between coverage and benefit. Prioritizing the extension of population coverage, Korea traded-off low benefit for larger population coverage even though there have been negative consequences of high out-of-pocket payment and low financial protection on health care (33). On the other hand, the United States chose benefit over coverage by implementing a two-tier system. As a result, one group is over benefited while the other receives no benefits. However, if coverage is chosen, there is still an opportunity to expand benefit for the insured after the achievement of universal coverage.

Resource allocation to National health insurance

More resources should be allocated to ensure the stability of universal coverage to reduce the financial burden of subsiding contribution for more than half of the population of the government of Vietnam. Mongolia achieved 95% of population coverage of health insurance in 1996 but experienced a shrinking trend of population coverage because of financial instability (34). To allocate resources, Korea raised sin taxes of tobacco and alcohol and transferred the money to the health insurance fund. This financial transfer accounted for 3.1% of health insurance revenue in Korea in 2010.