UNIVERSITY OF ECONOMICS ERASMUS UNVERSITY ROTTERDAM HO CHI MINH CITY INSTITUTE OF SOCIAL STUDIES VIETNAM THE NETHERLANDS VIETNAM - NETHERLANDS PROGRAMME FOR M.A IN DEVELOPMENT ECONOMICS THE IMPACT OF HEALTH INSURANCE ON OUT-OF-POCKET PAYMENTS IN THE MEKONG RIVER DELTA BY TA THI HONG NGOC MASTER OF ARTS IN DEVELOPMENT ECONOMICS HO CHI MINH CITY - DECEMBER, 2017 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com UNIVERSITY OF ECONOMICS INSTITUTE OF SOCIAL STUDIES HO CHI MINH CITY THE HAGUE VIETNAM THE NETHERLANDS VIETNAM - NETHERLANDS PROGRAMME FOR M.A IN DEVELOPMENT ECONOMICS THE IMPACT OF HEALTH INSURANCE ON OUT-OF-POCKET PAYMENTS IN THE MEKONG RIVER DELTA A thesis submitted in partial fulfilment of the requirements for the degree of MASTER OF ARTS IN DEVELOPMENT ECONOMICS By TA THI HONG NGOC Academic Supervisor: DR. TU VAN BINH HO CHI MINH CITY - DECEMBER, 2017 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com DECLARATION “I certify that this material is my own work, containing my independent research results, have not been published. I assure that all sources of information in the thesis, including data sets, are clearly acknowledged. I pledge to take responsibility for my research.” Signature Ta Thi Hong Ngoc Date: December, 2017 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com ACKNOWLEDGEMENT Firstly, I would like to express my appreciation to my supervisor Dr.
Tu Van Binh who provided me motivation, patience, and knowledge to complete my thesis. I am very grateful for his sympathy and his kind encouragement to me last year when my mother was deeply sick. His friendly guidance in all the time of research helped me overcome a hard time of writing this thesis. Besides my supervisor, I am grateful to Dr.
Truong Dang Thuy and Dr. Pham Khanh Nam who have provided the theoretical background and econometrics methodology, which strongly supported my thesis. My sincere thanks to tutor Nguyen Van Dung who support me data and kindly encourage me during my thesis. I would thank all lecturers, administrators and my VNP 22 classmate in the Vietnam – The Netherlands Program for giving me a loyal sympathy, for the memorable moments we were working together before deadlines of assignments and exams during the course.
Finally, I would like to give a special thanks to my family who has encouraged me not only in thesis period but also in my life. LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com ABSTRACT The study uses the Vietnam Household Living Standard Survey in the year of 2012 and 2014 in 13 provinces in the Mekong River Delta (MRD) to evaluate the impact of health insurance on out-of-pocket payments in the MRD. Three models including Pool OLS, Random Effects and Fixed Effects are applied and the regression result shows that health insurance is statistically significant and has the negative relationship with out-of-pocket expenses per visit to outpatient service and inpatient service. The study indicates that health insurance has a positive impact on reducing out-of-pocket expenses, meaning that people who have health insurance spend less than those who do not have health insurance.
Heath insurance benefits the society by reducing the monetary cost of using the health services and therefore is potentially advantageous for poor and underprivileged people in approaching healthcare resources. The policy implication insists that it is essential to increase health insurance coverage, especially for the poor and near poor. In addition, policy makers could consider reducing or eliminating co-payments for the poor and policy beneficiaries such as ethnic minorities in the MRD. Moreover, the authority needs to concern about awareness raising in the health insurance of people living in this area.
Key words: Health Insurance, Out-of-pocket expenses, Mekong River Delta. LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com TABLE OF CONTENTS DECLARATION i ACKNOWLEDGEMENT ii ABSTRACT iii TABLE OF CONTENTS iv LIST OF TABLES vi LIST OF FIGURES vii LIST OF ACRONYMS viii CHAPTER 1: INTRODUCTION 1 1.1 The practical problem 1 1.2 The research problem 1 1.4 Contribution of the Study 2 1.5 Organization of the Study 2 CHAPTER 2: LITERATURE REVIEW 3 2.2 Out-of-pocket payments 4 2.3 Empirical studies about the impact of health insurance on out-of-pocket payments 8 2.1 Out-of-pocket payments definition and measurements 8 2.4 Results 10 CHAPTER 3: RESEARCH METHODOLOGY AND DATA 13 3.1 Fixed Effects Estimation 14 3.2 Fixed Effects with Unbalanced Panels 15 3.3 Random Effects Models 15 3.4 Random Effects or Fixed Effects 16 iv LUAN VAN CHAT LUONG download : add luanvanchat@agmail.4 Data 19 CHAPTER 4: FINDINGS AND DISCUSSION 21 4.1 Overview of the research topic 21 4.1 Background of health insurance in Vietnam and the MRD 21 4.2 Overview of out-of-pocket health expenditure in Vietnam 24 4.3 Estimation results 33 CHAPTER 5: CONCLUSION AND POLICY IMPLICATIONS 40 5.3 Limitation 41 REFERENCES 42 v LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com LIST OF TABLES Table 3. 1: Variable description and sources. 2: The correlation coefficient between the variables.
3: Number of observations and proportion of people having health insurance28 Table 4. 4: Proportion of people having health insurance in 13 provinces in the MRD29 Table 4. 5: Statistical coverage of health insurance by age. 6: Statistics on the share of health insurance participation by gender.
7: Statistics on the share of health insurance participation by marital status. 8: Statistics on health insurance participation by ethnics. 9: Statistics on health insurance coverage by level of education. 10: Statistics on health insurance coverage by rural, urban area.
11: The panel data regression result with Out-of-pocket expenses per visit to outpatient service (OOV). 12: The panel data regression result with Out-of-pocket expenses per visit to inpatient service (OIV). 37 vi LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com LIST OF FIGURES Figure 1. 13 vii LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com LIST OF ACRONYMS 2SLS Two-Stage Least Squares DID Difference-in-Difference FE Fixed Effects GLS Generalized Least Squares GSO General Statistics Office HI Health Insurance IV Instrumental Variables MRD Mekong River Delta OIV Out-of-pocket expenses per visit to inpatient service OLS Ordinary Least Squares OOP Out-of-pocket payments OOV Out-of-pocket expenses per visit to outpatient POLS Pooled Ordinary Least Squares PSM Propensity Score Matching RE Random Effects VHLSS Vietnam Household Living Standard Survey WHO World Health Organization viii LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com CHAPTER 1: INTRODUCTION 1.1 The practical problem Out-of-pocket expenses are popular in health care study.
According to WHO (2005), results of 108 surveys conducting in 86 countries showed that catastrophic expenses for health care services lead 5% of households into poverty. To address the problem of reducing out-of- pocket payments due to illnesses, health insurance is expected as a good measure for its important role in health care and financial protection. It facilitates insured people to approach health care services better and protects them from financial burdens resulting from health problems. As people in the Mekong River Delta (MRD) do not have a long tradition of using health insurance, an interesting question is “to what extent does health insurance affect out-of- pocket expenses in this region?”.
There are currently several problems with the health care system in Vietnam, where using health insurance is normally linked with a poor service. In spite of the fact that there is an improvement in the coverage of health insurance, it is reported that only 52% of annual outpatient contacts use health insurance and up to 40% of the insured people did not use health insurances when having health care treatments in 2006 (Nguyen, 2012). It is also the case of in the MRD. Therefore, understanding the impact of health insurance on out-of-pocket payments can contribute some ideas to the government so that health insurance scheme may increase its effectiveness.2 The research problem Within the context of Vietnam, there have been some researches on the impact of health insurance on out-of-pocket expenses.
Nevertheless, the effects of health insurance on out-of-pocket expenses are not homogeneous. Some studies confirm the positive effects of health insurance on reducing out-of- pocket expenses (Jowett et al., 2003, Wagstaff & Pradhan, 2005, Sepehri et al. However, Wagstaff (2010) and Nguyen (2012) found that voluntary health insurance does not have an impact on out-of-pocket expenditures. Moreover, to the best of my knowledge, there has not been any studies on this issue in the context of the MRD.
Therefore, this research may contribute to filling the literature gap in the context of the MRD, which is still considered a poor region in Vietnam. Moreover, this study reexamines the impact of health insurance on out-of-pocket payments with updated data. 1 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.3 Research Objectives The study has the following objectives: (i) to estimate the impacts of health insurance on out-of-pocket payments (ii) to propose feasible policies to better manage health insurance program This study employs the Vietnam Household Living Standard Survey (VHLSS) in the year of 2012 and 2014 are used in the research to approach the research objectives. The data set covers 13 provinces/city (Long An, Tien Giang, Ben Tre, Tra Vinh, Vinh Long, Dongs Thap, An Giang, Kien Giang, Can Tho, Hau Giang, Soc Trang, Bac Lieu, Ca Mau) with approximately 7,000 observations/wave.
This thesis utilized Pool OLS, Fixed Effect, Random Effect regressions to test the impact of health insurance on out – of – pocket payments.4 Contribution of the Study This study makes a major contribution in two aspects as follows. First, there have been many empirical studies on the impact of health insurance on out-of-pocket expenses. However, most of these studies mainly focus on the case of developed countries. There are still few studies about this issue for developing countries where using health insurance is normally linked with a poor service.
In the case of the MRD, the rural area of Vietnam, there is still no published studies on this topic. Therefore, this paper contributes to the literature as one of the first comprehensive analysis of this issue in the Vietnamese case. Second, the research results are an important and reliable source of information for policy makers to better manage the health insurance service in the MRD in particular and in Vietnam in general.5 Organization of the Study The organization of the study is structured as follows. Chapter 1 introduce the practical problem, the research problem as well as research objectives.
Chapter 2 gives a review of the definition, core concepts of health insurance and out-of- pocket payments. In addition, theories and empirical studies are also presented. Chapter 3 presents the analytical framework, the research methodology, model specification and data. Chapter 4 gives a general review of background of health insurance in Vietnam and the MRD, an overview of out-of-pocket health expenditure in Vietnam, the descriptive statistics of variables used in the study and the findings and discussion.
Chapter 5 presents the conclusion, suggests some practical policy implications, and discusses the limitation and direction for further studies. 2 LUAN VAN CHAT LUONG download : add luanvanchat@agmail.com CHAPTER 2: LITERATURE REVIEW 2.1 Health insurance It is important to understand clearly the concept “health insurance” before going further with the study. The concept of “health insurance” is popular in health economics. Health insurance is defined as “coverage that provides for the payments of benefits as a result of sickness or injury.
It includes insurance for losses from accident, medical expense, disability, or accidental death and dismemberment” (Health Insurance Association of America, 2010). According to the Vietnamese Health Insurance Law No. 25/2008/QH12, “Health insurance is a form of services that is applied in the field of health care, not for profit purposes, organized by the State and those who are responsible for participating in provisions of law.” The health insurance fund is made up of contributions from the insured's income, managed centrally and transparently, ensuring a balance between revenue and state protection.