Report on Progress Towards Universal Health Coverage

EU HEALTH FACILITY IN VIETNAM

Report on Progress Towards Universal Health Coverage

Ms Nguyen Thuy Huong, Health Financing Expert

Mr Dejan Ostojić, Senior Health Financing Expert

Hanoi, 24 April 2017

CONTENTS

LIST OF ABBREVIATIONS

EXECUTIVE SUMMARY

INTRODUCTION

BACKGROUND INFORMATION

PROGRESS TOWARDS UHC

Population coverage or breadth of coverage

Service coverage or depth of coverage

Financial coverage or height of coverage

RECOMMENDATIONS

Population coverage or breadth coverage

Service coverage or depth coverage

Financial coverage or height coverage

CONCLUSION

LIST OF ABBREVIATIONS

AIDS - Acquired Immune Deficiency Syndrome

BCG – Boston Consulting Group

BHSP - Basic Health Services Package

CHS – Commune Health Station

DH – District Hospital

EU – European Union

EU-HF - European Union Health Facility

EU-HSPSP - European Union Health Sector Policy Support Programme

FFS - Fee For Service

GDP - Gross Domestic Product

GGHE - General Government Expenditure on Health

GoV - Government of Vietnam

HFG – Health Finance and Governance

HI – Health Insurance

HIV – Human Immunodeficiency Virus

HR – Human Resources

IT – Information Technology

MoH - Ministry of Health

NGO – Non-governmental Organisation

NPISH - Non-profit Institutions Serving Households

OOP – Out-of-Pocket

PvtHE - Private Expenditure on Health

SHA – System of Health Accounts

SHI – Social Health Insurance

STGs - Standard Treatment Guidelines

THE – Total Health Expenditure

USAID - United States Agency for International Development

UHC – Universal Health Coverage

VHPD - Vietnam Health Partnership Document

VND – Vietnamese Dong

VSS – Vietnam Social Security

WB – The World Bank

WHO – World Health Organisation

EXECUTIVE SUMMARY

There is no country that has reached full Universal Health Coverage (UHC) where each person receives every health service needed, without suffering any financial hardship. Therefore, rather than trying to achieve the impossible, every country should consider its health care reform as an ongoing process aiming to make progress towards UHC, which, in return, can deliver significant benefits - for individuals, in terms of access to health care services and protection from catastrophic expenditure and impoverishment caused by ill health, and for a country, in terms of improved populations’ health and contribution to economic growth.

The overall objective of this report is to analyse current status, and, based on the findings, to recommend the interventions needed for further progress towards the achievement of UHC in Vietnam. The report is mainly a qualitative study supplemented by analysis of reference literature, relevant reports (national and international), legal and policy documents, including limited amount of quantitative data and indicators. The analysis is based on:

a desk review of legal and policy documents currently in force in Vietnam, official statistics and relevant reports of the development partners;
meetings and workshops with key counterparts and development partners;
field visits to provinces; and
information and data collected from the officials at the Ministry of Health (MoH), Vietnam Social Security (VSS) and visited health care facilities in the provinces.

The report elaborates and synthesizes the evidence on progress towards the achievement of UHC and provides some policy recommendations in relation to three key dimensions of UHC: population, services and financial protection.

Since the introduction of the social health insurance scheme in 1992, Vietnam has made significant progress towards achieving universal health coverage. Continuous health care reforms of social health insurance (SHI) expanded the SHI coverage, and SHI program has become a key mechanism for improving equity in access to health care and mitigating the risk of people falling into poverty due to excessive health care spending. Despite the fact that remarkable achievements have been made so far, still certain challenges remain:

Unsatisfactory level of enterprises’ compliance with regulations related to registration of employees and payment of social health insurance contribution due to weak enforcement measures.
Contribution collection from the informal sector, as well as from the private formal sector, remains a challenge and can endanger the financial sustainability of the social health insurance fund.
Aggregated SHI enrolment rates are not so much different among poor and rich provinces, because SHI premiums for disadvantaged groups are subsidised by state budget, but high enrolment rates among the poor and ethnic minorities do not translate into effective coverage due to weak financial protection mechanisms of the SHI scheme.
The coverage rates are still rather low among enterprise employees, the voluntarily insured and the near-poor.
Out-of-pocket (OOP) spending limits the financial protection of vulnerable groups and is a key barrier that prevents access to health services. High out-of-pocket costs are partly driven by fee-for-service (FFS) payments and policy on hospital autonomy, which have created incentives for providers to increase the supply of services in order to generate additional revenues.
Existing geographical and financial barriers that limit access to health services, mainly for the poor and near-poor in disadvantageous areas, result in lower service utilization rates and lower level of health expenditures for these groups of insured.
Low level of health care provision capacity, usually accompanied with low level of health care quality, especially at grassroots health care facilities, additionally limits the access to the needed insured services at primary health care level, which mostly affects the poor and near-poor segments of population.
Knowledge and understanding of SHI scheme and its benefits is relatively low, especially among disadvantaged groups and to some extent among employees.
Efficient use of resources is undermined by inadequate arrangements of provider payment mechanisms, mainly because of predominant use of fee-for-service, which does not provide incentive for health care facilities to control the costs. Due to supplier induced demand caused by fee-for-service payments, the long term financial sustainability of social health insurance fund is in question, which could lead to the reduction of SHI benefits and financial protection for the citizens who would need to pay OOP for some services that are currently covered by SHI.
Fragmented SHI management and administrative capacity makes management of social health insurance complex and reduces the efficiency. A complex management structure negatively affects the information flow, it is less efficient and it is more costly (human resources, equipment, buildings, etc.), which additionally consumes the SHI resources that can be used for extension of SHI benefits or UHC expansion.
An aging population has multiple and more complex disease patterns, which contributes to increase of medical expenditures for the elderly, while their contribution to social health insurance revenues decreases over time. Taking this into account any further expansion of UHC to the elderly that are currently not covered by SHI would require additional financial resources in order to meet the health care needs of the aging population.

Taking into account these challenges the following recommendations should be considered:

Strengthening control mechanisms and enforcement measures related to the collection of social health insurance contribution.
Mobilisation of additional resources through introduction of innovative forms of revenue generation (tax on tobacco, tax on alcohol, tax on fuel, tax on air tickets, etc.).
Conduct an actuarial analysis of social health insurance scheme based on predictable changes in revenues, prices and volumes of services, and cost the expected budget impact of specific changes to the basic benefits package (i.e. adding a new service).
The mix of provider payment mechanisms should be redesigned in order to improve financial protection for the poor, the disadvantaged and those at financial risk in case of poor health, to reduce costs and to increase resource utilisation efficiency.
An appropriate capitation model for payment of preventive and selected primary health care services that could be provided at the grassroots level health care facilities should be introduced.
Improvement of operational efficiency in the context of hospital autonomy could lead to further cost containment and gain of efficiency savings.
Shift the paradigm of health care service provision from curative services to promotion and prevention in order to reduce occurrence of preventable diseases and to reduce high medical costs at secondary and tertiary level of health care.
Improvement of prescription practice is needed, because improper use of medications results in waste in treatment and increases co-payments by the insured, as well as OOP expenditures of people without health insurance.
Strengthening the capacity of health care providers (human resources, equipment, infrastructure, etc.) and quality of health care, especially at primary health care level.
Improvement and integration of health management information system to enable effective decision making.
Strengthening monitoring and evaluation for more effective oversight of service provision and coverage of poor, near-poor, ethnic minorities and other disadvantaged groups.
The institutional arrangements governing SHI should be reviewed and rationalised in order to enable effective management of SHI scheme, to reduce SHI management costs and to make the SHI governing structure more efficient.
Stimulate SHI enrolment by improving quality of care, simplifying administrative procedures and encouraging business and employee registration and family coverage rather than individual coverage.
Increase knowledge and understanding of social health insurance scheme and its benefits, especially among disadvantaged groups of population and employees.

The following introduction provides some general information about UHC. Then, an overview of key milestones related to the achievement of UHC in Vietnam is presented in the second section. The elaboration of progress along three key dimensions of UHC comes in the next section and is followed by a section with policy recommendations and conclusions at the end of the report.

INTRODUCTION

The World Health Organization (WHO) defines the main goal of Universal Health Coverage as, “To ensure that all people obtain the health services they need without suffering financial hardship when paying for them.”[1] The EU-WHO Universal Health Coverage Partnership supporting policy dialogue on national health policies, strategies and plans and universal coverage with the following objectives:[2]

Objective I: To support the development and implementation of robust national health policies, strategies and plans to increase coverage with essential health services, financial risk protection and health equity;

Objective II: To improve technical and institutional capacities, knowledge and information for health systems and services adaptation and related policy dialogue;

Objective III: To ensure international and national stakeholders are increasingly aligned around National Health Strategic Planning process and adhere to other aid effectiveness principles.

One of the most helpful ways to conceptualize the strategic choices facing governments as they undertake the reforms related to the achievement of UHC is the policy box (Figure 1).[3]

Figure 1. Planning for Universal Health Coverage

UHC2 png

This diagram proposes that governments plan their UHC strategies taking into account three key policy questions:

• Who in the population is covered?

• What services are they covered by – and at what level of quality?

• What level of financial protection do citizens have when accessing the services?

This approach helps policymakers realize that they need to make trade-offs across these three dimensions and that progress along only one dimension might not be the best course of action. For example, promising free health services is an ineffective strategy if there is inequality in access or if services are of poor quality. Vietnam is one of the countries that has made significant progress in terms of the SHI population coverage (81,7% at the end of 2016[4]), but there is inequality in access and services are often of poor quality, especially at primary health care level.

In 2014, 41% of the insured population was registered with commune health stations (CHS) as a first point of contact and 45% were registered at the district hospitals, with the remainder registered at provincial and central level hospitals.[5] According to the MoH study conducted in provinces (Hoa Binh, Vinh Phuc, Quang Ninh, TT Hue, Khanh Hoa, Lam Dong, Dong Nai and Tien Giang) between January and July 2016, registration for health insurance covered primary health care increased at district and provincial levels, while it decreased at commune level. Additionally, the proportion of registered insured children and elderly for primary health care is significantly higher than proportion of registered insured among working age population.[6]

In allocating financial resources, policymakers need to make choices on population and service coverage and to make trade-offs between these two dimensions. Allocation of financial resources determines the level of out-of-pocket payments. In Vietnam, household expenditure on health through OOP payment accounted for 36,76% of Total Health Expenditure (THE) in 2014[7], which is still relatively high and negatively affects the equity. The strength of the case for investing in health varies among countries. The return on investment is likely to be highest for emerging economies, like in Vietnam, and these countries can obtain significant improvements in health outcomes (eg. life expectancy) through modest increases in health expenditure.[8]

The benefits of investing in health are significant and not limited to improving the health of the population: there can be significant economic returns and social benefits. A report by the Lancet Commission on Investing in Health[9] lays out the channels by which health improvements have a direct impact on Gross Domestic Product (GDP): productivity (healthy people are more productive and less likely to take sick days); education (healthier children are more likely to go to school); investment (people are more likely to save when life expectancy is longer); access to natural resources (can be affected positively by a reduced risk from endemic diseases); demographics (temporary impact on ratio of working-age to dependent people). It showed that reductions in mortality accounted for about 11 percent of recent economic growth in low- and middle-income countries, or even 24 percent of growth if the value of added life years is used to calculate a country’s ‘full income’.

Figure 2. Choices on population and service coverage

UHC1 png

A number of developing countries, as well as Vietnam, are implementing health financing reforms aiming to improve their health care systems and meet people’s health care needs in the context of continuous socio-economic changes and limited resources for health. Deciding how to commence the progress towards UHC is critical. Countries usually pursue one of two broad strategies: (1) to extend coverage to the whole population for a priority package of services or (2) to prioritize specific population groups (for an example, people in formal employment or the poorest in society), offering them a broader range of services. These two approaches and experiences from developing countries, including Vietnam, have been illustrated in Figure 2.[10]

BACKGROUND INFORMATION

After the unification of the country in 1975, emigration of health workers, high inflation, and weak economic growth were the main characteristics of the socio-economic environment in Vietnam. Consequently, in the 1980s annual reductions in the government spending on health were recorded, leading to deterioration of health infrastructure and health care provision in general.[11]

The foundations for all-needed reforms of the health sector in Vietnam were laid down when the country embarked on the process of economic reforms Doi Moi with the goal of creating a “socialist-oriented market economy". The economy grew at an average annual rate of 7,5% in a period 1991-2000.[12] Since 2008 Vietnam’s GDP pace of expansion has slowed down due to global economic crisis, with 2012 rate declining to 5%, the lowest level in 13 years, while the macro economy faced turbulence, trade deficit, higher inflation and business closures. Over the last 5 years GDP growth has recovered and reached the level of 6,21 % in 2016,[13] with the prospect of a GDP growth rate at 6,30% in 2017[14] (Figure 3).

Figure 3. Annual GDP growth rate (previous year=100)

Source: Years 2010-2016 GSO of Vietnam. Year 2017 the World Bank forecast.

Structural and market reforms have enabled Vietnam to achieve strong economic performance and social development outcomes. This created favourable preconditions for the introduction of a social health insurance scheme at national level and sub-consequent development of health sector, which led to significant improvement of key health indicators. Life expectancy at birth increased from 71,3 years in 2006 to 73,2 years in 2014; the infant mortality rate was reduced from 36,7‰ in 2000 to 14,9 ‰ in 2014; the under 5 mortality decreased from 42‰ in 2000 to 22,4‰ in 2014.[15]

The reforms triggered some policy shifts in the health sector as well. Some of the most important were liberalization of the health care and pharmaceutical markets and the introduction of user fees at public health facilities. The reforms also led to rapid growth of household out-of-pocket spending, driven by the growth in sales of drugs and other pharmaceutical products, fees in public facilities, and private medicine. This was part of the so-called socialization of health care.[16]

By the early 1990s, the economic liberalization and the consequent incremental privatization of the health sector undermined financial protection and OOP spending accounted for 71 percent of the total health expenditure in 1993.[17] To address the growth in OOP payments and its associated problems of financial barriers to access the health care, the Government of Vietnam piloted a series of voluntary non-commercial health insurance (HI) schemes between 1989 and 1992. In 1992, Decree No. 299-HĐBT[18] was passed introducing a mandatory social health insurance scheme for civil servants, formal sector workers, pensioners, and people receiving social assistance. This nationwide scheme covered all of the eligible population by 1993.[19]