Free and Public

Vietnam’s healthcare system suffers on policy failure

Vietnam hospital. Credit: Ben Cullen-KerneyReproduced and adapted with permission from Oxford Analytica. Original article published in the Oxford Analytica Daily Brief on September 27, 2011

Commercialisation of healthcare services in public hospitals in Vietnam since the late 1980s has embraced private investment in public services and thereby shifted a large part of the fiscal burden of healthcare from the state onto individuals. Against this backdrop, the health sector is facing fundamental challenges in terms of access, quality and effectiveness.

At the arrival of market-oriented economic reform in 1986, Vietnam had extremely limited economic resources. Still, the country posted strong health outcomes. It had a strong network of primary care at the commune level and promoted social equity and free access to basic healthcare as a universal right. Following reform, social services were rapidly commercialised: the health sector began charging fees and privatised drug sales. In 1989, private practices were legalised.

In many respects for some social groups, healthcare provision in Vietnam is better than it was in 1989. Most notably, treatment standards have improved. According to official data, health indicators on issues such as life expectancy, child mortality and incidence of tuberculosis are also improving.

However, these benefits have not been shared equally – the main beneficiaries of commercialisation continue to be affluent social groups. The share of out-of-pocket payments in total health financing increased from an estimated 59% in 1989 to 80.5% in 1998. According to official figures, this fell to 52% in 2008, though other sources estimated the level at above 70%. In either case, this suggests that together with Bangladesh, China and India, Vietnam has among the world’s highest levels of private health financing. Furthermore, this share excludes informal fees, which account for a significant proportion of hospital fees and constitute a major source of revenue for public hospital staff.

The national health insurance scheme currently covers an estimated 60% of the population. Today, about 35 million Vietnamese are uninsured and at high risk of falling into poverty when encountering major medical expenses. The 53 million insured can in principle benefit from their health insurance. However, in reality, the poor and the exempted groups still find services unavailable without informal fees, known as ‘envelope’ payments, to doctors, nurses, midwives or other health staff. Indeed, a recent national survey shows that 65% of respondents experienced corruption at local health services and 70% of the medical staff interviewed admitted that they have asked patients to pay bribes. Due to this endemic corruption, the access of poorer Vietnamese to healthcare services remains limited.

The lack of relevant controls and regulations has created negative incentives in the health sector, compounding problems:

  • Doctors and other healthcare providers have incentives to move from rural and poor urban areas to major urban hospitals that serve the local elite and relatively wealthier sections of society.
  • Pharmaceutical companies lobby to make their drugs included in insurance lists. Once on the lists, they often increase drug prices by at least 30% over the market price and encourage doctors to overprescribe expensive medications and laboratory tests. Indeed, media investigations have shown that kick-backs and commissions to doctors sometimes make drug prices ten times higher than the import price (see VIETNAM: Media shape the news despite state ‘control’ – Oxford Analytica April 23, 2010). Since medication accounts for 45-60% of all hospital costs, such distortions increase the cost incurred by the Vietnamese National Health Insurance Fund (VHIF). Unsurprisingly, the VHIF is running at a loss and facing the risk of bankruptcy.
  • Public spending on health has begun to increase in recent years and currently stands at 6.4% of GDP. However, about 70% of the funds go to curative care at the central and provincial levels and their service providers, at the expense of primary care and preventive services in rural areas and at the commune level.

However, the current economic situation (see PROSPECTS 2011 Q4: South-east Asia – Oxford Analytica September 5, 2011) implies that the trend towards increased private and informal payments will continue and the government will struggle to extend insurance provision to an increasingly vulnerable population.

Commercialisation of the health sector has failed to address the ongoing problems of corruption, distribution of health workers, high drug prices and the dominance of curative services. Without major reforms to the fee-for-service mechanism, removal of negative incentives available to service providers and a reduction in informal and corrupt procedures in the health service and insurance refund system, Vietnam will struggle to develop a more efficient and equitable healthcare system. These reforms are all the more necessary because healthcare costs will only increase with economic development and increased demand for effective, accessible and quality services.


Will South Africa finally make progress towards a universal health system?

South Africa has long faced considerable health system equity challenges.  In particular, 43% of total health care expenditure is attributable to private health insurance schemes, which only cover 16% of the population.  General tax funding allocated to the health sector also accounts for about 43% of expenditure, and is used to provide services for most of the rest of the population.  Out-of-pocket payments account for the remainder of expenditure, most of which relates to co-payments by private insurance scheme members but also includes direct payments to private primary care providers by some of those not covered by private insurance. 

The Minister of Health recently released a Green Paper on introducing a National Health Insurance (NHI).  It indicates that the NHI will be guided by the principles of the right to health service access, social solidarity, equity, affordability and the provision of appropriate and effective health services.  It also states that the objective is to achieve universal coverage, where everyone has financial protection from the potentially impoverishing costs of health care and access to needed health care.  Core elements of the proposed NHI include:

  • Substantially increasing the pool of public funds (previous statements indicate that this will take the form of tax funding including: increased allocations to the health sector from general tax revenue; a surcharge on personal income; a payroll tax on employers; and/or increased VAT);
  • The creation of an independent public entity to pool these public funds and use them “to purchase health services on behalf of the entire population from contracted public and private health care providers” on a single payer basis;
  • All South Africans, legal permanent residents and registered refugees and asylum seekers will be entitled to benefit from these services;
  • A relatively comprehensive package of out- and in-patient services will be funded; and
  • There would be no fees charged at the point of service.

The Green Paper recommends that the NHI be phased in over a period of about 15 years, divided into three five-year phases. The first phase will be devoted to rebuilding the public health system.  The capacity and quality of public health services declined dramatically during the late 1990s and early 2000s, when a neo-liberal fiscal policy restricted government spending at precisely the time that the HIV epidemic was exploding, increasing the burden on public sector services.  Specific interventions planned are: ‘re-engineering’ primary care services, including the deployment of teams of community health workers in every ward; an audit of all public sector facilities and improvements in physical infrastructure and ensuring all facilities have a full complement of functioning equipment; increased training of the full range of health care workers; service quality improvement measures; and measures to improve management in hospitals and health districts.   Other preparatory activities such as establishing the NHI fund/independent public purchasing entity will also occur during this phase.

The second phase will focus on changing the way of paying health care providers.  It is proposed that primary care services will be paid for on a capitation basis while diagnosis-related groups (DRGs) will be used to pay hospital services.  Strategic purchasing of services from both public and private health sectors will also be initiated during this phase.  The final phase will be devoted to further expanding health service capacity to achieve universal access.

While there has been a relatively muted response to the release of the Green Paper, with many stakeholders adopting a ‘wait-and-see’ approach, there has been sufficient public commentary to identify key areas of support and concern.  The proposals have been praised for:

  • Being based on universal coverage principles;
  • Adopting a carefully phased approach;
  • Focussing firmly on addressing the problems in the public health sector first; and
  • Building a strong foundation of improved primary care services.

The major concerns expressed include:

  • Although there appears to be a commitment to a single public pooling and purchasing entity, the Green Paper makes mention of also considering a multi-payer option whereby private insurance schemes would act on behalf of the NHI, raising concerns about high administration costs, limiting income and risk cross-subsidies and less ability to cost-containment benefits of a single-purchaser;
  • Purchasing of services from the private sector may retain a two-tier system as wealthier groups live closer to private providers than the less well-off and given the rapid increase in fee levels among private for-profit providers, may threaten the sustainability of the NHI; and
  • Although it is proposed that there will be no fees at the point of service, the Green Paper also mentions having to consider co-payments, which would limit the financial protection afforded to beneficiaries.

There are clearly some contradictions within this policy document that need to be resolved.  It is also apparent that key stakeholders will use the period before the finalisation of the policy to influence the NHI design to best meet their personal objectives.  While the release of the Green Paper is a positive development in efforts to move towards universal coverage in South Africa, unwavering commitment to the core principles outlined in this policy document is required if the final NHI design is to be compatible with achieving these principles.

Di McIntyre is the South African Research Chair in ‘Health and Wealth’ and a Professor in the School of Public Health and Family Medicine at the University of Cape Town


Does health insurance work in Tanzania?

Donor agencies frequently claim that they do not subscribe to any blue print approach to health care reform in developing countries. Can we conclude that it’s just coincidence then that such a similar model of health insurance is under consideration in a growing number of low-income countries, despite little evidence that it can deliver universal coverage in such settings? A recent paper by Ghanaian NGOs in partnership with Oxfam brought into question the apparent ‘success’ of health insurance in Ghana. Here I take a look at Tanzania – another example of how the health insurance approach struggles to reach the most vulnerable and insecure in society i.e. the 90% of citizens who work in the informal economy.

Like for so many countries, user fees and other cost-sharing methods were introduced in Tanzania in the 1990s as part of the World Bank and IMF Structural Adjustment Programme. Again as is common, official user fee exemptions are rarely implemented successfully in Tanzania. Maternal services are supposed to be free for example but 73% of women delivering in a government facility still pay.

About ten years ago two new insurance schemes were introduced, one for the formal sector and one for the informal. The WHO has cautioned that such a split between formal and informal can lead to a two tier system and if it achieves partial success can delay more fundamental reform to reach citizens at scale. With only 4% coverage for the informal sector and a far inferior benefits package this risk is now a reality in Tanzania .

The National Health Insurance Scheme (NHIS) for formal sector and government employees is funded by a 6% salary contribution split between employee and employer. The insured employee, their spouse and four children are entitled to a generous package of health care from government and accredited non-state providers. However, as 90% of the population work in the informal sector its contribution to universal coverage is very limited.

The community health fund (CHF), and more recently its urban equivalent, Tiba Kwa Kadi (Tika), was set up with assistance from the World Bank  with the aim of reaching 60% of households by 2003. It is a voluntary pre-payment scheme with an annual membership fee of 5,000 – 10,000 Tanzanian Shillings (US$3-$6). Member contributions are matched by government at district level. Benefits are much less than the NHIS – expensive hospital care is not covered.

The WHO Alliance for Health Policy and Systems Research recently estimated that national coverage of the CHF was less than 4%.[1] Official figures for the NHIF and CHF combined estimate population coverage to be only 15%. Evidence shows that non-members, or 75% of Tanzanian citizens, are less likely to seek medical care when they are ill and are more likely to rely on self-medication. There are also serious equity challenges to consider. CHF contributions do not vary with income and inability to pay annual premiums is a major barrier preventing the poorest from joining the scheme. In principle those unable to pay are entitled to an exemption but there are significant problems with the criteria used and enforcement. Furthermore, regional inequality is exacerbated as poorer districts with fewer members are less able to generate additional revenue through match funding.

After ten years, 15% coverage is disappointing at best. I haven’t seen much evidence of donor agencies sharing the Tanzania experience with other countries interested in pursuing a similar health financing route.

[1] This is lower than official estimates – for 2007 the MOHSW reported that uptake of CHF was lower than expected at just 10% of rural households (range 4-40%)


Le système de l’assurance-maladie fonctionne-t-il réellement en Tanzanie ?

Les agences d’aide internationale prétendent fréquemment ne pas souscrire aux approches prédéfinies de réforme des soins de santé dans les pays en développement. Doit-on par conséquent considérer comme une coïncidence le fait qu’un modèle uniforme d’assurance-maladie soit envisagé dans un nombre croissant de pays à faibles revenus, et ce, malgré le manque de données probantes quant à son efficacité en termes de prise en charge universelle dans ce genre de contexte? Un récent article publié par des ONG ghanéennes en partenariat avec Oxfam a remis en question le prétendu “succès” de l’assurance-maladie au Ghana. Je me penche ici sur le cas de la Tanzanie, qui illustre également les difficultés avec un système d’assurance-maladie d’atteindre les populations les plus vulnérables et les plus exposées aux risques, soit les 90% des citoyens travaillant dans l’économie informelle.

À l’instar de ce qui s’est passé dans de nombreux autres pays, le paiement direct des soins par les usagers ainsi que d’autres méthodes de partage des coûts ont été instaurées en Tanzanie dans les années 90 dans le cadre des programmes d’ajustements structurels préconisés par la Banque Mondiale et le FMI. Autre effet fréquemment rencontré ailleurs, les exemptions officielles de paiement auxquelles l’usager est en droit de prétendre sont rarement appliquées de manière efficace en Tanzanie. Par exemple, même si les services de maternité sont censés être gratuits, toutefois 73% des femmes payent encore lorsqu’elles accouchent dans un service de santé public.

Il y a environ dix ans, deux nouveaux régimes d’assurance ont été mis en place, l’un destiné au secteur formel et l’autre au secteur informel. L’OMS a mis en garde contre le fait qu’une telle division entre le secteur formel et le secteur informel risque de conduire vers un système à deux vitesses qui, même s’il est en partie efficace, risque véritablement de retarder une réforme plus fondamentale qui bénéficierait à un plus grand nombre de citoyens. Avec un taux de couverture de 4% seulement pour le secteur informel et un ensemble de prestations très inférieur, ce risque est devenu réalité en Tanzanie.

Le régime national d’assurance maladie, le “National Health Insurance Scheme” (NHIS) destiné aux employés du secteur formel et aux fonctionnaires est financé par une contribution salariale de 6% répartie entre employés et employeur. L’employé assuré, son époux/épouse ainsi que leurs quatre enfants bénéficient d’un ensemble généreux de prestations de santé fournies par des prestataires publics et privés agréés. Cependant, étant donné que 90% de la population travaille dans le secteur informel, sa contribution à la prise en charge universelle est très limitée.

Le fonds de santé communautaire (CHF), et plus récemment son équivalent urbain, le Tiba Kwa Kadi (Tika), ont été mis en place avec l’assistance de la Banque Mondiale dans l’optique d’atteindre 60% des foyers en 2003. Il s’agit d’un régime volontaire de paiement anticipé avec une cotisation annuelle de 5 000 – 10 000 shillings tanzaniens (3-6$ US). L’apport du gouvernement complète la contribution des membres au niveau du district. Les prestations du fonds de santé sont largement inférieures au NHIS, et les soins hospitaliers coûteux ne sont pas pris en charge.

L’ Alliance pour la recherche sur les politiques et les systèmes de santé de l’OMS  a récemment estimé que la prise en charge nationale du CHF était inférieure à 4%.[1] Selon les chiffres officiels, le NHIF et le CHF combinés représentent un taux de couverture de la population de 15%. Il ressort des données disponibles que les non-adhérents, soit 75% des citoyens tanzaniens sont moins enclins à se faire soigner en cas de maladie faute de moyens et qu’ils ont tendance recourir à l’automédication. Il faut également tenir compte des sérieux défis relatifs à l’équité. Etant donné que les contributions au CHF ne varient pas en fonction des revenus ni de l’incapacité de payer, les primes annuelles sont un obstacle majeur qui empêche les plus démunis d’adhérer à ce régime. Ceux qui sont incapables de payer ont en principe le droit à une exonération, mais il existe des problèmes importants avec les critères utilisés et l’application de cette règle. En outre, les inégalités régionales s’accentuent étant donné que les districts les plus pauvres et comptant moins d’adhérents sont moins à même de générer des revenus additionnels par le système de co-financement.

Au bout de dix ans, un taux de couverture de 15% est pour le moins décevant. Malgré tout, je n’ai pas encore vraiment vu les agences d’aide internationale diffuser l’expérience tanzanienne à d’autres pays intéressés d’appliquer un modèle similaire de financement des services de santé.

[1] Ce chiffre est inférieur aux estimations officielles – selon les rapports du ministère de la santé et des affaires sociales de Tanzanie pour 2007, l’adhésion au CHF était inférieure aux attentes, à raison de 10% des foyers ruraux (intervalle de 4-40%)


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Global Health Check was created by Anna Marriott and is currently edited by Mohga Kamal-Yanni