Inequity in household health care finance in vietnam

MINISTRY OF EDUCATION AND TRAINING UNIVERSITY OF ECONOMICS HO CHI MINH CITY  TRAN NGOC THANH INEQUITY IN HOUSEHOLD HEALTH CARE FINANCE IN VIETNAM MASTER OF ART IN DEVELOPMENT ECONOMICS (SPECIALIZATION IN HEALTH ECONOMICS AND MANAGEMENT) Ho Chi Minh City – 2015 MINISTRY OF EDUCATION AND TRAINING UNIVERSITY OF ECONOMICS HO CHI MINH CITY  TRAN NGOC THANH INEQUITY IN HOUSEHOLD HEALTH CARE FINANCE IN VIETNAM Major : Economics Code : 60310105 MASTER OF ART IN DEVELOPMENT ECONOMICS (SPECIALIZATION IN HEALTH ECONOMICS AND MANAGEMENT) Advisor: Dr Pham Khanh Nam Dr ArdeshirSepehri Ho Chi Minh City – 2015 WORD OF WARRANTY My name: Tran Ngoc Thanh As master student, grade Economics and Health Administration, the 2013-2015, Faculty of Development Economics, University of Economics Ho Chi Minh City I swear this is my research The data and conclusions of Research presented in this thesis are honest and have not been published in other research I am responsible for my research Student Tran Ngoc Thanh CONTENTS LIST OF ABBREVIATIONS CONTENT OF TABLE CONTENT OF FIGURE CHAPTER 1: INTRODUCTION .1 1.1 Background 1.2 Research Objectives 1.3 Data source 1.4 Study Design CHAPTER 2: LITERATURE REVIEW 2.1 Definition .4 2.1.1 Social equity 2.1.2 Equity in health care .5 2.1.3 Inequality and Inequity 2.1.4 Vertical equity and Horizontal equity 2.1.5 Ability to pay – ATP .9 2.2 Concentration index and Concentration curve 2.3 Concentration index 2.3 Concentration curve 10 2.3 Katwani indices and Concentration curves 10 2.4 Inequity or Progressivity of health care finance 12 2.5 Decomposition .13 2.6 Review emperical studies about health equity finance .14 CHAPTER 3: METHODOLOGY 19 3.1 Analytical framework 19 3.2 Model 20 3.3 Data 24 3.4 Variables 24 CHAPTER 4: RESULTS 27 4.1 Vietnam Health Care System 27 4.2 Delivery of Health care 28 4.3 Financing of Health Care 29 4.4 Results .32 4.4.1 OLS and Quantile Regression of Household Total expenditure 32 4.4.2 Average Per household Health Finance, Shares of Total Financing 35 4.4.3 Distributional Incidence of Sources of Household Health Finance .39 4.4.4 Decomposition inequality of Household Total expenditure 43 4.4.5 Decomposition inequality of Health Care 43 4.4.6 Concentration Curves 47 4.4.7 Distribution of Health Payments 48 4.5 Compare with international studies .49 4.6 Discusion .50 CHAPTER 5: CONCLUSION AND POLICY IMPLICATION .51 5.1 Conclusion 51 5.2 Policy implication 52 5.3 Limitation 53 REFERENCE LIST OF ABBREVIATIONS ATP Ability to pay CI Concentration index GDP Gross domestic product GSO General Statistics Office K Katwani index MOH Ministry of Health OOP Out-of-pocket (payment) PHI Private health insurance SHI Social health insurance THE Total health expenditure VND Vietnamese Dong (currency) OLS Ordinary least squares VHLSS Vietnam Household Living Standards Survey WHO World Health Organization CONTENT OF TABLE Table 1: Some brief definitions Table 2: The magnitude of inequality based on the value of CIs 10 Table 3: Summary formulae analyzing inequity 20 Table 4: Variables of socioeconomic factors and expenditures .25 Table 5: Health Expenditure in Vietnam 31 Table 6: OLS and Quantile Regression of Household Total expenditure 33 Table 7: Average Per household Health Finance (‘000 VND) and Shares of Total Financing (%) 37 Table 8: Distributional Incidence of Sources of Household Health Finance in Vietnam, 2012 and 2010 41 Table 9: Decomposition inequality of Household Total expenditure .46 Table 10: Decomposition inequality of Health Care 45 Table 11: Compared results with international studies 49 CONTENT OF FIGURE Figure 1: Social determinants of health and health equity Figure2: Health inequality vs health inequity Figure3: Process to analyze inequity Figure4: Three dimensions of health coverage Figure5: Lorenz curve for prepayment income and concentration curve for health care payment .11 Figure6: Framework of analysing inequity .19 Figure7: The structure of health care system in Vietnam 28 Figure8: Channels of financing sources for Viet Nam health care system .30 Figure9: Social Insurance Contribution, Inpatient and Outpatient payments, Out-ofpocket for health care 47 Figure10: Health Payment Shares by Quintiles 49 CHAPTER 1: INTRODUCTION 1.1 Background Equity is one of the most important problems on the world, especially in health care finance Many countries are working to establish a health financing system that allows them promote, prevent, curate and rehabilitate health interventions for all at an affordable cost – thereby achieving equity in access and financial riskprotection as well as in health financing (WHO, 2005) Moreover, this is particularly challenging for low- and middle-income countries in light of their heavy reliance on out-of-pocket (OOP) payments for health care (WHO, 2010) Viet Nam is a developing country, withoutthe exception The challenge is to improve the health financing system in order to achieve universal coverage asan overall policy goal Equitable financing is a key objective of health care systems Its importance is evidenced in policy documents, policy statements, the work of health economists and policy analysts The financing of health care is a subject of major concern throughout the world The conventional categorisations of finance source for health care are taxation, social health insurance, and out-of-pocket payments An understanding of the equity implications would help policy makers in achieving equitable financing The main purpose of this research was to comprehensively assess the equity of health care financing in Vietnam, which represents a new country context for the quantitative techniques used In this research, author uses the concentration index to assess inequality and Katwani index to assess the inequity of health care finance The study evaluated each of the four financing sources (outpatient and inpatient expenditures, health insurance,out-of-pocket payments) independently, and subsequently by combined the financing sources to evaluate the whole financing system The author also assesses inequality of expenditure only in health care and total expenditure including food and non-food expenditures of households Moreover, the author also uses additional methodology to assess that which sources mostly affect inequity of health care finance by applying the method decomposition of expenditure Definition of Equity involves a value judgment of fairness on the variations from the equality in the population Equity in health care financing is assessed by the degree of inequality in paying for health care between households of unequal Ability To Pay (ATP) (Doorslaer, Wagstaff, 1993), ATP is the factor used to evaluate inequity of health care finance system– ATP can be measured by the total expenditure of household, including food, non-food payments and healthcare expenses To strengthen the important of health care finance related to ATP, many studies have used ATP to evaluate the inequity in health care field such as ATP in Denmark and the UK; Ireland, Portugal and Spain; Italy and the Netherlands; and tax financing in Switzerland Furthermore, the accordance of health payments to ATP is regarded as an important objective in the finance of health care in Belgium, France, Germany, the Netherlands Policy makers in various countries are seen to commit towards financing health care according to ATP Kakwani Wagstaffand (1997), Doorslaer Doorslaer (1997,2000),Doorslaer (1993, 1997),Wagstaff(2002)have andMasseria(2004), studied income- relatedinequalityinhealthcareutilization, equity in health care delivery, equity in health care finance, and inequalities in health by using ATP The Ministry of Health (MOH) in Vietnam also agree to use the new national health financing scheme be related to ATP (PAHE, 2011) With all reasons above, the author also uses ATP tomeasureandexplaininequality and inequity in health care finance in Vietnam In summary, this study usetheconcentrationindex and Kakwani indexforthe measurement of ATPinequality and inequity in health care finance proposedbyWagstaffandDoorslaer (2000) to assess whether there are inequity and inequality in health care system andwhichfactors affect mostly to the inequity in health care finance system in Vietnam 42 2010 Equivalent household expenditure quintile Poorest 20% Equivalent household expenditure Total expenditure for health Inpatient OOP payments Outpatient Insurance premiums 7.12% 6.16% 4.92% 5.98% 6.11% 7.40% (standard error) (0.074) (0.239) (0.388) (0.305) (0.245) (0.645) Poorest 40% 19.32% 15.91% 13.51% 15.97% 15.71% 20.78% (0.146) (0.483) (0.801) (0.627) (0.494) (1.282) 35.93% 30.47% 27.14% 30.68% 30.08% 39.83% (0.218) (0.802) (1.392) (1.028) (0.821) (2.100) 58.68% 52.96% 51.42% 52.05% 52.54% 63.32% (0.283) (1.211) (2.227) (1.543) (1.242) (3.035) Against 45 line - - - - Against Lorenz curve - - - 0.4068 0.4421 0.4097 0.4111 0.3021 (0.012) (0.021) (0.016) (0.012) (0.045) 0.0672 0.1025 0.0701 0.0715 -0.0375 (0.020) (0.037) (0.026) (0.020) (0.063) Poorest 60% Poorest 80% Total expenditure for daily activity Food payments Non-Food payments 7.22% 7.50% 6.25% (0.082) (0.112) 20.24% 17.64% (0.156) (0.226) 37.30% 33.58% (0.230) (0.357) 60.14% 56.12% (0.295) (0.505) - - - + + - 0.3331 0.3214 0.3728 (0.003) (0.006) -0.0182 0.0332 (0.003) (0.007) (0.080) 19.65% (0.153) 36.46% (0.227) 59.23% (0.295) Test Dominance Concentration index (CI) (standard error) Katwani index (K) (standard error) Dominance tests: 0.3396 – indicates the 45-degree line/Lorenz curve dominates the concentration curve + indicates concentration curve dominates 45-degree line/Lorenz curve blank: non- dominate a Gini index for equivalent household expenditure (0.004) -0.0065 (0.002) 43 4.4.4 Decomposition inequality of Household Total expenditure Author of this study use equation (11) suggested by Wagstaff, van Doorslaer, and Watanabe (2003) to decompose ATP (total expenditure) inequality of households Vietnam in 2012 and 2010 A summary of the results is presented in Table9 The entries in each column are derived from equation (11) and give the elasticity of total expenditures (ATP) with respect to each factor, the concentration index for each factor, and the total contribution of each factor to the ATP concentration index The results are presented in Table9, both year 2012 and 2010.The large elasticities of ATP with respect to these factors are responsible for their large contribution to the ATP concentration index In year 2012, food and non-food expenditure have the largest elaticities, elasticities 0.772 and 0.162, contribute most inequality in ATP, 0.266 and 0.054, make highest share of contributions, 77.25% and 15.72% Outpatient and inpatient have share of contributions 2.41% and 3.24% eventhough they have high concentration indices because they have very low elasticities In year 2010, food and non-food expenditure have the largest elaticities, elasticities 0.7049 and 0.2068, contribute most inequality in ATP, 0.2265 and 0.0771, make highest share of contributions, 66.72% and 22.70% Outpatient and inpatient have share of contributions 4.22% and 4.63% eventhough they have high concentration indices because they have very low elasticities 4.4.5 Decomposition inequality of Health Care To decompose health care expenditure inequality of households Vietnam Author only uses financing varibles in health care to analyze, not including food and non-food expenditure A summary of the results is presented in Table To analyze more detailed, drugs, healthtools expense also used in this study The resultsare presented in Table 10, both year 2012 and 2010 44 In year 2012,outpatient and inpatient have highest elasticities, 0.3756 and 0.3992 Next is drugs expenditure, 0.1505 So, contributions of inpatient and outpatient in inequality are too high The last column is the share of contribution in inequality of healthcare expenditure In year 2010,outpatient and inpatient also have highest elasticities, 0.3961 and 0.4025 Next is drugs expenditure, 0.1506 So, contributions of inpatient and outpatient in inequality are too high The last column is also the share of contribution in inequality of healthcare expenditure 45 Table 10: Decomposition inequality of Health Carepayments 2012 Outpatient expense Inpatient expense Insurance expense Drugs expense Healthtools expense " Residuals" Total Source: Author Elast CIs 0.376 0.399 0.061 0.150 0.014 0.324 0.412 0.270 0.249 0.340 Contribution 0.122 0.165 0.016 0.037 0.005 0.000 0.345 2010 Share of Contributions Elast CIs 35.3% 47.7% 4.8% 10.9% 1.4% 0.396 0.403 0.040 0.151 0.011 0.410 0.442 0.302 0.330 0.441 Contribution 0.162 0.178 0.012 0.050 0.005 0.000 0.407 Share of Contributions 39.89% 43.74% 2.94% 12.22% 1.21% 46 Table9: Decomposition inequality of Household Total expenditure 2012 Outpatient expense Inpatient expense Insurance expense Drugs expense Healthtools expense Food expense Non-Food expense " Residuals" Total Source: Author Elast CIs 0.026 0.027 0.002 0.010 0.001 0.772 0.162 0.324 0.412 0.270 0.249 0.340 0.344 0.334 Contribution 0.008 0.011 0.000 0.002 0.000 0.266 0.054 0.003 0.345 2010 Share of Contributions 2.41% 3.24% 0.13% 0.69% 0.09% 77.25% 15.72% Elast CIs 0.035 0.036 0.003 0.013 0.001 0.705 0.207 0.410 0.442 0.302 0.330 0.441 0.321 0.373 Contribution 0.014 0.016 0.001 0.004 0.000 0.227 0.077 0.000 0.340 Share of Contributions 4.22% 4.63% 0.31% 1.29% 0.13% 66.72% 22.70% 47 4.4.6 Concentration Curves Figure 9presents the Lorenz curve for household total expenditure gross of health payments along with the concentration curve for each source of household health financing, year 2012 It shows household Social Insurance Contribution, Inpatient and Outpatient payments, Out-of-pocket for health care The Lorenz curve shows the cumulative share of consumption according to the cumulative share of population ranked in ascending order of consumption For instance, only 20 percent of total consumption might come from the poorest 30 percent of the population This curve provides us with a visual representation of household inequality: the farther the curve is from the 45° line, the greater is the inequality Concentration Curves for Health Payments and Lorenz Curve for Household Expenditure Figure 9:Social Insurance Contribution, Inpatient and Outpatient payments, Out-of-pocket for health care Insurance inpatient Lorenz outpatient Source: Author 48 The concentration curves represent the cumulative share of health payments according to the cumulative share of population, again ranked in ascending order of consumption For instance, the poorest 30 percentmight contribute only 10 percent to social insurance These curves show how health financing varies according to consumption: the farther a curve is from the 45° line, the more the corresponding source of financing is borne by the richest households For some sources of financing, the concentration curve might lie above the 45° line In such cases, payments are more concentrated among the poorest households Furthermore, these graphs offer a powerful means of representing the effect of health financing on the distribution of household living standards Indeed, whenever a concentration curve lies outside the Lorenz curve, this indicates progressivity However, a formal test of statistical dominance is required to conclude this definitively (see O’Donnell and others 2008, ch 7) The Results are presented in graph Figure In graph Figure 9, the concentration curves for inpatients appear to lie outside the Lorenz curve, suggesting that this is progressive sources of finance The curve for the social insurance appears to lie inside the Lorenz curve suggests regressivity for the richest households However, the gap between the concentration and Lorenz curves is never wide 4.4.7 Distribution of Health Payments Figure 10 shows the average budget share of out-of-pocket health payments (that is, health payments divided by total expenditure) by quintile of total consumptions This figure is a direct representation of the progressivity of health payments These are progressive if their share ofhousehold consumption increases with consumption and are regressive in the opposite case Finally, if their budget share does not vary with consumption, health payments are proportional to income 49 2012 2010 Figure 10a:Health Payment Shares by Quintiles Figure 10b:Health Payment Shares by Quintiles Source: Author Author’s study shows that out-of-pocket payments in VHLSS 2012 are regressive over the first two quintiles, and stabilize for the richest quintile But, very progressive for the richest quintiles in VHLSS 2010 4.5 Compare with international studies This research assessed equity of health care financing in Vietnam employing Kakwani's progressivity index It represents the first study to measure progressivity of each of the finance sources and the whole financing system in Vietnam in a comprehensive manner To see the more detailed picture with other countries, I also compared the result to other studies of other countries on the world 50 Table 10: Compared results with international studies Countries, Year Proportion of main finance source (%) Kakwani's Indices Progressive Social insurance Malaysia 1998/99 Italy, 1991 (Wagstaff et al 1999) France, 1989 (Wagstaff et al 1999) Mildly progressive 39.2 73.6 0.0811 0.0413 0.0012 Belgium, 1997 (Wagstaff et al 1999) 42.1 -0.0001 Nearly proportional Hungary, 1999 (Wagstaff et al 1999) 44.1 -0.0181 Mildly regressive South Korea, 2000 (O'Donnell et al 2005) Taiwan, 2000 (O'Donnell et al 2005) West Germany, 1989 (O'Donnell et al 2005) Japan, 2001 (O'Donnell et al 2005) 33.9 51.8 -0.0239 -0.0292 65 54 -0.0452 -0.0688 Netherlands, 1992 (Wagstaff et al 1999) 64.7 -0.0703 Out-of-pocket Bangladesh, 1999 (Institute of Policy Studies 2002) Indonesia, 2001 (O'Donnell et al 2005) Philippines, 1999 (O'Donnell et al 2005) Malaysia 1998/99 27.2 33 39.7 0.2142 0.1732 0.163 0.1043 Progressive Nepal, 1996 (O'Donnell et al 2005) 23.5 0.0625 Mildly progressive China, 2000 (O'Donnell et al 2005) 14.9 0.0404 (forthcoming [11]) 4.6 Discussion The Vietnam health financing system was progressive in both years, with concentration indices of 0.344 in 2012 and 0.3396 in 2010 In 2012, the households contribute progressively towardsinpatient payments, and out-of-pocket payments, but very small.In 2010, the households contribute progressively towards outpatient, inpatient , and out-of-pocket payments, except contributions to social insurance The magtitude of Katwani index is larger in 2010 than in 2012 51 CHAPTER 5: CONCLUSION AND POLICY IMPLICATION 5.1 Conclusion This section concludes the findings of Chapters and Chapter concentrates on the calculation and interpretation of consumption-related inequality in health care payment Two important indicators when researching financial inequity is Concentration index CI and Katwani index K CI> or CI0 means that there is inequitytowards progressivity, the rich pay much more than theirability to pay, and contrary Results in 2012 and 2010 in this study showed that the overall picture of the first two periods Data showed VHLSS and CI2012 = 0.344 , CI2010= 0.3396, says there are inequalities in health expenditure of households Looking at the chart (figure 10) we see progressivity of OOP in 2012 more unclear than in 2010 K2012 almost equal to 0, it can be judged very little inequity according to data VHLSS, however K2010 equivalent to China, the mildly progressive For the decomposition inequality, based on Table 9, we see spending for inpatient and outpatient contribute to inequalities in health care spending more than other factors The reason is that ratios in spending towards these factors, the higher elasticity, and their contribution are more than in health care inequality 5.2 Policy implication Results of this study reflect a real part of the state system of health care spending (according to data VHLSS) in Vietnam, helping policy makers with a view to quantify their suggestions for improving methods health care system, to reduce the inequity and inequality in payment for health care OOP is an important incidence which contribute to inequality health care finance, we need to reduce OOP spending, and increased funding for health care 5.3 Limitation 52 This study is based on data from VHLSS 2012 and 2010, these factors should be considered in studies of health care spending can not find adequate in this data set Really inequity health care finance is one of the difficult research area, requiring a very high understanding of econometric knowledge, with knowledge of the author can not be universal, and this is a limitation of the subject Research by health care finance inequity is one process includes two arrays goals: health care spending and government funding for health care of it This study is only done the first array goal, the study is not considered in government funding This 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