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n Determinantsofhousehold health care expenditure: AnanalysisinVietnamusingofVHLSS2006 I INSTITUTE OF SOCIAL STUDIES THE HAGUE THE NETHERLANDS UNIVERSITY OF ECONOMICS HO CHI MINH CITY VIETNAM J ; VIETNAM - NETHERLANDS PROGRAMME FOR M.A IN DEVELOPMENT ECONOMICS ,f' · ; r· DETERMINANTSOFHOUSEHOLDHEALTHCARE f EXPENDITURE: ANANALYSISINVIETNAMBYUSINGOFVHLSS2006BY I LE PHUONG THAO MASTER OF ARTS IN DEVELOPMENT ECONOMICS I I, I HO CHI MINH CITY, NOVEMBER 2011 - -··· · ~- - -~ - -~ - 1/79 VNP Class 13 Determinantsofhousehold health care expenditure: AnanalysisinVietnamusingofVHLSS2006 INSTITUTE OF SOCIAL STUDIES THE HAGUE THE NETHERLANDS UNIVERSITY OF ECONOMICS HO CHI MINH CITY VIETNAM VIETNAM- NETHERLANDS PROGRAMME FOR M.A IN DEVELOPMENT ECONOMICS DETERMINANTSOFHOUSEHOLDHEALTHCARE EXPENDITURE: ANANALYSISINVIETNAMBYUSINGOFVHLSS2006 A thesis submitted in partial fulfilment of the requirements for the degree of MASTER OF ARTS IN DEVELOPMENT ECONOMICS By LE PHUONG THAO Academic Supervisor: DR LE THI THANH LOAN HO CHI MINH CITY, NOVEMBER 2011 VNP Class 13 Determinantsofhousehold health care expenditure: AnanalysisinVietnamusingofVHLSS2006 ACKNOWLEDGEMENTS Foremost, I would like to express my gratitude to all those who gave me the possibility to complete this thesis I would like to express my deep and sincere gratitude to my advisor Prof Le Thi Thanh Loan for the continuous support of my study and research, for her patience, motivation, enthusiasm, and immense knowledge Her guidance helped me in all the time of research and writing of this thesis And my sincere thanks also go to Associate Professor Dr Nguyen Trong Hoai, Co- Director ofVietnam - The Netherlands Program for M.A in Development Economics, who has always given me his encouragements and kindly during the course of my study and thesis research I wish to thank my close friend, Pham Tien Thang, who supported me in finding working papers for references Lastly, I owe my loving thanks to my parents and my husband Without their encouragement and understanding, it would have been impossible for me to finish this work VNP Class 13 Determinantsofhousehold health care expenditure: AnanalysisinVietnamusingofVHLSS2006 DECLARATION I declare that "Determinants ofhouseholdhealthcare expenditure: AnanalysisinVietnamusingofVHLSS 2006" is my own work, that it has not been submitted to any degree or examination at any other universities, and that all the sources used or quoted are indicated and acknowledged by complete references Ho Chi Minh City, November 2011 LE PHUONG THAO VNP Class 13 Determinantsofhousehold health care expenditure: AnanalysisinVietnamusingofVHLSS2006 ABSTRACT The main purpose of this study is to identify the determinantsofhouseholdhealthcareexpenditureinVietnam The main source data for the analysis are from VietnamHousehold Living Standard Survey 2006 (VHLSS 2006) The analysis uses statistic analysis and Ordinary Least Squares (OLS) estimates to find out the determinantsofhealthcareexpenditure First, statistic analysis gives us an overview ofhouseholdhealthcareexpenditure situation inVietnam Second, we estimate the parameters ofhouseholdhealthcareexpenditure model byusing the Ordinary Least Squares (OLS) estimates The statistic results indicate that in the total ofhousehold expenditure, the householdhealthcareexpenditure made up only 6.37% and in total ofhouseholdhealthcare expenditure, 72.53% is used in paying user fees at health facilities (health expenditure for having treatment) The results also present that householdhealthcare expenditures differ byexpenditure quintiles, health status, health insurance status, education ofhousehold head, gender of house head and ect, The regression results bring out some findings First, householdhealthcare expenditures and household income (that householdexpenditure is a proxy) have significant relationship Second, important determinantsofhouseholdhealthcareexpenditure were household expenditure, household size, health status and health insurance The age and education ofhousehold head are also important, but their effects on householdhealthcare are small Moreover, there were statistically significant differences inhouseholdhealthcareexpenditure across regions Key words: households; healthcare expenditure, household expenditures, Vietnam VNP Class 13 Determinantsofhousehold health care expenditure: AnanalysisinVietnamusingofVHLSS2006 TABLE OF CONTENTS Page TABLE OF CONTENTS ACKNOWLEGEMENTS DECLARATION ABSTRACT LIST OF TABLES LIST OF FIGURES 10 LIST OF APENDIXS CHAPTER I 11 INTRODUCTION 1.1 Problem statements 11 1.2 Objectives of the study 14 1.3 Research questions 15 CHAPTER LITERATURE REVIEW 17 2.1 Definitions 2.1.1 17 Healthcare 17 2.1.2 HouseholdHealthcareexpenditure 2.2 18 Theoretical framework for HouseholdHealthcare 18 Expenditure Function 2.2.1 Households and utilization of health care 18 Household characteristics and householdhealthcare 2.2.2 expenditure 2.2.3 Community characteristics and householdhealthcareexpenditure 2.3 VNP 20 22 An overview of the Empirical studies relates to 23 householdhealthcareexpenditure Class 13 Determinantsofhousehold health care expenditure: AnanalysisinVietnamusingofVHLSS2006 CHAPTER3 35 METHODOLOGY AND DATA SET 3.1 Econometric Model of the study 35 3.2 Data set 38 3.2.1 Data Source 38 3.2.2 Some definitions ofVHLSS 2006 39 40 3.3 Methodology 3.3.1 Descriptive statistics 41 3.3.2 Estimation strategy 41 CHAPTER4 4.1 4.1.1 RESEARCH FINDINGS FOR HOUSEHOLD Overview householdhealthcareexpenditureinVietnamHealthcareexpenditure and householdexpenditure structure inVietnam 43 43 4.1.2 Household characteristics and healthcareexpenditure 46 4.1.3 Community characteristics and healthcareexpenditure 54 4.2 Estimated results and Explanation CHAPTERS 56 CONCLUSIONS AND RECOMMENDATIONS 67 5.1 Conclusions 67 5.2 Policy recommendations 68 REFERENCES VNP 43 HEALTHCARE EXPENDITURES INVIETNAM 71 Class 13 Determinantsofhousehold health care expenditure: AnanalysisinVietnamusingofVHLSS2006 LIST OF TABLES Page LIST OF TABLES Table 4.1 Household characteristics 46 Table 4.2 Income and householdhealthcareexpenditure 48 Table 4.3 Healthcareexpenditureby Education of head ofhousehold 49 Table 4.4 Healthcareexpenditureby gender ofhead ofhousehold 50 Table 4.5 Healthcareexpenditureby age of head ofhousehold 51 Table 4.6 Healthcareexpenditureby health status 52 Table 4.7 Healthcareexpenditureby Insurance 52 Table 4.8 Healthcareexpenditurebyhousehold size 53 Table 4.9 Community characteristics 54 Table 4.10 Healthcareexpenditureby urban/rural 55 Table 4.11 Healthcareexpenditureby regions 55 Table 4.12 Variables - their definitions and expected signs 56 i Table 4.13 Regression results of the determinantsofhousehold 59 healthcare expenditures Table 4.14 Regression results of the determinantsofhousehold 64 healthcare expenditures with significant variables VNP Class 13 Determinantsofhousehold health care expenditure: AnanalysisinVietnamusingofVHLSS2006 LIST OF FIGURES LIST OF FIGURES Figure 4.1 Page Structure of sources of health expenditures in VietNam, 43 2006 Figure 4.2 Householdexpenditure structure in year 2006 44 Figure 4.3 HouseholdHealthcareexpenditure structure in year 2006 45 VNP Class 13 Determinantsofhousehold health care expenditure: AnanalysisinVietnamusingofVHLSS2006 APPENDIXS LIST OF APPENDIXS Appendix Appendix Page Inter-correlation matrix of all the independent variables Correlation between household expenditures on 76 healthcare and independent variables Appendix Appendix4 Checking for Multicollinearity 77 Regression of the model with dependent variable 1s 78 Household per capita healthcareexpenditure Appendix The best model: Regression of the model with dependent variable is Household per capita healthcareexpenditure VNP 75 Class 13 79 Determinantsofhousehold health care expenditure: AnanalysisinVietnamusingofVHLSS2006 regression results of these variables are not different from the results in Table 13 so that we can explain similar before Beside, we also regress the model with dependent variable is household per capita healthcareexpenditure (HHEXP_PC) The regression results are given in Appendix and Appendix 5, the results also depict that householdexpenditure and health status had most impact on householdhealthcareexpenditure And insurance status, education ofhousehold head and regions are significant impact on householdhealthcareexpenditure We can see that the results are not different from the regression results with dependent variable is householdhealthcareexpenditure Briefly, householdhealthcareexpenditure is a function of many household characteristics and community characteristics variables The robust estimates of OLS regression equations of some major household characteristics and community characteristics variables that may effect on healthcareexpenditure lead us to the following conclusions: • Householdhealthcare expenditures are highly elastic to household expenditures as a proxy ofhousehold income • Household expenditure, household size, health status and insurance status are major determinantsofhouseholdhealthcareexpenditure • Age ofhousehold head and education level ofhousehold head are also important factors, but their effects on householdhealthcare are small • In general, gender is considered as a significant determinant ofhouseholdhealthcareexpenditure However, in this case, it is not true The results show VNP 1J I Clo.ss 13 Determinantsofhousehold health care expenditure: AnanalysisinVietnamusingofVHLSS2006 that gender has not any clear and meaningful pattern m the influence on householdhealthcareexpenditure • Area of resident variable (urban/rural) presented a surprise result that householdhealthcareexpenditureof rural household is higher than which of urban household • The region variables are also important determinant ofhousehold expenditures on healthcare There were statistically significant differences inhouseholdhealthcareexpenditure across regions (except in the case ofNorth East region) Some of these results and their implications are discussed in Chapter VNP J • I I Class 13 Determinantsofhousehold health care expenditure: AnanalysisinVietnamusingofVHLSS2006 Chapter 5: Conclusions and Recommendations In this chapter, the main findings and results in the thesis will be summarized m order to give some conclusions Based on these conclusions, the thesis will suggested some policy recommendations 5.1 Conclusions: Conclusions from the results of the analysis were as follows: The descriptive analysis for householdhealthcare expenditures presented several important findings First, in total national healthcare expenditures, householdhealthcare expenditures made up 63% This rate is high and it means that healthcare expenditures are burden of households, especially poor households Second, in total household expenditures, spending for healthcare made up only 6.37% while spending for food and drink made up to 52.76% This implied that the living standard of households was still low Third, in total ofhousehold health care expenditures, payment of medicines in self-treatment was still high, it accounted for around 22.39% Forth, the average householdhealthcare expenditures in2006 was 1,344.51 thousand VND and there were 20.25 percent of9189 households that had member got illness/injury in the last week The inequity inhealthcareexpenditure among households had different characteristics on region, area of residence, mcome, • education levels and age ofhousehold head groups In the model for estimating the determinantsofhouseholdhealthcarein Vietnam, there are some important findings The factors that influenced householdhealthcare expenditures were regions, area of residence and some household's characteristics as household size, household income, health status, education of VNP Class 13 Determinantsofhousehold health care expenditure: AnanalysisinVietnamusingofVHLSS2006household head, age ofhousehold head and health insurance coverage Healthcareexpenditure was higher in the households with characteristics as follows; higher expenditure quintile, larger household size, the household head was older, lower education level ofhousehold head, less health insurance coverage, had member that get illness/injury and living in Mekong river Delta (compared with other regions) Householdhealthcare expenditures were highly elastic to household expenditures Household per capita expenditure measured the living standard that is a key determinant ofhouseholdhealthcareexpenditure Therefore, householdhealthcare expenditures vary across expenditure quintiles The households in higher expenditure quintile spend more for health care than the lower while the lower is more likely to get sick Besides, health insurance was also an important determinant ofhouseholdhealthcare Health insurance had negative relatively to householdhealthcareexpenditure It help to reduce household out-pocket healthcare expenditures 5.2 Policy recommendations: In order to improve the quality of health care and reduce healthcare expenditures for households, especially for poor households, households in difficultly regions (North West, North East ); the government should focus more on some problems and policies as below: First, the Government needs to continue increasing state budget spending for healthcare and using it more effectively to ease the cost burden of households on healthcare The health care system in rural areas and difficult regions also should be invested The government should equip commune health centers with health care equipments and support the health care facilities in training professional staff And VNP Class 13 Determinantsofhousehold health care expenditure: AnanalysisinVietnamusingofVHLSS2006by implementing these policies, the overload problem in high level hospitals will be also solved Second, to reduce household out-of-pocket healthcare expenditures, especially for poor, near-poor households, we need have more financial assistance policies for healthcare for the poor and other social welfare target groups The forms of prepayment for all groups in society, especially in the form of health insurance should be more diversify The procurement of health insurance for the poor, near-poor and other social welfare target groups also need to be supported (Example: now, Ho Chi Minh city issues free health insurance cards to poor households that have income per capita less or equal million VND/ year, and support 50% fee for buying health insurance cards if households have income per capita from to 10 million VND /year) Health insurance level needs to increase to ensure covering rising cost of services Besides, the new voluntary health insurance program should be extended because it can help the poor, near-poor households and for all households to reduce burden ofhealthcareexpenditure Third, the high rate of self - treatment expenditure indicates that there were inefficient health seeking and utilization behavior of households Self-medication and self- treatment are very dangerous for the health so that we need to popularize the significance of safe drug usage, especially in difficult regions where the health care information Therefore, the government should restrict self-medication and sales of prescription drugs without a prescription 5.3 Suggestions for further study The thesis also have some limitations and because we lack the information on health such as the information of and price of medical care, the thesis is still not a VNP Class 13 Determinantsofhousehold health care expenditure: AnanalysisinVietnamusingofVHLSS2006 comprehensive analysisofdeterminantsof health care expenditure And extent the model with some other household characteristics, community characteristics that may effect on householdhealthcareexpenditureinVietnam as number of inpatient visits, outpatient visits, over-counter visits for self-treatment, number of children, and number of elderly persons in household, ethnic status, distance to nearest healthcare facility A further study of the determinantsofhouseholdhealthcareexpenditure should be done in order to follow-up and monitor the impact of changes in population, and socio-economics due to the development of the country VNP Class 13 Determinantsofhousehold health care expenditure: AnanalysisinVietnamusingofVHLSS2006 REFERENCES Bolin K, Jacobson L, Lindgren B, 1999, The family as the health producer When spouses are Nash-bargainers, Studies in Health Economics 30, Department of Community Medicine, Lund University, Lund Becker G, 1964, Human capital, New York: Columbia University Press !' Behrman J R, Pollak R A, Taubman P, 1982, Parental preferences and provision for progeny, Journal of Political Economy, 90(1), 52-73 Blanchard Janice C., 2005, "Discrimination and Health Care Utilization", Published 2006by the RAND Corporation Catharina Hjortsberg, 2000, DeterminantsOfHousehold Health Care Expenditure -The case of Zambia Chiappori, D A, 1988, Rational Household labour supply, Econometrica, 56(1 ), 63-89 Currie J, Gruber J, 1996, "Health insurance eligibility, utilization of medical care, and child health", The Quarterly Journal of Economics, 111:431-466 CCSE- WHO group and Ministry of Health group, 2006, "Catastrophic health expenditureinVietnam 2002", the project Development of Health Sector m Vietnam, CCSE-WHO, 2006-2008 Grossman M 1972, The demand for health: a theoretical and empirical investigation, NBER Occasional Paper 119, New York Gertler P, van der Gaag J 1990, The willingness to pay for medical care, Baltimore, The Johns Hopkins University Press Grossman, M., 2000, "The human capital model of the demand for health", in Handbook of Health Economics, A.Culyer and J Newhouse (eds), Elsevier VNP Class 13 Determinantsofhousehold health care expenditure: AnanalysisinVietnamusingofVHLSS2006 Gao M, Yao Y., 2006, "Gender gaps in access to health care in rural China", Economic Development and Cultural Change 55(1): 87-107 Himanshu, 2006, Influence of income and Education on household Health expenditure: the case of Tribal Orissa; 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MPRA Paper No 6489, posted 31 December 2007 I 21 :08; Online at http://mpra.ub.uni-muenchen.de/6489/ Sommer A.S, 2006-2007, "Access to health insurance, barriers to care, and service use among adults with disabilities", Inquiry 43(4): 393-405 Thomas, D, 1990, "Intra Household Resource allocation: an inferential approach", Journal of Human Resources, 25(4), 635-664 Wagstaff A, 1986, The demand for health: Some new empirical evidence, Journal of Health Economics 5, 195-233 World Bank, 1993, "Investing in Health - World Development Report", Washington D.C.: Oxford University Press Woottipong Satayavongthip, 2001, "Determinants of and inequity inhouseholdexpenditure on health care in Thailand'', Thesis was submitted to the Faculty of Graduate Studies, Mahidol University for the degree of Doctor of Philosophy (Demography) World Bank, 2001, "Attacking povertyWashington D.C.: Oxford University Press VNP World Development Report", Class 13 Determinantsofhousehold health care expenditure: AnanalysisinVietnamusingofVHLSS2006 Appendix 1: Inter-Correlation matrix of all the independent variables i Variables EXPEND EXPEND 1.0000 INS 0.0208 1.0000 SEX 0.0109 -0.0103 1.0000 EDU 0.1638 0.0218 0.0393 1.0000 HESTA 0.0235 0.0372 -0.0177 -0.0521 1.0000 AGEhh 0.1210 -0.0356 -0.0703 -0.0388 0.0747 1.0000 HHSIZE -0.2046 0.0509 0.0381 -0.0099 -0.1159 -0.3104 INS SEX EDU HESTA AGEhh ~ ~ VNP Class 13 HHSIZE 1.0000 Determinantsofhousehold health care expenditure: AnanalysisinVietnamusingofVHLSS2006 Appendix 2: Correlation between Householdhealthcareexpenditure and Independent variables Variables HHEXP EXPEND INS SEX EDU HESTA AGEhh HIIEXP 1.0000 EXPEND 0.2871 1.0000 INS -0.0246 0.0208 1.0000 SEX -0.0073 0.0109 -0.0103 1.0000 EDU 0.0249 0.1638 0.0218 0.0393 1.0000 HESTA 0.0715 0.0235 0.0372 -0.0177 -0.0521 1.0000 AGEhh 0.0325 0.1210 -0.0356 -0.0703 -0.0388 0.0747 1.0000 HHSIZE 0.0514 -0.2046 0.0509 0.0381 -0.0099 -0.1159 -0.3104 • VNP Class 13 HHSIZE 1.0000 Determinantsofhousehold health care expenditure: AnanalysisinVietnamusingofVHLSS2006 Appendix 3: Checking for Multicollinearity VIF lNIF EXPEND 1.61 0.619904 EDU 1.20 0.831212 HHSIZE 1.16 0.860187 AGE 1.07 0.935559 SEX 1.00 0.995357 HESTA 1.03 0.974956 INS 1.05 0.952736 AREA 1.33 0.752099 Red River Delta 6.90 0.144873 Mekong River Delta 6.63 0.150822 South East 5.82 0.171746 North central 4.79 0.208566 North East 4.32 0.231614 Central Coast 3.64 0.274394 Central Highlands 2.88 0.347719 Mean VIF 2.96 Variables VNP Class 13 Determinantsofhousehold health care expenditure: AnanalysisinVietnamusingofVHLSS2006 Appendix 4: Regression of the model with dependent variable is Household per capita healthcareexpenditure Dependent variable: LN (HHEXP_PC) Explanatory Variables I Coef I Std Err I P>ltl Household' characteristics: 1.027886 0.0325512 0.000* EDU -0.0083092 0.0022934 0.000* INS -0.1004739 0.0324439 0.002** SEX -0.0237285 0.0315362 0.452 AGEhh 0.0039667 0.0007744 0.000* HESTA 0.6250354 0.0373241 0.000* HHSIZE -0.0073179 0.0106489 0.492 AREA -0.197538 0.0414647 0.000* Red River Delta 0.1981882 0.0826514 0.017 North East 0.2132056 0.0877627 0.015 North central -0.0751996 0.0846044 0.374 Central Coast 0.1960487 0.0893739 0.028 Central Highlands 0.3264841 0.0963288 0.001 * South East 0.2928127 0.0891608 0.001 * Mekong River Delta 0.3780431 0.081759 0.000* -4.18889 0.2768638 0.000 LN(EXPEND) Communities' characteristics: • l> Constant Number of obs = 8789; F( 15, 8773) = 135.10; Prob > F = 0.0000; R-squared = 0.23 *: significant at the percent; **:significant at the percent;***: significant at the 10 percent, Omitted region is Northwest ~ VNP Class 13 Determinantsofhousehold health care expenditure: AnanalysisinVietnamusingofVHLSS2006 Appendix 5: The best model: Regression of the model with dependent variable is Household per capita healthcareexpenditure Dependent variable: LN (HHEXP_PC) Explanatory Variables Coef Std Err P>ltl Household' characteristics: LN (EXPEND) 0.9699452 0.0295856 0.000* EDU -0.008251 0.0023024 0.000* INS -0.1080591 0.322785 0.001 * AGEhh 0.0040379 0.0007557 0.000* HESTA 0.6280211 0.374743 0.000* Red River Delta 0.2685221 0.0513898 0.000* North central 0.2791466 0.0610435 0.000* Central Coast 0.2437715 0.622788 0.000* Central Highlands 0.3610007 0.728343 0.000* South East 0.3194286 0.062093 0.000* Mekong River Delta 0.4474105 0.0508001 0.000* Constant -3.855089 0.2381539 0.000* Communities' characteristics: I Number of obs = 8789; F( 11, 8777) =177 48; Prob > F = 0.0000; R-squared = 0.2271 ' *: significant at the percent; **: significant at the percent;***: significant at the 10 percent VNP Class 13 ... care expenditure: An analysis in Vietnam using of VHLSS 2006 DECLARATION I declare that "Determinants of household healthcare expenditure: An analysis in Vietnam using of VHLSS 2006" is my own... head income of the household in Tribal and rural area than in urban area VNP Class 13 Determinants of household health care expenditure: An analysis in Vietnam using of VHLSS 2006 However, the influence... Class 13 Determinants of household health care expenditure: An analysis in Vietnam using of VHLSS 2006 ABSTRACT The main purpose of this study is to identify the determinants of household healthcare