IHS Global Insight Perspective | |
Significance | Vietnam is to increase health insurance coverage by 10 million people in 2009 and raise the premium to 4.5% from next year. However, the current coverage rate, 44% of the population, still remains low due to challenges like a funding shortage and lack of specific guidance. |
Implications | The Vietnamese government's goal of universal health insurance coverage by 2014 appears challenging if the government doesn't move faster. |
Outlook | The increasing health insurance coverage is going to expand the country's pharmaceutical market and will therefore provide opportunities for both domestic and multinational pharmaceutical companies. |
The head of the Vietnamese Ministry of Health's (MoH) Office of Social Insurance, Dr Tong Thi Song Huong, revealed that the government is aiming to increase the number of people with health insurance coverage from 40 million by the end of 2008 to 50 million by the end of this year. However, there are still many challenges ahead for the government to achieve its universal coverage aim by 2014, reports the VietNamNet Bridge.
A Goal of Universal Health Insurance Coverage by 2014
Passed by the National Assembly in November 2008, a new Law on Health Insurance will come into effect in Vietnam from 1 July 2009. The new law outlines the government's goal of realising universal health insurance by 2014. According to the law, the health insurance premium will be 6% of an employee's monthly salary, of which the employee pays one-third and their employer pays the rest. Meanwhile, there will be a premium cap at no more than 20 times the minimum salary.
The Vietnamese health authorities are planning to increase the health insurance premium from the current level of 3% to 4.5% of monthly salary from 2010.
Lack of Funds and Specific Guidelines Challenge the 2014 Goal
Despite the breakthrough in the new health insurance law, implementation is difficult without specific guidelines such as hospital fee policies. Meanwhile, the health insurance fund shortage is also a challenge for the government to realise the goal. According to Dr Tong Thi Song Huong, the health insurance payout is expected to reach over 13 trillion Vietnamese dong (US$731 million) in 2009, however, the estimated income is only going to be about 10 trillion dong.
The Health Minister Nguyen Quoc Trieu admitted the difficulty in achieving the goal of total coverage by 2014 at a recent conference and said that the current health insurance coverage in Vietnam stands at a low level of 44% of the total population.
Outlook and Implications
With a current coverage level of 44% of the population, the Vietnamese government is facing a tough task to increase it to 100% within five years considering the health insurance fund is chronically underfunded and there have not been implementation guidelines released following the issue of the new law. In addition to the premium hike from next year, the government will also need to attract more people to join in the health insurance scheme with more comprehensive community healthcare services, especially for those living in rural areas. On the other hand, stricter rules need to be in place as well to regulate employers' compliance with the health insurance law and pay the premium for their employees.
The overall trend, however, is promising to the pharmaceutical industry, which is set to benefit from an expanded market in Vietnam with a steadily increasing health insurance coverage.