Vietnam’s Health Care System: A Macroeconomic Perspective -- Susan Adams, IMF Resident Representative --January 21, 2005

Vietnam’s health indicators are better than would be expected for a country at its development level, and they continue to improve at rates that equal or surpass those in most neighboring countries. However, in the midst of a major program of poverty reduction and economic growth, Vietnam’s health care system is in the midst of a dramatic transformation. Twenty years ago, it was firmly controlled by the central government. But the ability of the Ministry of Health (MOH) to shape activities has diminished significantly, due to the rapid growth of the private sector, the much larger role of out-of-pocket expenditures, and the ongoing process of fiscal decentralization. Over time, new policy tools have been developed, including user fees, health insurance and health-care funds for the poor. These tools all focus on the financing of health, but still fail to merge into a coherent health financing system. This paper outlines the current structure and effectiveness of Vietnam’s health sector from the perspectives of public finance administration and macroeconomic tradeoffs. The paper will first compare Vietnam’s health sector to those of other countries in Asia. A discussion of health spending in the context of overall public expenditure priorities in Vietnam will follow, with special attention to how the health sector is evolving within the context of Vietnam’s Comprehensive Poverty Reduction and Growth Strategy (CPRGS) and longerterm planning framework.