Can health insurance reduce household vulnerability? Evidence from Viet Nam

• Published in: World development 2019-12, Vol.124, p.104645, Article 104645
• Main Authors: Vo, Thang T., Van, Pham Hoang
• Format: Article
• Language: English
• Subjects: Access; Difference in difference; Health; Health care expenditures; Health care industry; Health insurance; Health status; Households; Impact evaluation; Insurance; Insurance coverage; Propensity; Propensity score matching; Risk aversion; Rural areas; Rural communities; Statistical analysis; Vulnerability
• ISSN: 0305-750X; 1873-5991
• DOI: 10.1016/j.worlddev.2019.104645

•Health insurance reduces households’ loss in expected utility by 81 percent.•Health insurance reduces the probability of becoming poor by 19 percent.•Lower costs and better efficiency in health care can also reduce vulnerability. This study provides new evidence on the impact of health insurance coverage on household vulnerability using the Vietnam Access to Resources Household Surveys (VARHS) for 2010 and 2012. We apply propensity score matching to address the non-random selection of households into health insurance status. The VARHS data allow us to include risk preference as a predictor of health insurance propensity, an important source of endogeneity between health insurance coverage and vulnerability. We estimate that health insurance helps rural households in Vietnam reduce the idiosyncratic component of utility loss by 81 per cent and the probability of becoming poor by 19 per cent. Our results are robust to alternative statistical specifications. To the best of our knowledge, this is the first paper measuring the impact of health insurance coverage on household ex-ante vulnerability. Our findings suggest that expanding access, reducing costs and improving efficiency in health care would have big benefits of reducing vulnerability for the poor.