Can health insurance reduce household vulnerability? Evidence from Viet Nam

Abstract

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.