Health financing needs bold strategy

In Vietnam, health financing has played a key role in protecting people from catastrophic health expenditures and improving access to essential services. With public and private resources mobilised through social health insurance, the country has significantly expanded coverage.

Over the past three decades, Vietnam’s health financing system has evolved from a fully state-subsidised model to one based on social health insurance, out-of-pocket contributions, and government subsidies. This transformation has resulted in over 90 per cent health insurance coverage today, a major achievement.

The country has introduced targeted support for vulnerable groups such as the poor, ethnic minorities, and children under six, contributing to broader access to care.

Following Decree No.188/2025/ND-CP, issued on July 1 and coming into effect from August 15, the state budget subsidises health insurance premiums at different rates: 100 per cent for near-poor residents in poor communes, at least 70 per cent for vulnerable groups in formerly disadvantaged areas (up to 36 months), and at least 50 per cent for human trafficking victims (for one year) and other eligible groups under the Health Insurance Law.

This is a significant development for the Vietnamese healthcare industry, aiming to provide free medical examination and treatment services for all citizens.

However, challenges persist. Out-of-pocket spending remains relatively high, placing financial pressure on households and limiting access to necessary services. At the same time, the lack of efficient resource allocation, overreliance on hospital care, and deficiencies in primary care infrastructure continue to hinder the system’s performance.

Despite these challenges, Vietnam’s strong political commitment and growing economy provide a solid foundation for future reforms.

For healthcare to become truly universal and sustainable, financing must be sufficient to meet growing needs while ensuring quality and equity. This requires strategic investments in cost-effective services, such as primary care and preventive healthcare, as well as mechanisms that promote both financial protection and the long-term resilience of the system.

The promotion of generic drugs and biosimilars occupies a paramount position in our agenda. Recognising the profound impact these alternatives can have on mitigating accessibility challenges of patients to high-quality medicines and broadening treatment options, while supporting the health finance system, we advocate for early issuance of guidance on drug registration, incentives for technology transfer initiatives, and intensive healthcare professional training, to bring affordable quality medicines to Vietnamese people.

The success of any health financing system depends on a combination of political will, legal frameworks, financial sustainability, and institutional capacity.

Mandatory enrolment, especially for workers in the informal sector, helps create large, risk-sharing funds and reduces inequalities. Stable funding sources from the state budget and the Vietnam Social Security can increase the flexibility of health budgets. In addition, strategic procurement, which allocates resources based on performance and the health needs of the population, can significantly improve efficiency.

Vietnam can learn from countries such as Thailand, which has introduced strict cost controls and universal health insurance with low co-payments. South Korea provides an example of financing a system of taxes linked to crime, while Germany emphasises the importance of governance and digital infrastructure, highlighting the importance of transparency and evidence-based decision-making. Adapting these lessons to the Vietnamese context will be essential for shaping the next phase of reform.

Meanwhile, improving the efficiency of health financing in Vietnam requires a multipronged strategy. Firstly, the country needs to explore options for increasing its fiscal space for health spending, including through earmarked revenues and more efficient use of public spending. Secondly, moving to compulsory health insurance will help reduce fragmentation and ensure cross-financing. Thirdly, Vietnam needs to modernise pay mechanisms for service providers so that they reward results rather than volume, thereby encouraging efficiency and quality care. Investment in primary care infrastructure is also critical, as strong community-based care reduces the burden on hospitals and facilitates early intervention.

Coordination among stakeholders is essential to achieve these goals. The government must provide a clear legal and policy framework, insurers must introduce payment and care reforms, providers must adapt to new service models, and development partners and civil society must support capacity building, innovation, and accountability. Together, these efforts can create a fairer and more sustainable health system.