Vietnam: Proposal to increase contributions to stabilize the public healthcare system

Employer Action Code: Monitor

The Ministry of Health has proposed a new Health Insurance Law. The proposal aims to support the long-term financial stability of the public healthcare system, lower out-of-pocket spending and extend insurance coverage to include certain additional treatments. If passed in its current form, the new law would take effect on January 1, 2025.

Key details

Under the proposed Health Insurance Law:

• Employer and employee combined contributions for healthcare would gradually increase from 4.5% to 6.0% of covered earnings by 2035, maintaining the current split of two-thirds payable by the employer, one-third by the employee.
• The public healthcare system would pay the existing full reimbursement rates for healthcare costs in more circumstances. Currently, the full reimbursement rates (80%, 95% or 100%, depending on the type of the insured, age, income and possibly other factors) are sometimes reduced (e.g., based on where the treatment is provided). Most private-sector employees qualify for 80% reimbursement, pensioners for 95%.
• Health insurance would cover various additional items, such as certain medical devices, screening tests, treatment of refractive errors (extended to people under age 18) and early treatment of certain conditions.

Employer implications

Over 90% of companies surveyed provide supplemental private health insurance for their employees. Employers should monitor the progress of the proposals and consider the potential effects on their plans. Despite the high nominal coverage rates under the public system (80% to 100% of costs), individuals still tend to pay a significant share of their healthcare costs. According to World Health Organization 2021 data, out-of-pocket spending accounted for 40% of all healthcare expenditure, well above the 34% average for the Association of Southeast Asian Nations. The Ministry of Health aims to lower the out-of-pocket share of spending to 23% by 2025. At the same time, the demand for healthcare has been growing steadily, driven in part by successful campaigns to extend healthcare coverage to the whole population, which has strained the finances of the system.