User fees, financial autonomy and access to social services in Viet Nam

User fees, financial autonomy and access to social services in Viet Nam

June 19, 2013

Recently the government has granted financial and managerial autonomy to the revenue-raising public service entities, including government health facilities and schools. The Decree on Financial Autonomy (Decree 10) grants sweeping powers to revenue-raising public agencies to manage their revenue and expenditure accounts, exploit alternative revenue sources, and make decisions concerning staffing levels and remuneration. This decree has far reaching implications for the delivery and financing of health services as it creates incentives for public entities similar to those of for-profit providers. Concerns have been expressed over the implications of this decree for the cost burden of publicly provided health services and the accessibility of health services for the poor and vulnerable.  

This paper contributes to the current debate by reviewing existing information on the implications of user fees and greater financial autonomy of service providers on the accessibility of publicly provided health and education services, especially for the poor and near poor.  The paper addresses the issue of the accessibility and affordability of social services before and after the introduction of Decree 10 and Viet Nam’s past experience with user charges. The implications of Decree 10 for the affordability of social services are discussed using available data from hospitals that have already implemented the decree.

The review of user fees in health and education suggests that the private costs of these services represent a significantly larger proportion of household non-food budgets for the poor and near poor than for the non-poor. At the same time, the quality of health and education received by the poor and near poor remains deficient. Hospital costs are onerous, especially in the case of hospital admission. The cost of a single service contact with a district hospital takes up over one-fifth of annual non-food consumption expenditure for a person from the poorest population quintile, and as much as 44 percent if the illness requires an admission to a provincial hospital. The high cost of accessing public hospitals can lead to long-term impoverishment of households, which are often forced to sell assets and/or borrow to finance the cost of their hospitalization.

The limited availability of reliable information on the impact of user fees and financial autonomy remains a constraint on effective policymaking. The main recommendation of the paper is the need for a comprehensive research programme to collect and analyse new information on the relationship between user fees and financial autonomy on accessibility to quality social services, particularly for the poor and near poor.