Willingness to pay for health insurance among informal sector workers: A case study from Hanoi capital Vietnam
Doan Thi Thu Huyen1*, Hoang Van Minh1, 2
ABSTRACT
Objective:The aim of the study was to assess the individual’s willingness to pay (WTP) for health insurance among informal sector workers in urban areas of Viet Nam and to examine the effects of socio-economic factors on the WTP. Methods: The contingent valuation method, using the iterative biding game technique and final open-ended question, was used to elicit willingness to pay (WTP) for health insurance among informal sector workers. A two-stage cluster sampling technique was used to randomly select 300 informal sector workers aged 18-60 years working in the 4 inner districts of Hanoi.
Results:48.4% of respondents were willing to pay for health insurance. On average, people were willing to pay about 51 thousand VND per month (equivalent to 2.50 USD). The males’ willingness to pay was higher than females (57.4 thousand VND versus 47.6
thousand VND). The significant factors that affected on the rate and amount of WTP were:
1) male gender, 2) education of the respondents; 3) economic status of the respodent’s households 4) having chronic disease. Conclusion: Less than half of informal sector workers in the study area were willing to pay for health insurance. The WTP of informal sector workers was affected by gender, economic status of households and health status of respondents. There was a tendency of adverse selection in health insurance among informal sector workers.
Keywords: Contingent valuation, willingness to pay, health insurance, informal sector worker, Vietnam.
BACKGROUND
According to International Labour Organization (ILO), informal sector includes
1 Institute for Preventive Medicine and Public Health, Hanoi Medical University, Hanoi, Vietnam 2 Center for Health System Research, Hanoi Medical University, Hanoi, Vietnam
* Corresponding author: Doan Thi Thu Huyen, Institute for Preventive Medicine and Public Health, Hanoi Medical University, No 1 Ton That Tung, Dong Da, Ha Noi, Viet Nam; Tel: 84 4 38523798; Email: [email protected]
small-scale, self-employed activities (with or without employees) typically at a low level of organization and technology, with the primary objective of generating employment and income. The activities are usually carried out without proper recognition from the authorities, and escape the attention of the Governmental administration responsible for enforcing laws and regulations1. All employees in the informal sector are thus considered to be informal employees. In addition, the employees with no social security in the formal sector are also informal employments2. In Vietnam, informal sector workers make up a considerable proportion of the workforce and the size of informal sector workers has rapidly increased in recent years. As of 2010, the informal sector contributed more than 11 thousand jobs in Vietnam, mainly worked in Hanoi Capital and Ho Chi Minh City3,4. While the coverage of health insurance of the populations in Vietnam in 2010 was more than 60%, only 24% of informal sector workers reported to be enrolled in a health insurance scheme5. In Vietnam, the political commitments to endorse Universal Health Coverage (UHC) has been very strong and expanding the coverage of health insurance among informal sector workers has been identified as a key to achieving the UHC target6, 7.
Up to now, little is known about the demand for health insurance among informal in Vietnam. Therefore, this paper aims to assess the individual willingness to pay (WTP) for health insurance of informal sector workers in urban areas of Vietnam and to examine the effects of socio-economic factors on the WTP.
The evidence from this study is expected to be helpful for policy makers in making policies and plans toward the UHC goal.
METHODS
Study timing and area
This study was carried out in July 2011 in 4 inner-districts with the highest population density in Hanoi, capital of Vietnam namely:
Dong Da, Hai Ba Trung, Hoan Kiem, Ba Dinh.
Study respondents, sample size and sampling Given the time and budget constraints, in this study, 300 people aged 18-60 years belong five main informal sector worker groups were selected, including 1) Home-based shop seller;
2) Street/sidewalk vendors; 3) Tailors; and 4) Hair dressers; and 5) Motorbike- taxi drivers (60 per each group).
A two-stage cluster sampling technique was applied to select the study participants. In the first stage, 30 clusters (communes) were randomly selected from 71 communes located in the 4 inner districts of Hanoi. In the second stage, 2 people per each study group from each selected cluster were randomly chosen for this study.
Contingent valuation method
This study applied the contingent valuation method (CVM). CVM is a survey-based economic technique which asks individuals how much they are willing to pay (WTP) for public goods. It was firstly applied in a health study to assess the prevention heart attacks8. With this method, respondents were directly asked their maximum willingness to pay (WTP) for specified public goods in a hypothetical scenario. Respondents stating a high or low WTP indicates whether the demand for public goods is high or low8-10. In our study, the iterative bidding technique was used to elicit individual WTP that involved a sequence of dichotomous choice
questions (i.e., yes or no to the bid offered in each question) followed by a final open-ended question. The bidding technique has been widely used in developing countries11-12. Some researchers showed that this technique had more advantages than other formats such as payment cards, dichotomous choice or open- ended questions8, 13, 14.
Study questionnaire
The study questionnaire was designed by the research and was tested in the pilot phase with 20 informal sector workers. The study questionnaire has contingent valuation scenario for eliciting WTP with five questions.
A premium of 50 thousand VND (about 2.00 USD) was used as the first-bid. This amount is equivalent to 4.5% of the minimum salary of employee in Vietnam, and the basis premium rate is regulated by the Law on Health Insurance in Vietnam6. Depending on whether respondents accepted or rejected the bid, it was either raised or lowered. Then, finally, an open-ended question was designed to discover the highest amount of the respondents WTP.
WTP1. If the monthly health insurance premium is 50 thousand VND, are you willing to pay?
Yes =>WTP2 No=> WTP3 Don’t know=> WTP5
WTP2. If the monthly health insurance premium is 60 thousand VND, are you willing to pay?
Yes =>WTP5 No=> WTP5 Don’t know=> WTP5
WTP3. If the monthly health insurance premium is 40 thousand VND, are you willing to pay?
Yes =>WTP5 No=> WTP4 Don’t know=> WTP5
WTP4. If the monthly health insurance
premium is 24 thousand VND, are you willing to pay?
Yes =>WTP5 No=> WTP5 Don’t know=> WTP5
WTP5. What really is the maximum amount you are willing to pay for health insurance per month?
Data collection and supervision
Twelve enumerators with bachelor’s in public health degrees were selected and trained for collecting data. A three-day training workshop consisting of lectures on objectives of the survey, survey techniques and processes and the use of the questionnaire, etc. and mock interviews and actual filed practices were conducted.
Data management and analysis
Collected data were entered into a computer using the EpiData management software. Both descriptive and analytical statistics were performed by using Stata 10. The mean of WTP amount was calculated from the open- ended questions where respondents stated the exact maximum level of WTP for health insurance. A logistic regression model was performed to estimate the probability of being willing to pay for health insurance (WTP rate) based on socio-economic factors. A log-linear regression model was applied to identify socio-economic factors that would influence WTP amount. Two-tailed tests were conducted with a significant level of 0.05. Vietnam Dong (VND) were converted into United States dollars (USD) using the 2011 exchange rates:
1 USD = 20 000 VND.
RESULTS
General description of the study respondents Of the 300 people selected for this study, 248
participated, respondent rate of 82.7%. Table 1 shows the general characteristics of the final study sample by socioeconomic status. There were more women (63.3%) than men (36.7%).
More than 90% of them aged less than 49 years old. Most of them had secondary or tertiary education. Only 4.8% of the study participant reported that their households were classified by the local authority as poor.
24.5% of the study respondents reported having a chronic disease.
Willingness to pay for health insurance
Table 2 shows the rates of the WTP for health insurance among informal sector workers in the study area. Generally 48.4% of respondents stated being willing to pay for
health insurance (who answered yes to the first bid of 50 thousand VND). The WTP rates were significantly different by: 1) gender (men had higher WTP rate than women), 2) household size (the fewer number of household members, the lower WTP rate), 2) economic status of the household (The non- poor had higher WTO rate), and 3) having a chronic disease (respondents with a chronic disease were more willing to pay than those without a chronic disease). There were no statistically significant differences in the WTP rates by age and education.
The mean and median of WTP amounts for health insurance were measured through the open-ended questions where respondents stated the exact amount of money (Table 3).
Table 1. General characteristics of the study sample
Table 2. The pattern of willingness to pay for health insurance
Specially, the mean and median of WTP amounts were 51.07 thousand VND and 50 thousand VND, respectively (min: 10 thousand VND; max: 200 thousand VND).
The levels of maximum WTP were significantly different by: 1) gender (males stated a higher WTP amount), and 2) economic status of household (the non-poor households and respondents with higher incomes stated a higher WTP amount).
Table 4 shows the multiple logistic regression analysis of the correlation between socio- economic factors and the WTP rate for health insurance among informal sector workers.
After controlling for other variables, the significant correlates of the WTP rate were found to be: 1) gender (men were more willing to pay than women), 2) household economic (poor households had lower WTP rate than non-poor households), and 3) those with a choric disease.
Table 5 shows the results of the multiple log- linear regression analysis of determinants of WTP amount for health insurance. After controlling for other variables, there were some significant determinants of WTP amount including: 1) gender: men were willing to pay a higher amount, and 2) economic status of household: non-poor households were willing to pay a higher amount, and 4) getting chronic disease: people with chronic diseases showed their higher WTP amount.
DISCUSSION
To our knowledge, this study is one among the few studies conducted on the WTP of health insurance among informal sector workers in Vietnam. The demand for health insurance was estimated through the WTP rate and WTP Table 3. Levels of maximum willingness to pay
for health insurance
a: The Mann–Whitney U test for comparing 2 groups and Kruskal–Wallis for comparing more than 2 groups based on their sum of ranks
* Denotes significant result
Table 4. Multiple logistic regression analyses of determinants of willingness to pay
a: OR: Odd Ratio b: 95%CI: 95% Confidence Interval
* Denotes significant result (95%CI does not include 1)
amount. Our study shows that only less than half of the study informal sector workers (48.4%) were willing to pay for health insurance. This figure is higher than the one found in a study from Nigeria in 2010 (40.0%)15but lower than the rate reported by a study from Namibia in 2009 (87.0%)16. The mean WTP amount of 51 thousand VND (about 2.50 USD) among those who were willing to pay found in this study is slightly higher than the corresponding figure revealed from a study in Cameroon 2011 (2.15 USD)17 but lower than the WTP level reported by a study in China in 2010 (4.8 USD)18and the one documented in a report from Ghana in 1997 (3.0 USD)19.
Our study shows a negative correlation between the WTP and female gender. This implies that women in the study area were probably less concerned about health insurance. This result is similar to the findings from studies carried out in Bavi, Vietnam in 200520, in Burkina Faso in 200321 and in Nigeria in 201015. In our study, people with higher educational level had higher WTP rate as well as a higher WTP amount than that among those with lower education. In fact, the higher educational level the people have the better they have understanding about the benefits of health insurance. As a result, they are willing to buy health insurance. This is similar to the findings reported from studies conducted in India in 200722and Burkina Faso in 200323.
The present studies also indicate that both the WTP rate and WTP amount are positively associated with the economic status of the respondents’ households. The finding is in line with our hypothesis that better-off households should have higher demand for all goods in general and for health insurance in particular.
This finding is in line with the previous reports from China18, Nigeria15, Ghana19, India22, Burkina Faso23and Ba Vi, Vietnam24.
Our study also shows that people with chronic disease stated a higher WTP rate and WTP amount. This finding indicates that there is still
“adverse selection” phenomenon in health insurance in Vietnam (i.e. Ill people, people with chronic diseases, pre-existing conditions, usually have a higher demand for health care utilization). Our findings are similar to those found in the studies from China18, from Bavi, Vietnam24and India22.
In summary, this pilot study reveals the WTP rate and WTP amount for health insurance Table 5. Log linear regression modeling for
determinants of willingness to pay level
* Denotes significant result
among informal sector workers, which are still low. The WTP rate and WTP amount are positively associated with education of the respondents and economic status of their households. There is still “adverse selection”
phenomenon among the informal sector workers in Vietnam. This finding suggests that achieving universal coverage of health insurance is still challenging in Vietnam,
especially among the informal sector workers.
Improving health literacy concerning health insurance and provision of premium subsidies could be an effective means to increase coverage among these groups in Vietnam.
CONFLICT OF INTEREST
The authors declare that they have no competing interests.
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