Effects of health insurance on labour supply

Evidence from the Health Care Fund for the Poor in

Vietnam
Nga Le Wim Groot Sonila M. Tomini Florian Tomini
February 1, 2017

Preliminary results, please do NOT cite

Abstract
Health insurance has been ever expanding in emerging countries which can
increasingly finance it for the general mass. However, this raises the concern of
unintended negative effects of health insurance on the labour supply of those
covered. Employing Difference-in-Difference and Matching Difference-in-Difference
methods on a panel data from Vietnam Household Living Standard Survey during
2002-2006, we show that the Health Care Fund For the Poor (HCFP) in Vietnam,
which aims to provide poor people and disadvantaged minority groups with free
healthcare via free health insurance, indeed have a positive labour supply effect.
This positive effect is manifested in increase in both average work hours and
probability of employment. Additionally, the effect seems more significant in 2006
than in 2004 in both size and sign, suggesting a health boosting effect of the free
health care over time for the Vietnamese poor. This supports the widely used
argument that people would work more if getting free health coverage thanks to
improved physical well-being.

Keywords: Vietnam, Health care fund for the poor,

health insurance , labour supply

UNU-MERIT/MGSoG, Maastricht University, the NL, nga.le@maastrichtuniversity.nl

TIER and CAPHRI School for Public Health and Primary Care, Maastricht University, the
NL,wn.groot@maastrichtuniversity.nl

UNU-MERIT/MGSoG, Maastricht University, the NL, sonila.tomini@maastrichtuniversity.nl

TIER,Maastricht University and Amsterdam School of Economics, University of Amsterdam, the
NL, florian.tomini@maastrichtuniversity.nl
1 Introduction
Out-of-pocket spending has been a long-standing concern for patients in non-
advanced countries. For instance, according to the most updated World Banks
statistics, out-of-pocket payment in low and middle income countries made up more
than 78 percent of total private health spending in the mid nineties and remains
very high at more than 75 percent in 2014 (WB, 2016). Therefore, to address
this concern, there has been increasing interest in expanding health coverage over
the last two decades around the less-developed world (Wagstaff, 2010). Currently,
together with living standard increase in fast-growing regions, the movement is
gaining more and more momentum in emerging economies that can gradually
finance it. It has been rolling out into a global wave under the term of Universal
Health Coverage (UHC), which has been strongly pushed by large donors and
international organizations. Vietnam is also in the trend with strong top-down
political will which is manifested in recently introduced health insurance laws and
regulations such as Health Insurance Law in 2008 and its amendment in 2014.
However, in Vietnam, the wave of health coverage expansion was ignited much
earlier. After the 1986 Reform, normally referred as Doi Moi where the economy
was shifted from centrally planned system to a more open and market oriented
economy, Vietnamese government has conducted a plethora of healthcare reforms
(Wagstaff, 2010) to improve healthcare access and coverage. One among the efforts
is Health Care Fund For the Poor (hereafter, HCFP), which was introduced in 2003
as a subsidized health scheme for the poor and ethnic minority peoples. The aim
was to tackle ever increasing out-of-pocket payment, especially for the poor and
vulnerable (Wagstaff, 2010).
Despite the good intention, there has been a recent concern raised
about unintended consequences of health insurance. For instance,
Wagstaff and Moreno-Serra (2009, 2015) shows empirically that social health
insurance is associated with higher unemployment and reduced employment in
East Europe and Central Asia during 1990-2004. Additionally, welfare benefits
- which normally include social health insurance - are theoretically associated
with moral hazard in form of decreased labour supply (Gruber, 2010). Budget
constraint approach argues that non-contributory welfare benefits disincentivize
people to work because it gives the poor incentive to remain poor to qualify for the
benefits(Gruber, 2010, p.500). This effect is substantial if health expenses account
for a large proportion of total household expenses (ibid.), which is particularly
true in the case of poor people. In addition, the theory of static labour supply
predicts that public health coverage which is not linked to employment potentially
makes working less attractive (Chou et al., 2002).
From another theoretical viewpoint, the precautionary labour theory developed
by Netzer and Scheuer (2007) suggests that individuals faced with less uncertainty
will decrease labour supply due to reduced need for savings. Therefore, as inferred
from this model, health insurance which aims to remove catastrophic health
expenses might make people feel more secured about the future and hence change
their work behaviour. All in all, these theoretical foundations and empirical pieces
of evidence seemingly indicate that negative effects of health insurance on labour
supply should not be neglected.
Despite potential adverse impacts, there is inadequate evidence on the topic.
Our recent systematic review (Le et al., 2017) suggests that empirical evidence in
developing countries is relatively scarce and sporadic. This creates a knowledge
gap, especially for policy makers in low and middle income countries where health

1
coverage is ever expanding. Therefore, it is timely to seek for more evidence to help
guide policy making. In Vietnam, this is crucially relevant as health coverage is
being expanded rapidly towards universal health coverage.
This paper investigates the effects of health insurance on labour supply of the
Vietnamese poor. The program in question is HCFP introduced in 2003. We aim
at evaluating labour supply effects of free health coverage for the poor and seek for
more empirical evidence on this sporadically researched topic. Another objective
is to guide policy making in Vietnam in its course of moving towards universal
coverage. This paper would contribute as an important piece of evidence given the
strong push for universal health coverage in developing countries and in Vietnam
particularly.

2 Literature Review
As aforementioned, existing literature on labour supply effects of health insurance
in developing countries is rather limited. According to the systematic review
(Le et al., 2017), 45 out of 63 post-2000 publications reviewed are US-based,
which can not shed much light for developing countries given the unique design
of American employment-tied system. Given the dominance of US-based literature
as well as our aim in seeking for more evidence in developing countries, in this
section we separate our discussion into US and non-US literature.
The US literature started since the early eighties with studies on
job mobility (Mitchell, 1982; Madrian, 1993; Monheit and Cooper, 1994)
and retirement effects (Madrian et al., 1994; Gustman and Steinmeier, 1994;
Gruber and Madrian, 1993; Rogowski and Karoly, 2000) of employer sponsored
insurance. Since then, this literature has been developed with more recent
simulation models (Blau and Gilleskie, 2006; French and Jones, 2011) and empirical
evidence (Levy et al., 2016). In general, these studies suggest a trend that
people would postpone their retirement if post-retirement insurance is not
available (Gruber and Madrian, 2002). By contrast, retiree health insurance
availability sharply increases the retirement likelihood (Karoly and Rogowski,
1994; Gruber and Madrian, 1995; Blau and Gilleskie, 2001). Job lock is another
interesting phenomenon with mixed results. Health insurance reduces the
probability of quitting a job and creates job lock for men (Mitchell, 1982). It is also
a significant pull factor for job quitting if the new job has better insurance offers
(Cooper and Monheit, 1993). Later researches using more advanced econometric
techniques to take selection problems into account, however find insignificant and
small effect of spouse insurance on mobility (Holtz-Eakin et al., 1996; Kapur, 1998).
More recent literature has been moving into discussions of of spousal coverage
(Wellington and Cobb-Clark, 2000; Royalty and Abraham, 2006; Murasko,
2008; Kapinos, 2009; Wenger and Reynolds, 2009; Cebi and Wang, 2013),
dependent coverage (Antwi et al., 2013; Depew, 2015; Hahn and Yang, 2015;
Dahlen, 2015) and entrepreneurship lock (Wellington, 2001; DeCicca, 2007;
Zissimopoulos and Karoly, 2007; Heim and Lurie, 2010; Fairlie et al., 2011;
Gurley-Calvez, 2011; Velamuri, 2012).
These studies consistently find a negative labour supply effects of spousal
and dependent insurance. In more details, if given spousal coverage, American
secondary earners are less likely to work either via shifting out of the labour force
(Murasko, 2008) or cutting hours of work and being less likely to hold regular
full-time jobs (Royalty and Abraham, 2006; Kapinos, 2009; Wenger and Reynolds,
2009; Cebi and Wang, 2013). Similarly, young Americans who get covered via

2
their parents employers are less likely to work full-time (Antwi et al., 2013;
Hahn and Yang, 2015; Depew, 2015) even though the likelihood of being employed
does not change with insurance (Antwi et al., 2013; Depew, 2015). From another
perspective, those who are aging out and facing coverage loss tend to work
more and be more active in the labour market (Dahlen, 2015). Regarding self-
employment effect, healthcare reforms enlarging eligibility is positively correlated
with self-employment (Niu, 2014; DeCicca, 2007). A subsidized premium for
the self-employed via tax reforms, is a push for self-employment (Gurley-Calvez,
2011; Velamuri, 2012). On the other hand, the literature seems consistent in
confirming entrepreneurship lock, which implies a negative effect of employment-
tied insurance on self-employment (Gai and Minniti, 2015; Fairlie et al., 2011;
Zissimopoulos and Karoly, 2007).
US-based literature is also very rich in the discourse of labour supply effects
of public assistance recipients (around 12 studies). However, the result is very
ambiguous with mixed and even inconsistent results (Le et al., 2017). These studies
are also the only literature line that pays attention to labour supply effect of the
poor and low-income groups.
Outside America, there are only seven studies examining labour supply
effects of universal coverage and social health insurance: one in Thailand
(Wagstaff and Manachotphong, 2012), four in Taiwan (Chou and Staiger, 2001;
Chou et al., 2002; Kan and Lin, 2009; Liao, 2011) and two in East Europe and
Central Asia (Wagstaff and Moreno-Serra, 2009, 2015). Four studies out of
which find that health coverage is associated with reduced labour supply of
married women (Chou and Staiger, 2001; Liao, 2011) and the public in general
(Wagstaff and Moreno-Serra, 2009, 2015). As an exception, Chou et al. (2002)
suggest no significant change in labour supply of married women who used to
be uncovered before the expansion of National Health Insurance in Taiwan in
1995. Another isolated case is in Thailand, which can serve as a lesson learned
as Thai government manged to incentivize people to work more and move into
formal sector (Wagstaff and Manachotphong, 2012) by expanding the coverage to
only formal workers. Also in the synthesis (Le et al., 2017), there are a small
amount of papers and book chapters investigating the effects of health coverage on
self-employment (Fossen and K onig, 2015; Wagstaff and Moreno-Serra, 2015) and
formalization level of the economy (Campos-Vazquez et al., 2010; Liao and Taylor,
2010; Aterido et al., 2011; Azuara and Marinescu, 2013; Camacho et al., 2014;
Bergolo and Cruces, 2014; Bosch and Campos-Vazquez, 2014) but the non-US
literature is rather scattered and isolated.
Regarding Vietnam-based literate, there is currently no studies discussing this
topic. Recent evaluations of health insurance in Vietnam rather investigate the
effect on out-of-pocket spending (Jowett et al., 2003; Wagstaff, 2007; Axelson et al.,
2009; Wagstaff, 2010; Nguyen, 2012; Nguyen and Wang, 2013), healthcare
utilization (Sepehri et al., 2006; Wagstaff, 2007; Axelson et al., 2009; Wagstaff,
2010; Nguyen, 2012; Nguyen and Wang, 2013; Guindon, 2014; Palmer et al., 2015)
and health outcome (Guindon, 2014).
Additionally, two studies specially assessing HCFP(Wagstaff, 2007, 2010) do
not really target the poor beneficiaries. Wagstaff (2007, 2010) instead evaluate the
impacts of HCFP on those who are covered and uncovered without taking into
account the eligibility of the program. He fails to disentangle the effect on the
eligible poor- the target group of HCFP- from the average treatment effect of being
covered which normally comprises also ineligible individuals who are covered due
to inclusion error.

3
 Plus, we notice that there is an important data inconsistency in the panel
used by Wagstaff (2007,2010) that should be discussed in-depth for this type of
evaluation. In more details, insurance- related questionnaire in 2002, which is more
simplified than and hence inconsistent with the later data waves in 2004 and 2006,
does not allow to conduct the analysis at individual level. However, Wagstaffs
methodology (2007, 2010) is far from clear on how he actually addresses this data
inconsistency for his evaluations. In this paper we would address these issues and
clarify assumptions we make in conducting individual level analysis.
In summary, as highlighted by Le et al. (2017), the main gap in literature is
concentrated outside the US. In Vietnam, the gap is even larger as no study in
the topic can be found. Besides, quality is another issue for the synthesis could
pinpoint a high degree of result inconsistency in the literature of health coverage
for low-income assistance recipients and universal health coverage (ibid.). Such
poor robustness may cause confusion for policy makers while trying to anticipate
the effects of well-intended health coverage expansion, leading to the need for more
quality evidence.
All things concerned, this research is designed to fill in the knowledge gap
to better inform policy making. Our paper also serves as the first paper on
this topic in Vietnam, potentially initiating a policy discourse in the context of
universal coverage expansion. We also aim to compliment Wagstaff (2007, 2010)
by clarifying assumptions made to tackle the data inconsistency whilst at the same
time accounting for the programme eligibility.

Theoretical framework and expectations

There are three lines of theories that can explain the labour supply effect of
free health coverage for the poor. On the one hand, existing literature mostly
use i) budget constrain approach and ii) theory of static labour supply to
predict the effect. The former argues that non-contributory welfare provision is
negatively correlated to labour supply as it raises the incentive for the poor to stay
poor and remain eligible for pro-poor benefits (Gruber, 2010, p.500). Whereas
the latter shows that non-contributory health insurance which is not tied to
employment would make working less attractive thanks to consumption smoothing
effect resulted from the removal of unexpected catastrophic health expenses
(Chou and Staiger, 2001). The effect however depends on the contribution of
health expenses out of total household expense (ibid.). In the case of HCFP, it
might potentially have large impact on the poor given the consumption smoothing
effect relative to their low income. These two theories are consistent in predicting
a negative effect on labour supply of free health insurance for the poor.
On the other hand, the third school of thought emphasizes the positive effect
on health outcome which make the beneficiaries healthier and they hence can work
more to earn extra income. This health fostering argument, in addition to the
allegation of human right violation, is widely used by human rights activists in the
current global UHC movement. This last theory however provides another impact
channel where the labour supply effect is positive.
In this paper, we employ all of these three theories and estimate the net effect
of all.

4
3 Vietnam Health Care Fund For The Poor
HCFP was founded under the Prime Ministers Decision No. 139/2002/Q-TTg,
under which provincial governments are mandated to allocate annual sum for
Provincial Agency of labour - invalids and social affairs - a subordinate body under
Ministry of Labour - Invalids and Social affairs- MOLISA- to buy health insurance
cards and then have them delivered to the poor within the province. The budget
was allocated annually based on a list of poor people proposed by the agency which
gathered information from lower level agencies at district and commune levels via
hierarchical reporting. The fund was co-financed by both central and provincial
government and was introduced to replace its precedent called Free Health Card
for the Poor.

3.1 Targeting strategy

According to Decision 139/2002/Q-TTg by Vietnamese Government, HCFP is to
target the poor as defined by MOLISAs national poverty line issued under Decision
1143/2000/Q-LTBXH. However, in reality the specification of poor households at
local level was done via community meetings and consultation with local authorities
who would submit an annual list of poor people to provincial authorities. Plus, the
fund targeted everyone living in the most disadvantaged communes listed under
Programme 135- the largest poverty reduction program in Vietnam under Prime
Ministers Decision 135/1998/Q-TTg in July 1998 - or those belonging to ethnic
minority groups who live in Central Highland regions (as listed in Decision No.
168/2001/Q-TTg, and hence referred as Program 168) and six poorest Northern
West provinces (as listed in Decision No. 186/2001/Q-TTg, normally referred as
Program 186).

3.2 Payment and Implementation

As regulated, HCFP would pay 100 percent of premium fee for the poor (around
2.5 USD in 2003) to ensure that every poor can get free access to any public
healthcare facilities affiliated with National Health Insurance Scheme. The Fund
would then directly pay to service providers upon utilization (according to Decision
139/2002/Q-TTg). This is to ensure that the poor, by law, do not have to pay any
deposit in advance. Even though the regulation requires that Provincial authorities
buy health insurance for the poor, during implementation process, provincial
governments can chose to i) either buy and issue free health insurance cards for the
poor and hence automatically enroll them into national Social Health Insurance
Scheme or ii) directly reimburse service providers for free-of-charge healthcare
services delivered (Tran et al., 2011).
In reality, many provincial governments normally use both approaches: i)
issuing health insurance and ii) providing free healthcare services for the poor
disregard of the availability of health insurance cards (Tran et al., 2011). In the
latter case, poor certificates, which serve as an identification for the poor, can
be used instead when seeking for free treatment. Qualitative evidence also shows
that some provinces tried to shift the financial burden to social health insurance
system via enrolling sick people into the scheme while providing user-fee exemption
and direct reimbursement to the remaining poor (Lieberman and Wagstaff, 2009).
Because of this, some policy modifications were later made in 2005 to remove
direct reimbursement and ensure that every poor have health insurance (Tran et al.,

5
 2011). This crucial right was afterwards embraced in subsequent health regulations
(i.e Health Insurance Law versions in 2008 and 2014). However, the flexibility
and inconsistency during the early stage of implementation as mentioned above
really complicates our analysis as we can not disentangle the effects between health
insurance issued under HCFP and its precedent (Free Health Card for the Poor)
because health insurance card could be absent if the poor used poor certificates
upon healthcare seeking. Therefore, in this analysis, we decide not to separate the
two, which is consistent with (Wagstaff, 2010) when he assesses the effects of HCFP
on healthcare utilization and out-of-pocket payment in Vietnam.

4 Data and Methodologies

We use a panel from Vietnamese Household Living Standard Surveys (VHLSS)
during 2002-2006. VHLSS is a nationally representative multi-purpose household
survey in Vietnam conducted every two years since 2002 and covers many areas
including demographics, expenditure, income, health, labour supply, education and
so on. These surveys originated from the well-known World Banks Living Standard
Measurement Surveys (LSMS) and were renamed VHLSS since 2002. Currently,
data collection is carried out by Vietnams General Statistical Office with technical
support from the World Bank Vietnam. Around 3,000 communes were surveyed
every two years, accounting for nearly 30 percent of all communes in Vietnam.
Three households per commune were interviewed making a total household sample
size of 9,000. However, because VHLSS uses sample rotating approach where
only half of the sample in a previous survey is repeated in the next round, this
significantly reduces the sample size of the panel.In other words, a longer panel
would leads to a smaller sample size. After data check and cleaning, we end up with
an unbalanced panel which includes respectively 6572, 7050 and 7050 individuals
in 2002, 2004 and 2006.
As we are examining labour supply, we adopt the universally used working
age definition and only keep individuals aged between 16 and 65 although labour
regulations in Vietnam do not set the upper bound. 1 The age cut-offs then reduce
the sample size to 2582, 4505 and 4830 individuals respectively.
One important note about the data is that the survey design in 2002 is relatively
simplified compared to the other two waves. Health insurance-related questions in
2002s survey are asked at the household level while data in 2004 and 2006 are
more detailed for each household members. This data limitation however is not
mentioned in previous studies using the same panel (particularly Wagstaff (2007,
2010)). Here we assume that if a household is covered with HCFP or Health
certificate scheme, then everyone within the family is considered covered. This
assumption is reasonable given the fact that poverty status in Vietnam is specified
at household level via community meetings. Another noteworthy data issue is
that 2002s survey merely asks for information on HCFP and its precedent health
coverage (Healthcare Certificate) while ignoring other types of pro-poor health
scheme (for instance health insurance for the working age disabled people, the
elderly and so on) probably because they were not available yet in 2002. Therefore,
in our definition of control and treatment groups in 2002, we fail to separate
the effect of HCFP and other health insurance schemes for the poor (if any).
This issue will be discussed further in section 6. Notably, as aforementioned, the

1
According to Vietnams labour law in 1992 and its amendment in 2004, legal workers are those who
are above fifteen.

6
implementation complications during early stages make it impossible to separate
HCFP from its antecedent. In this study, we follows Wagstaff (2010) by not
separating these two schemes. The effect evaluated in this study would be a
combination of HCFP and the Health Certificate scheme.
To compare and contrast the effects over years, we conduct two separate set of
regressions for two different panels 2002-2004 and 2002-2006, each of them consists
of two survey waves. In our definition, covered in 2004 and 2006 is defined as being
covered by either HCFP or Health Certificate, and not covered by any of other types
of health insurance. Covered in 2002 is specified as being covered by either HCFP
or Health Certificate, and maybe covered by any of other types of health insurance-
we simply do not have any information about this due to the aforementioned data
unavailability in 2002. Similarly, Uncovered refers to not being covered with HCFP
nor Health Certificate, but maybe covered by other types of health insurance (In
the case of the working-age poor, there is another type of health insurance: health
insurance for social assistance recipients: the invalid, the elderly, mothers of war
martyrs).
We conduct Difference-in-Difference estimates merely for eligible individuals
because HCFP only targets the poor and disadvantaged racial minority groups
while it is shown that many non-poor individuals are covered probably due to
implementation complications that cause inclusion errors (see descriptive statistics
in section 5 and (Wagstaff, 2010)). In doing so, individual eligibility is specified
based on the targeting strategy of the fund (either poor individuals or ethnic
minority peoples belonging to Program 168 or Program 186 as mentioned in
Section 3). We use expenditure-based poverty line (Glewwe, 2003) during 2002-
2006 to determine who is poor. Other criteria can be easily detected based on
the geographical location and racial identifiers of the observations. Because eligible
group changes slightly over year due to changes in income and expenditure level, we
use 2002 as a baseline for eligibility identification. The eligibility threshold reduces
the sample size to 876 eligible individuals in 2002. We then match it with later
waves and remove unmatched observations to form two final balanced panels (2002-
2004 and 2002-2006) before removing 106 individuals who are covered in 2002 out of
the HC scheme. The final samples consist of 834 (417 individual each wave) and 840
observations respectively (420 individuals each wave). This include 316 control and
101 treated individuals in 2002-2004 and 292 control and 128 treated individuals
during 2002-2006. The treated consist of eligible individuals who were uncovered in
2002 and then got covered in the second wave 2004 (or 2006). Whereas the control
group includes those who were eligible in 2002 yet uncovered in both waves 2002
and 2004 (or 2006). Here, we have this control group because of exclusion errors
occurred during the implementation process. This exclusion error is probably due
to the lack of fund in the starting stage. Additionally, inclusion error obviously
contributes to squeezing the budget which is already tight.
Here it is important to discuss the randomization of health coverage among
eligible people to avoid the endogeneity problem. We see that all criteria used for
eligibility definition in our method is very objective: expenditure-based poverty
status, racial groups where the individuals belong to, the regions where they
are living in. Therefore, if coverage is entirely based on eligibility as in theory,
endogeneity is not an issue so that we can assume that treatment assignment (free
health coverage) is randomly distributed among eligible people. If this is the case,
Difference-in-Difference estimates are asymptotically unbiased.
However, one possible source of bias might come from the observation that
local authorities might have prioritized sick and poorer people among the poor

7
 (Tran et al., 2011) in the context of limited finance. We, thus for robustness
check also employ pre-treatment Matching Difference-in-Difference method where
we reject the randomization assumption and match individuals based on their pre-
treatment covariates before estimating Difference-in-Difference effects. The results
of this sensitivity check is presented in the Appendix.
We use two dependent variables: i) number of hours worked per month on
average as left-censored variable and ii) probability of employment as a binary
choice. We respectively employ Tobit regressions and Linear probability models for
these two outcomes. To avoid normal distribution assumption, we employ bootstrap
method in estimating standard error and confidence interval for all regressions. The
reduced form specifications are as follows:

hourit = timeit + treatmentit + treatmentit timeit + x0it + uit (1)

employit = timeit + treatmentit + treatmentit timeit + x0it + uit (2)

where:

employ=1 if employed and =0 otherwise.

hour denotes number of hours worked per month on average
time=1 if in the second wave (2004 or 2006), time=0 if in the baseline (2002).
treatment=1 for treated individuals who are covered in the second wave (2004
or 2006)
treatment=0 for control ones who are uncovered in both waves (2002-2004 or
2002-2006).
x is the vector of control variables that explain labour supply.
u is the error term.
i and t respectively denote individual and time subscripts.
is the average treatment effect (ATT) of interest

Vector x consists of individual and household characteristics that potentially

explain labour supply. These include age, gender, literacy, marital status, relation
to the household head, household size, gender of the household head, dependent
ratio 2 . Additionally, we try to proxy for health status by number of healthcare
utilization per year. We also account for the effects of labour demand by specifying
the geographical regions where the individuals are living using variable urban
and the availability of poverty reduction programmes in their locality. Finally,
cultivation sector, which is the most common for the Vietnamese rural poor, and
type of work (wage-employment in particular) is controlled for.

5 Results
5.1 Descriptive results
Coverage of HCFP or its precedent during 2002-2006 are presented in Figure 1.
As suggested in Figure 1, coverage increased over time during 2002-2006. Those

2
this variable is defined as the total number of dependent household members aged below 16 or above
65 over the total household size

8
 who were covered in 2002 are the beneficiaries of Health Certificate policy which
was then replaced by HCFP in late 2002 and 2003. The introduction of HCFP
indeed has contributed to raising the coverage for vulnerable people, from more
than 17 percent in 2002 to around 40 and 50 percent in 2004 and 2006 respectively.
Exclusion error is another issue as more than 11 per cent of those ineligible in 2006
got coverage. Additionally,even though the programme is designed to benefit all of
poor population, in its first phase of implementation less than half of eligible poor
population are covered probably due to budget constraint.

Figure 1: HCFP or Health Certificate Coverage in 2002-2006 (in percentage)

Note(s): Coverage are complied based on the full sample in every year (not only the rotating sample).

Descriptive results of control variables are shown in Table 1. This descriptive

picture are drawn from only the rotating sample that forms the panel, not the big
cross-sections used in estimating coverage in Figure 1. In general, the majority of
eligible individuals in our final sample are literate (at around 86-89 percent), and
live in dominantly male-headed households (the rate of those who live in female-
headed households is smaller than 4 percent). Additionally, they live in households
where dependents make up of around one third of total household size which is on
average at 5 people per household.
The majority of our sample work in agriculture and cultivation sector (ranging
from 73 percent), this is reasonable given more than 93 percent of them are living
in rural areas. It is worth noting that the eligibility filter does play a role here
because the healthcare fund is intended to target poor people and ethnic minorities
groups who are more likely to live in the most remote and disadvantaged areas in
Vietnam.

9
Table 1: Descriptive results of the two panels- Only eligible individuals

2002 2006
Variables Mean Std. Mean Std.
Dev. Dev.
Age 38.859 11.697 40.386 12.055
Male 0.480 0.500 0.486 0.500
Literate (dummy) 0.888 0.316 0.893 0.309
Marital status 1.928 0.360 1.907 0.383
Household size 5.276 1.732 5.283 1.735
Dependent ratio 0.389 0.193 0.387 0.194
Female headed household 0.014 0.119 0.012 0.109
No. of healthcare utilization p.a 0.200 0.482 0.186 0.457
Urban (dummy) 0.060 0.238 0.062 0.241
Belongs to Programme 135 0.475 0.500 0.479 0.500
Belongs to Programme 168 0.079 0.270 0.083 0.277
Belongs to Programme 186 0.151 0.359 0.150 0.357
Engaged in Cultivation sector 0.739 0.440 0.729 0.445
Engaged in wage-employment 0.261 0.440 0.259 0.439
2002 2006
Age 38.386 12.055 43.374 11.114
Male 0.486 0.500 0.486 0.500
Literate (dummy) 0.893 0.309 0.868 0.338
Marital status 1.907 0.383 1.938 0.373
Household size 5.283 1.735 5.117 1.917
Dependent ratio 0.387 0.194 0.347 0.212
Female headed household 0.012 0.109 0.036 0.186
No. of healthcare utilization p.a 0.186 0.457 0.510 0.682
Urban (dummy) 0.062 0.241 0.062 0.241
Belongs to Programme 135 0.479 0.500 0.379 0.486
Belongs to Programme 168 0.083 0.277 0.086 0.280
Belongs to Programme 186 0.150 0.357 0.140 0.348
Engaged in Cultivation sector 0.729 0.445 0.721 0.449
Engaged in wage-employment 0.259 0.439 0.352 0.478

10
5.2 Main results
Difference-in-Difference estimates are presented in Table 2 and 3. We use Tobit
models for the left censored work hours and only report the effects on those who
are employed (anyone who are unemployed are left-censored and has the value
of zero hours worked accordingly). We initially add individual and household
characteristics in model 2 and then slowly expand the model to control for health
status (model 3), geographical location (model 4-5) and employment sector and
activity (model 6-7).

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 Table 2: Difference-in-Difference 2002-2004

(1) (2) (3) (4) (5) (6) (7)

Number of hours worked per month
treat=1 -10.113 -9.619 -9.583 -9.803 -12.938 -14.179 -14.977
(7.74) (7.51) (7.81) (8.65) (6.85) (8.25) (8.33)
t=1 -14.554 -14.298 -14.020 -13.950 -15.257 -14.606 -15.903
(4.84) (4.15) (4.82) (4.66) (4.32) (5.33) (5.95)
treat=1 t=1 10.509 10.959 11.044 11.127 11.178 12.101 12.128
(7.74) (8.00) (7.11) (8.47) (9.25) (8.16) (8.88)
Age -0.082 -0.080 -0.073 -0.017 -0.034 -0.018
(0.32) (0.29) (0.33) (0.31) (0.29) (0.27)
Male (dummy) -24.001 -23.858 -21.825 -20.686 -19.194 -22.735
(15.82) (22.55) (15.77) (19.61) (25.91) (21.01)
Household size -1.006 -1.014 -1.044 -1.124 -1.206 -0.884
(1.36) (1.47) (1.32) (1.39) (1.38) (1.21)
Dependence ratio 34.725 34.776 36.653 36.123 35.472 33.237
(12.72) (14.62) (15.43) (14.84) (12.43) (13.17)
Literacy (dummy) 14.024 14.106 13.863 16.798 17.165 17.154
(7.29) (7.80) (6.96) (9.41) (8.66) (7.47)
Marital status (compared to married people)
-Never married -31.772 -31.842 -33.851 -34.657 -36.147 -36.380
(18.27) (18.52) (19.30) (20.33) (18.18) (16.42)

12
-Widowed/Divorced/Separated -20.030 -20.836 -19.636 -18.758 -19.157 -19.201
(29.02) (29.55) (29.76) (38.08) (33.28) (29.95)
Relation to the household head
-spouse -35.751 -35.416 -33.511 -31.602 -31.289 -30.594
(16.37) (22.78) (15.03) (18.86) (28.13) (22.72)
-child -12.349 -12.227 -10.805 -6.424 -3.601 -2.744
(21.46) (23.11) (19.72) (21.70) (24.85) (26.30)
-parent -141.138 -139.336 -137.653 -135.014 -132.672 -127.886
(134.74) (148.33) (131.45) (142.68) (145.04) (123.63)
-grandchild -99.107 -99.490 -95.995 -92.530 -82.780 -77.911
(139.50) (118.93) (132.48) (106.38) (144.29) (107.18)
-others -45.662 -45.433 -43.599 -38.757 -35.331 -32.660
(28.77) (28.14) (24.46) (27.11) (39.18) (36.04)
Female headed HH (dummy) -36.028 -34.345 -36.516 -32.745 -30.341 -28.369
(41.70) (43.03) (38.69) (40.03) (41.82) (33.55)
Number of healthcare utilization per year -1.144 -1.271 -1.655 -0.899 -0.663
(5.93) (5.13) (6.02) (6.02) (6.32)
Urban (dummy) 23.197 21.330 25.012 22.485
(12.21) (14.30) (14.97) (14.94)
Belongs to P135 communes -3.292 -2.812 -2.945
(7.04) (7.26) (5.63)
Belongs to P168 regions 4.310 0.607 -0.669
(8.18) (9.68) (8.23)
Belongs to P186 regions 20.267 18.129 21.221
(4.62) (6.56) (5.25)
Work sector: cultivation (dummy) 13.577 15.232
(8.31) (8.35)
Engaged in wage employment outside the HH 17.089
(4.82)
N 831 820 820 820 820 820 820
 Table 3: Difference-in-Difference 2002-2006

(1) (2) (3) (4) (5) (6) (7)

Number of hours worked per month
treat=1 -5.137 -11.754 -11.746 -10.467 -11.763 -12.295 -11.704
(8.40) (5.65) (7.25) (7.87) (7.40) (8.63) (6.94)
t=1 -12.204 -11.270 -8.359 -8.438 -8.766 -8.636 -10.131
(4.67) (3.95) (5.16) (6.31) (5.25) (5.46) (5.30)
treat=1 t=1 8.666 12.489 14.246 14.273 14.586 14.391 12.392
(9.85) (7.80) (8.54) (8.86) (10.52) (7.73) (7.23)
Age -0.426 -0.408 -0.390 -0.369 -0.366 -0.319
(0.30) (0.33) (0.34) (0.32) (0.38) (0.38)
Male (dummy) -8.890 -8.834 -7.668 -7.851 -7.194 -12.524
(21.21) (18.08) (21.58) (14.69) (17.01) (20.91)
Household size 0.036 -0.045 -0.158 -0.084 -0.124 0.176
(1.34) (1.54) (1.66) (1.37) (1.57) (1.62)
Dependence ratio 37.019 37.161 38.648 38.396 38.441 36.937
(13.04) (13.53) (14.64) (14.95) (17.32) (16.15)
Literacy (dummy) 18.750 18.936 19.204 19.063 19.221 17.994
(8.07) (7.40) (7.33) (8.78) (7.32) (8.48)
Marital status (compared to married people)
-Never married -38.297 -38.503 -39.592 -39.187 -39.487 -39.543
(17.59) (15.64) (16.96) (18.40) (21.68) (19.84)

13
-Widowed/Divorced/Separated 10.129 13.824 14.368 14.495 13.742 13.150
(21.31) (35.20) (35.87) (25.11) (27.91) (35.33)
Relation to the household head
-spouse -17.773 -16.274 -15.173 -15.148 -14.725 -14.582
(23.62) (20.22) (22.04) (16.12) (18.43) (20.07)
-child -21.401 -21.130 -19.762 -18.215 -16.481 -17.066
(17.48) (20.18) (25.12) (16.92) (18.84) (20.11)
-parent -113.283 -105.580 -104.131 -102.912 -100.917 -95.833
(159.78) (176.76) (163.17) (175.43) (133.69) (166.21)
-grandchild -103.311 -108.853 -106.115 -105.172 -101.116 -93.453
(155.77) (147.85) (155.12) (140.23) (147.67) (114.54)
-others -30.795 -30.481 -30.221 -27.701 -26.585 -23.452
(35.86) (28.48) (28.66) (33.85) (27.09) (32.77)
Female headed HH (dummy) -1.441 0.397 -1.320 -0.658 0.070 -1.140
(28.87) (28.73) (32.66) (27.45) (25.01) (29.37)
Number of healthcare utilization per year -10.852 -10.526 -10.264 -10.200 -10.498
(4.12) (3.72) (4.43) (3.71) (3.77)
Urban (dummy) 14.669 15.010 16.519 13.417
(15.07) (13.21) (14.61) (13.61)
Belongs to P135 commune -2.275 -2.234 -2.442
(3.96) (4.07) (5.57)
Belongs to P168 regions -5.743 -7.003 -9.313
(8.07) (8.15) (7.90)
Belongs to P186 regions 9.895 9.446 12.122
(5.60) (6.67) (6.81)
Work sector: cultivation (dummy) 5.798 8.419
(7.21) (8.74)
Engaged in wage employment outside the HH 22.718
(5.79)
N 837 828 828 828 828 828 828
 According to Table2 and 3, -the coefficient of the interaction term between
time and treatment assignment is always positive if any statistically significant. In
other words, Average treatment effect of the treated (ATT) of health insurance for
the poor, if any, is positive, suggesting a positive net impact of free health care
on labour supply of the poor. On average, the poor with free healthcare tend to
work between 9 hours to 14.5 hours more per month. Interestingly, there is a slight
difference in the magnitude and statistical meaning of the effect between the two
periods where the effect is statistically insignificant in 2004 yet become significant
in later regressions of 2006. This means that the net effect of health insurance is
positive, if ever statistically meaningful, and it would be accumulated over time
when the beneficiaries become healthier over the years.
Unsurprisingly, individuals in family with more dependents tend to work more,
an increase of one unit in dependent ratio is associated with an increase of more than
34 to 36 hours worked per month during 2002-2004. Economically speaking, given
the average household size at around five members and dependent ratio at 0.39 in
2002, an increase of one new member (for example a newborn baby) into that five-
member household would yield a new ratio of 0.49 (an increase of 0.1 unit). Keeping
other things constant, this newborn baby is hence associated with an increase of
around 3.4 to 3.6 hours per month in labour supply of other working-age household
members. Similarly, the effect magnitude during 2002-2006 is slightly larger, at
approximately 37- 38 hours per month per unit increase in dependent ratio - or
an increase of 3.7-3.8 hours per month for those living in that example household.
This small change in magnitude might be due to the slight decrease in dependent
ratio in 2006 compared to 2004 (0.34 and 0.37 respectively).
Geographical location does play a role on labour supply for: someone living in
urban areas seems to work from 23 to 25 hours more monthly compared to his/her
counterpart in rural areas. This might be explained by the fact that there is always
more job opportunities in cities where people are more connected to the labour
market and where the labour demand is always higher. However, this variable is
only significant in several regressions in the panel 2002-2004 and not in the second
period.
Regarding health status, healthcare utilization in form of the number of
healthcare visit per year is used as a proxy because the data does not allow to use
a more concise measure of health status concept. In general, in both tables, this
number is negatively related to labour supply, which is intuitively logical as ill or less
healthy people are expected to reduce their work hours. However, during 2002-2004,
this effect is statistically insignificant while that during 2002-2006 is significantly
negative. This can be explained by the increase in the mean of healthcare visits from
0.45 during 2002-2004 to 0.51 during 2004-2006 and the fact that healthcare seeking
behaviour of those in 2006 is much more associated with their health status owing
to the cut in forgone utilization when needed after two years having free coverage.
This is also an indication of increased healthcare utilization as a result of HCFP
accompanied by reduced out-of-pocket payment. This is consistent with (Wagstaff,
2010) who estimates that HCFP has substantially cut out-of-pocket spending in
Vietnam. Finally, for agriculture and cultivation always take more work hours
at the farms, those who work in this sector tend to work more in 2004. The
magnitude is approximately at 15 hour increase in 2002-2004. Engagement in wage
employment have positive impacts on labour supply, this might be due to a fixed
work time scheduled tied with this form of work while the rest are self-employed
in agriculture. This finding is rather surprising given the fact that the majority
of our sample are not having any wage-employment and mainly concentrated in

14
self-employed agriculture.
Table 4 and 5 illustrate Difference-in-Difference estimates of the second outcome:
the probability of employment. In general, those with free healthcare support
from HCFP are more likely to work, the likelihood is estimated at around 5.3-7
percentage point increase in employment probability during 2002-2004 and 4.2-5.4
percentage point increase during 2002-2006. However, the statistical significance is
mixed between the two periods.
This change in significance in model 7 of the second period is mainly due to
the inclusion of wage employment as a control variable, meaning that the effects
of this newly added control might outweigh the effect caused by health insurance.
However, in general, the ATT of HCFP on probability of employment of eligible
poor people are positive, if statistically meaningful. This positive results together
with the positive signs in Table 2 and 3 suggest that the net impact of HCFP
on the target population (the eligible poor people or ethnic minority individuals)
is positive, if any significant, by increasing the likelihood of working and also the
number of hours worked per month. Additionally, the effect on work hour seemingly
increases over time as we observe the change in significance for period 2002-2006.

15
 Table 4: Probability of employment - Difference-in-Difference 2002-2004

(1) (2) (3) (4) (5) (6) (7)

treat=1 0.014 0.020 0.021 0.021 0.002 -0.020 -0.025
(0.03) (0.03) (0.02) (0.03) (0.03) (0.03) (0.02)
t=1 -0.025 -0.021 -0.017 -0.017 -0.018 -0.005 -0.014
(0.02) (0.02) (0.02) (0.01) (0.02) (0.02) (0.02)
treat=1 t=1 0.055 0.053 0.054 0.054 0.055 0.070 0.069
(0.03) (0.03) (0.03) (0.02) (0.03) (0.03) (0.03)
Age 0.000 0.000 0.000 0.000 -0.000 -0.000
(0.00) (0.00) (0.00) (0.00) (0.00) (0.00)
Male (dummy) -0.172 -0.170 -0.171 -0.166 -0.133 -0.156
(0.09) (0.09) (0.10) (0.08) (0.07) (0.08)
Household size -0.004 -0.004 -0.004 -0.005 -0.006 -0.004
(0.01) (0.01) (0.01) (0.01) (0.01) (0.00)
Dependence ratio 0.073 0.074 0.073 0.067 0.054 0.038
(0.05) (0.05) (0.06) (0.05) (0.05) (0.05)
Literacy (dummy) 0.045 0.046 0.046 0.056 0.060 0.059
(0.03) (0.04) (0.04) (0.04) (0.02) (0.03)
Marital status (compared to married people)

-Never married -0.070 -0.071 -0.070 -0.082 -0.109 -0.110

(0.08) (0.08) (0.09) (0.07) (0.06) (0.07)

16
-Widowed/Divorced/Separated -0.024 -0.036 -0.036 -0.037 -0.037 -0.039
(0.07) (0.05) (0.05) (0.06) (0.06) (0.06)
Relation to the household head
-spouse -0.198 -0.193 -0.194 -0.188 -0.175 -0.169
(0.09) (0.09) (0.09) (0.08) (0.07) (0.08)
-child -0.193 -0.192 -0.193 -0.182 -0.127 -0.120
(0.08) (0.10) (0.10) (0.09) (0.09) (0.09)
-parent -0.606 -0.580 -0.581 -0.569 -0.478 -0.449
(0.35) (0.35) (0.38) (0.34) (0.34) (0.30)
-grandchild -0.384 -0.392 -0.393 -0.370 -0.209 -0.178
(0.24) (0.24) (0.26) (0.25) (0.24) (0.24)
-others -0.296 -0.293 -0.294 -0.282 -0.214 -0.195
(0.13) (0.15) (0.14) (0.15) (0.13) (0.13)
Female headed HH (dummy) -0.303 -0.279 -0.278 -0.266 -0.214 -0.199
(0.16) (0.16) (0.17) (0.14) (0.14) (0.13)
Number of healthcare utilization per year -0.017 -0.017 -0.017 -0.004 -0.003
(0.02) (0.01) (0.01) (0.01) (0.01)
Urban (dummy) -0.013 -0.034 0.031 0.013
(0.04) (0.05) (0.05) (0.04)
Belongs to P135 commune -0.001 0.009 0.006
(0.02) (0.02) (0.02)
Belongs to P168 regions 0.076 0.010 0.001
(0.04) (0.04) (0.04)
Belongs to P186 regions 0.039 0.001 0.024
(0.02) (0.02) (0.02)
Work sector: cultivation (dummy) 0.236 0.246
(0.03) (0.03)
Engaged in wage employment outside the HH 0.118
(0.02)
N 831 820 820 820 820 820 820
 Table 5: Probability of employment- Difference-in-Difference 2002-2006

(1) (2) (3) (4) (5) (6) (7)

treat=1 0.006 -0.009 -0.009 -0.012 -0.016 -0.039 -0.035
(0.03) (0.03) (0.02) (0.03) (0.03) (0.03) (0.02)
t=1 0.004 0.003 0.009 0.010 0.010 0.015 0.007
(0.02) (0.01) (0.02) (0.02) (0.02) (0.02) (0.02)
treat=1 t=1 0.043 0.048 0.052 0.052 0.052 0.042 0.031
(0.03) (0.03) (0.02) (0.03) (0.03) (0.02) (0.03)
Age -0.001 -0.001 -0.001 -0.001 -0.001 -0.000
(0.00) (0.00) (0.00) (0.00) (0.00) (0.00)
Male (dummy) -0.107 -0.106 -0.110 -0.106 -0.075 -0.103
(0.08) (0.08) (0.09) (0.09) (0.07) (0.08)
Household size -0.001 -0.001 -0.001 -0.002 -0.004 -0.002
(0.01) (0.01) (0.01) (0.01) (0.01) (0.01)
Dependence ratio 0.021 0.021 0.017 0.016 0.017 0.008
(0.05) (0.04) (0.05) (0.06) (0.06) (0.06)
Literacy (dummy) 0.044 0.044 0.044 0.049 0.053 0.047
(0.03) (0.03) (0.03) (0.03) (0.03) (0.03)
Marital status (compared to married people) -Never married -0.157 -0.157 -0.155 -0.157 -0.167 -0.168
(0.10) (0.07) (0.09) (0.08) (0.07) (0.06)
-Widowed/Divorced/Separated -0.056 -0.048 -0.049 -0.052 -0.084 -0.086
(0.07) (0.10) (0.07) (0.08) (0.07) (0.08)

17
Relation to the household head
-spouse -0.141 -0.138 -0.141 -0.137 -0.116 -0.113
(0.08) (0.08) (0.09) (0.09) (0.06) (0.09)
-child -0.154 -0.153 -0.156 -0.154 -0.077 -0.078
(0.08) (0.07) (0.09) (0.09) (0.08) (0.07)
-parent -0.486 -0.467 -0.470 -0.456 -0.333 -0.312
(0.36) (0.42) (0.38) (0.39) (0.32) (0.32)
-grandchild -0.327 -0.340 -0.347 -0.339 -0.165 -0.127
(0.30) (0.37) (0.31) (0.29) (0.31) (0.28)
-others -0.166 -0.165 -0.165 -0.165 -0.117 -0.097
(0.14) (0.16) (0.14) (0.15) (0.12) (0.13)
Female headed HH (dummy) -0.055 -0.051 -0.046 -0.039 -0.004 -0.012
(0.08) (0.09) (0.10) (0.10) (0.10) (0.13)
Number of healthcare utilization per year -0.023 -0.024 -0.025 -0.021 -0.023
(0.02) (0.02) (0.02) (0.02) (0.01)
Urban (dummy) -0.042 -0.055 0.010 -0.007
(0.05) (0.04) (0.05) (0.04)
Belongs to P135 communes 0.001 0.003 0.002
(0.01) (0.02) (0.02)
Belongs to P168 regions 0.043 -0.012 -0.024
(0.05) (0.03) (0.03)
Belongs to P186 regions 0.006 -0.013 0.002
(0.02) (0.02) (0.01)
Work sector: cultivation (dummy) 0.246 0.258
(0.03) (0.03)
Engaged in wage employment outside the HH 0.125
(0.02)
N 837 828 828 828 828 828 828
6 Discussion
It is worth noting that the positive results shown in Difference-in-Difference
estimations remain unchanged and insensitive to methodological change where we
reject the assumption of random assignment of health coverage among the eligible
(see robustness check results in the Appendix). This to some extent reveals that
what is observed by (Tran et al., 2011) about local officials prioritizing sick people
in this health scheme is not necessarily correct, at least in the case of HCFP during
our research period in 2002-2006. Besides, this result consistency and randomness
indeed can be observed when doing matching before DD calculations. Even
though we attempt different matching algorithms (from Kernel to nearest neighbour
matching and stratification), we yield the same matching results which only remove
15 out of more than 800 observations in our final sample. This once again confirms
that eligible people are relatively homogenous and hence endogeneighty of health
coverage is not an issue.
The finding of positive net effects of HCFP during 2002-2006 is good news for
the current efforts in expanding healthcare coverage for the poor and the non-poor
as well as the countrys commitment to move towards UHC.
Our results are very interesting as contradicting with empirical evidence
in the US where social assistance recipients are found to either reduce their
labour supply (Guy Jr et al., 2012; Rosen, 2014; Dague et al., 2014; Dave et al.,
2015) or just do not change their behaviour (Gooptu et al., 2016; Strumpf, 2011;
Ham and Shore-Sheppard, 2005). This may be explained by the difference in
coverage of HCFP in Vietnam with public assistance schemes in the US (in this case
including Medicare, Medicaid and some state-level benefits). HCFP was designed
to provide the Vietnamese poor with free health care via the issue of free health
insurance. In latter stages of implementation, once got covered, the Vietnamese
poor were pooled into the whole health insurance system in Vietnam and could
have all entitlements as other health insurance holders. Therefore, the depth of
the coverage of HCFP is relatively generous, which might explain the large health
boosting effect. On the contrary, the health insurance system in the US is more
fragmented, and the coverage those low-income beneficiaries can get via the public
assistance schemes might not be as generous. Therefore, in the American case, the
work disincentive effect, if any, might have out-weighted any health improvement
induced by the public health schemes. This somehow suggests that in order to
achieve the desirable effects of health insurance in both health and labour supply
outcomes, the generosity of the coverage or the scheme design is the key. Both
health boosting effect and work disincentive are evidenced, the key question for
policy makers would be how generous the public schemes should be.
This study comes with a caveat: effects of other health insurance subsidies other
than free health insurance for the poor can not be adequately accounted for due to
data limitations in 2002. In more details, the health section of 2002s questionnaire
is relatively simple and it does not cover any question on health coverage. The
information on HCFP and HC is however asked at household level in another
section about governments subsidies and assistance benefiting the household. This
is inconsistent with the design of later surveys in 2004and 2006 where health
coverage is specified for each household member (and hence the level of analysis is
at individual level). This data limitation leads us to assume that HCFP is covered
for the whole family if the household confirmed that their family has at least one
person receiving this benefit in 2002. Additionally, due to not being asked, other
types of health coverage in 2002 is unknown, leading to an under or over estimation

18
of the effect magnitude depending how other coverage alternatives are distributed
among eligible individuals in 2002. More in-depth data investigation reveals that
this proportion in 2004 and 2006 is not negligible, we hence can not infer that this
rate in 2002 is thin. As we define uncovered people in 2002 as not being covered
with HCFP nor HC, yet maybe (because we do not know) covered by other types of
health insurance, the control group potentially consist of those covered with other
schemes. Whereas, the likelihood of being covered by other health schemes in the
treated groups are less likely because these coverage options are normally not for
free and the incentive for buying extra coverage next to HCFP is minimal. In this
logic, the effect suggested in our models probably under-estimate the real net effect
of HCFP, meaning that the health fostering argument is even more supported with
our research.

7 Conclusion
This paper uses Difference-in Difference and Matching Difference-in-Difference to
evaluate the labour supply impacts of free health coverage for the poor in Vietnam
as a result of HCFP. We find that the net effect of health coverage on work hour, if
statistically significant, is positive. This positive effect is manifested in increase in
both average work hours and probability of employment. This supports the third
theory arguing that people would work more if getting free health coverage thanks
to improved physical well-being.
We contribute to current literature in several ways. First, we help fill in the
knowledge gap in low and middle income countries where the health coverage
is rapidly expanding yet not guided by any empirical evidence. Second, we
compliment previous evaluations of HCFP by highlighting data inconsistency and
suggest how to assume away the issue whilst considering eligibility of the program
to better assess the impacts on the target group.

8 Appendix

19
 Table 6: Difference-in-Difference Matching 2002-2004

(1) (2) (3) (4) (5) (6) (7)

Number of hours worked per month
treat=1 -11.946 -11.489 -11.532 -11.619 -13.650 -16.330 -17.277
(6.99) (6.54) (6.47) (5.68) (7.03) (6.32) (7.30)
t=1 -11.109 -11.339 -9.893 -9.891 -12.040 -10.573 -12.830
(4.62) (3.65) (4.24) (3.39) (6.17) (5.32) (4.77)
treat=1 t=1 11.757 13.089 13.917 14.092 13.500 14.740 15.263
(8.96) (7.07) (7.34) (6.26) (9.02) (8.22) (7.27)
Age -0.252 -0.234 -0.235 -0.202 -0.228 -0.161
(0.23) (0.23) (0.22) (0.27) (0.25) (0.27)
Male (dummy) 10.871 10.773 11.241 11.514 11.835 10.522
(9.90) (8.03) (7.21) (9.64) (9.68) (10.48)
Household size -1.154 -1.295 -1.308 -1.404 -1.447 -1.218
(1.45) (1.21) (1.09) (1.10) (1.22) (1.17)
Dependent ratio 24.643 24.939 25.966 25.605 25.047 25.812
(11.29) (11.78) (11.69) (12.63) (11.65) (13.62)
Literacy (dummy) 8.845 8.949 8.842 10.738 11.456 10.803
(8.91) (8.22) (7.01) (7.42) (7.99) (7.00)
Marital status (reference group: married people)
-Never married -16.185 -17.008 -18.588 -18.604 -18.831 -19.913
(9.54) (10.44) (10.54) (11.51) (13.29) (10.87)

20
-Widowed/Divorced/Separated -33.905 -35.816 -34.783 -34.934 -33.213 -33.319
Relation to the HH head
-spouse -0.273 0.408 0.892 1.613 0.212 4.581
(9.92) (8.86) (7.69) (9.77) (10.36) (10.38)
-child -14.395 -13.651 -12.805 -11.315 -9.010 -4.813
(11.68) (10.02) (12.14) (11.28) (13.37) (11.10)
-parent -98.800 -92.484 -91.574 -90.958 -89.857 -80.333
(131.85) (132.16) (150.20) (145.27) (117.09) (130.24)
-grandchild -13.000 -12.829 -13.459 -13.204 -12.774 -8.607
(21.33) (27.14) (29.38) (19.42) (26.19) (26.80)
-others -36.828 -36.491 -35.396 -34.531 -31.022 -23.880
(27.74) (21.08) (26.44) (26.56) (21.04) (19.34)
Female headed HH (dummy) 18.581 21.300 20.316 21.093 21.947 24.896
(13.27) (12.31) (11.38) (15.28) (13.28) (14.43)
Number of healthcare utilization per year -6.505 -6.621 -6.721 -5.515 -4.537
(5.17) (5.83) (4.38) (5.36) (5.18)
Urban (dummy) 24.215 22.644 29.570 25.683
(9.67) (11.97) (10.48) (9.78)
Belongs to P135 commune -5.187 -3.610 -3.780
(5.54) (5.89) (5.95)
Belongs to P168 regions 4.644 -2.297 -3.654
(7.52) (7.89) (7.40)
Belongs to P186 regions 13.293 10.070 14.937
(6.85) (7.17) (6.27)
Work sector: cultivation (dummy) 23.579 25.593
(8.30) (6.22)
Engaged in wage employment 25.844
(4.36)
N 1,144 1,139 1,139 1,139 1,139 1,139 1,139
 Table 7: Difference-in-Difference Matching 2002-2006

(1) (2) (3) (4) (5) (6) (7)

Number of hours worked per month
treat=1 -8.008 -13.091 -13.374 -11.334 -10.825 -11.736 -12.076
(6.36) (7.66) (5.74) (5.69) (5.81) (7.56) (5.20)
t=1 -10.184 -8.348 -4.913 -4.925 -5.621 -4.823 -6.757
(4.21) (4.42) (4.23) (4.35) (5.34) (4.60) (4.08)
treat=1 t=1 13.884 15.676 17.340 17.401 17.627 17.246 14.703
(7.87) (8.01) (7.20) (6.23) (6.56) (7.54) (6.75)
Age -0.346 -0.334 -0.315 -0.325 -0.324 -0.277
(0.29) (0.23) (0.22) (0.32) (0.29) (0.26)
Male (dummy) 8.432 8.948 9.264 9.206 10.490 8.893
(9.50) (9.96) (7.25) (9.22) (9.25) (10.40)
Household size 0.030 -0.120 -0.257 0.138 0.016 0.399
(1.39) (1.28) (1.65) (1.55) (1.23) (1.07)
Dependent ratio 38.114 38.197 39.858 38.694 38.997 38.791
(12.22) (14.31) (12.63) (13.05) (13.65) (12.41)
Literacy (dummy) 13.096 12.829 13.173 10.879 11.404 10.104
(7.74) (8.38) (7.11) (8.66) (7.28) (6.29)
Marital status (reference group: married people)
-Never married -8.474 -10.749 -12.428 -11.733 -11.819 -14.990
(10.93) (11.76) (13.39) (13.22) (12.18) (12.15)

21
-Widowed/Divorced/Separated -2.195 -1.112 -0.480 -0.154 0.337 -0.116
(14.23) (16.23) (16.06) (13.91) (12.34) (16.24)
Relation to the HH head
-spouse -0.887 0.670 1.052 1.008 1.943 6.196
(10.03) (10.87) (7.19) (10.27) (10.83) (10.80)
-child -27.361 -25.941 -24.778 -24.148 -20.708 -16.644
(11.56) (10.46) (12.72) (9.87) (12.00) (10.65)
-parent -126.864 -119.900 -119.195 -119.344 -113.986 -101.322
(141.99) (138.39) (163.30) (157.31) (154.67) (137.09)
-grandchild -52.167 -50.846 -50.881 -48.531 -47.951 -41.958
(61.04) (61.33) (30.44) (28.36) (27.58) (32.03)
-others -48.613 -47.255 -46.660 -44.394 -42.935 -36.496
(17.12) (19.92) (17.49) (21.89) (18.00) (19.85)
Female headed HH (dummy) 15.916 18.151 16.930 17.486 18.859 20.835
(12.16) (12.20) (10.07) (10.50) (14.09) (13.21)
Number of healthcare utilization per year -12.800 -12.621 -12.195 -12.134 -11.633
(4.01) (3.69) (3.80) (4.15) (3.25)
Urban (dummy) 22.024 23.708 27.312 23.272
(13.26) (9.67) (12.56) (11.33)
Belongs to P135 commune -5.108 -4.851 -4.376
(5.14) (4.51) (4.13)
Belongs to P168 regions -12.270 -15.547 -17.417
(9.59) (8.86) (8.05)
Belongs to P186 regions 4.522 3.263 6.845
(4.97) (4.64) (5.66)
Work sector: cultivation (dummy) 13.253 15.746
(6.84) (6.18)
Engaged in wage employment 27.567
(4.93)
N 1,074 1,072 1,072 1,072 1,072 1,072 1,072
 Table 8: Probability of employment - Difference-in-Difference Matching 2002-2004

(1) (2) (3) (4) (5) (6) (7)

Probability of employment
treat=1 0.006 0.014 0.014 0.014 -0.005 -0.036 -0.041
(0.02) (0.02) (0.03) (0.03) (0.03) (0.02) (0.02)
t=1 -0.014 -0.012 -0.004 -0.004 -0.005 0.013 0.000
(0.02) (0.02) (0.01) (0.02) (0.02) (0.02) (0.02)
treat=1 t=1 0.042 0.042 0.047 0.047 0.047 0.060 0.062
(0.03) (0.03) (0.03) (0.03) (0.03) (0.02) (0.03)
Age -0.000 -0.000 -0.000 0.000 -0.000 0.000
(0.00) (0.00) (0.00) (0.00) (0.00) (0.00)
Male (dummy) 0.011 0.010 0.011 0.012 0.015 0.006
(0.05) (0.04) (0.03) (0.04) (0.03) (0.04)
Household size -0.003 -0.004 -0.004 -0.005 -0.005 -0.004
(0.01) (0.00) (0.01) (0.00) (0.00) (0.00)
Dependent ratio 0.039 0.041 0.041 0.035 0.026 0.030
(0.05) (0.05) (0.04) (0.05) (0.04) (0.04)
Literacy (dummy) 0.029 0.029 0.029 0.043 0.049 0.045
(0.03) (0.04) (0.03) (0.03) (0.03) (0.02)
Marital status (Reference group: married people)
-Never married -0.048 -0.053 -0.054 -0.059 -0.064 -0.069
(0.04) (0.04) (0.05) (0.05) (0.05) (0.03)

22
-Widowed/Divorced/Separated -0.095 -0.106 -0.106 -0.108 -0.085 -0.086
(0.04) (0.06) (0.06) (0.05) (0.04) (0.04)
Relation to household head
-spouse -0.025 -0.022 -0.021 -0.019 -0.036 -0.012
(0.05) (0.03) (0.04) (0.04) (0.03) (0.04)
-child -0.108 -0.104 -0.103 -0.100 -0.070 -0.048
(0.04) (0.04) (0.04) (0.05) (0.03) (0.03)
-parent -0.378 -0.343 -0.343 -0.334 -0.282 -0.240
(0.36) (0.36) (0.39) (0.38) (0.25) (0.25)
-grandchild -0.027 -0.027 -0.028 -0.031 -0.024 0.001
(0.10) (0.12) (0.13) (0.10) (0.13) (0.12)
-others -0.255 -0.253 -0.253 -0.250 -0.203 -0.163
(0.13) (0.12) (0.13) (0.13) (0.09) (0.08)
Female headed HH (dummy) -0.033 -0.017 -0.018 -0.017 -0.007 0.008
(0.05) (0.05) (0.04) (0.05) (0.04) (0.05)
Number of healthcare utilization per year -0.037 -0.037 -0.037 -0.022 -0.017
(0.01) (0.02) (0.02) (0.01) (0.01)
Urban (dummy) 0.016 -0.007 0.075 0.053
(0.03) (0.04) (0.04) (0.03)
Belongs to P135 commune -0.003 0.016 0.014
(0.02) (0.02) (0.02)
Belongs to P168 regions 0.085 0.000 -0.008
(0.04) (0.04) (0.02)
Belongs to P186 regions 0.037 -0.002 0.026
(0.03) (0.02) (0.02)
Work sector: cultivation (dummy) 0.280 0.290
(0.03) (0.02)
Engaged in wage employment 0.145
(0.01)
N 1,144 1,139 1,139 1,139 1,139 1,139 1,139
 Table 9: Probability of employment- Difference-in-Difference Matching 2002-2006

(1) (2) (3) (4) (5) (6) (7)

Probability of employment
treat=1 0.006 -0.007 -0.007 -0.007 -0.010 -0.028 -0.029
(0.03) (0.03) (0.02) (0.02) (0.02) (0.02) (0.02)
t=1 0.000 0.001 0.008 0.008 0.008 0.023 0.014
(0.01) (0.02) (0.01) (0.02) (0.02) (0.01) (0.01)
treat=1 t=1 0.050 0.055 0.059 0.059 0.060 0.050 0.037
(0.02) (0.03) (0.03) (0.03) (0.03) (0.03) (0.02)
Age 0.000 0.000 0.000 0.000 0.000 0.001
(0.00) (0.00) (0.00) (0.00) (0.00) (0.00)
Male (dummy) 0.023 0.025 0.025 0.025 0.050 0.040
(0.05) (0.04) (0.03) (0.03) (0.03) (0.04)
Household size 0.001 0.001 0.001 0.000 -0.002 -0.000
(0.01) (0.01) (0.01) (0.01) (0.00) (0.00)
Dependent ratio 0.073 0.074 0.074 0.074 0.075 0.073
(0.05) (0.06) (0.05) (0.04) (0.04) (0.04)
Literacy (dummy) 0.008 0.008 0.008 0.011 0.020 0.014
(0.03) (0.03) (0.03) (0.04) (0.02) (0.02)
Marital status (Reference: married people)
-Never married -0.051 -0.056 -0.056 -0.056 -0.054 -0.071
(0.05) (0.06) (0.06) (0.06) (0.05) (0.04)

23
-Widowed/Divorced/Separated -0.063 -0.061 -0.060 -0.062 -0.052 -0.053
(0.05) (0.04) (0.06) (0.05) (0.04) (0.05)
Relation to household head
-spouse -0.017 -0.013 -0.013 -0.013 0.004 0.025
(0.05) (0.05) (0.03) (0.03) (0.03) (0.04)
-child -0.150 -0.147 -0.147 -0.145 -0.076 -0.055
(0.05) (0.05) (0.05) (0.05) (0.05) (0.03)
-parent -0.599 -0.585 -0.585 -0.579 -0.444 -0.384
(0.35) (0.26) (0.32) (0.35) (0.23) (0.25)
-grandchild -0.105 -0.103 -0.103 -0.107 -0.095 -0.063
(0.18) (0.18) (0.16) (0.13) (0.11) (0.14)
-others -0.171 -0.169 -0.168 -0.169 -0.135 -0.100
(0.10) (0.11) (0.09) (0.11) (0.08) (0.08)
Female headed HH (dummy) 0.057 0.063 0.062 0.063 0.089 0.096
(0.05) (0.05) (0.04) (0.04) (0.05) (0.05)
Number of healthcare utilization per year -0.028 -0.028 -0.029 -0.026 -0.024
(0.02) (0.02) (0.02) (0.01) (0.01)
Urban (dummy) 0.004 -0.004 0.066 0.045
(0.04) (0.03) (0.04) (0.04)
Belongs to P135 commune -0.005 0.001 0.003
(0.02) (0.02) (0.01)
Belongs to P168 regions 0.021 -0.043 -0.052
(0.04) (0.03) (0.03)
Belongs to P186 regions 0.013 -0.012 0.006
(0.02) (0.03) (0.02)
Work sector: cultivation (dummy) 0.263 0.273
(0.03) (0.02)
Engaged in wage employment 0.140
(0.02)
N 1,074 1,072 1,072 1,072 1,072 1,072 1,072
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