Can Households Cope with Health Shocks in Vietnam?

This paper investigates the economic impact of health shocks on working-age adults in Vietnam during 2004-2008, using a fixed effects specification. Health shocks cover disability and morbidity and are measured by 'days unable to carry out regular activity', 'days in bed due to illness/injury', and 'hospitalization'. Overall, Vietnamese households are able to smooth total non-health expenditures in the short run in the face of a significant rise in out-of-pocket health expenditures. However, this is accomplished through vulnerability-enhancing mechanisms, especially in rural areas, including increased loans and asset sales and decreased education expenditures. Female-headed and rural households are found to be the least able to protect consumption. Results highlight the need to extend and deepen social protection and universal health coverage.