Vietnam’s Aging Population Drives Healthcare Cost

Vietnam and other ASEAN nations are currently facing healthcare expenditure challenge in the upcoming decade.

July 2018 , by

With the past decade's improvement in life expectancy and rise of income, the oldest age group of most Southeast Asia nation's population, including Vietnam, is rapidly growing, bringing rapid change to the population structure and driving demand for healthcare. A report from YCP Solidiance stated that Vietnam has the highest rate of growth (4.43% CAGR) of the elder population as the driver of healthcare demand among ASEAN countries in the period 2015-2040.

According to YCP Solidiance's white paper, "The ~USD 320 billion healthcare challenge in ASEAN", nearly all ASEAN 6 nations today show either negative or close-to-zero growth for the youngest part of their population (0-14 years old). While the workforce age part of the population (15-64 years old) in all nations-expect Singapore-is still slowly growing, the retirement age population (age group 65 and above) is outpacing them rapidly, with relative growth rates 3-10 times higher than the working age population.

Hence the ASEAN region will undergo profound population transition. In Southeast Asia, 9.6% of the total population was 60 and above in 2016 but is expected to more than double to 21.1% by 2050, driven by the increased life expectancy of elders and reduced fertility rates of an increasingly wealthy population. A relatively larger elder population is expected to further burden society with an increased need for healthcare, while a relatively smaller workforce will have to produce the economic wealth to sustain the ever-growing demand for medicine, treatment, and caretaking

The report highlighted that Vietnam and other ASEAN nations are currently facing healthcare expenditure challenge in the upcoming decade. From around USD 420 billion, total healthcare spending is estimated to keep increasing to reach USD 740 billion by 2025. The governments and healthcare industry stakeholders in ASEAN should address the USD 320 billion increment in order to avoid future crisis and develop more efficient healthcare model in the future.

Throughout the 2013-2017 period, the growth of Vietnam's healthcare expenditure per capita hit 26.78%, expanding from USD 112 in 2013 to USD 142 in 2017, outpacing GDP per capita. Accounting 3,8% of GDP in 2014, Vietnam's public healthcare expenditure was also recorded as the highest among ASEAN countries. 

Growth of Health ExpenditureAside of cost challenge, the report also mentioned numerous challenges faced by Vietnam's healthcare industry, including outdated and overcrowding hospitals, limited State budget, obsolete medical equipments, as well as shortage of qualified medical staffs.

Improving Vietnam's healthcare system

Vietnam and other ASEAN-6 nations could take early actions, despite the rising challenges.  Firstly, generating new sources of healthcare funding is needed. This could include implement taxation on unhealthy luxury commodities, such as tobacco, alcohol, salt and sugar. To improve the situation for consumers and governments, countries also need streamlined co-payment or broader insurance systems, with Vietnam has about 3/4 healthcare coverage for the citizens.

Secondly, despite large reliance on State budget for public hospitals, the budget is still considered too low to meet the demands. Vietnam and ASEAN-6 countries need to rationalize budget and reduce overhead cost.

Thirdly, Vietnam and ASEAN-6 nations should invest more in prevention at early stages of treatment in order to avoid the future cost. Countries might be able to improve survival rates of patients and the need for massive treatment through early diagnosis and treatment. This strategy should become a key pillar of sustainable healthcare policy.

Read more about Vietnam & ASEAN's healthcare challenges in our white paper.

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