This post was revised and edited on 1st July 2025.
The Global Climate Risk Index 2021 ranked Vietnam as the thirteenth country in the world most affected by climate change and extreme weather events between 2000-2019 [1].
Sea level rise, drought, weather complexity, heat, diarrhoea, dengue fever, malaria, and respiratory diseases, increasing population, childhood stunting, and high male imbalance are just a few of the adaptation challenges that Vietnam must overcome.
In September 2024, the Alliance for Transformative Action on Climate and Health based at the World Health Organization announced that one of its members, the Ministry of Health Vietnam, was conducting a nation-wide carbon emission assessment in healthcare service and manufacturing facilities [2].
This got me wondering – where is Vietnam on its transition towards a low-carbon, climate-resilient biodiversity positive health system?
This first post concentrates on whether and how Vietnam can pay for the needed transition. A second post follows HERE.
Vietnam’s Health System: Overview
The public health system is decentralized.
Provincial Government (through their Provincial Health Department) manages public healthcare providers and regulates private healthcare providers. The Central Ministry of Health (MOH) guides on policy and manages a small number of central hospitals. Central MOH also controls about 10% of state health budget for administration, regulation, illness prevention, public health, training, and research [3]. However, Provincial Government is the critical decision maker in day-to-day healthcare functioning.
The sources of finance for health in Vietnam are [4]:
- Private health expenditure;
- General Government Health Expenditure (government budget);
- Social (compulsory) Health Insurance (SHI);
- Direct-from-households as out-of-pocket payments (OOPs);
- Official Development Assistant (ODA);
- Voluntary health insurance.
Private expenditure represents the largest share of finance in health before out-of-pocket (OOPS) expenditures by households (meaning no subsidized care or not through social health insurance) and public expenditure.
Overseas development assistance (ODA) for health has been relatively small since 1995, at around 3% of total finance for health. Vietnam’s historical closure from western donor support meant ODA levels were low anyway. As the national economy has grown, grants and cheap loans from key global health development partners have become sparse. In fact, personal remittances from overseas Vietnamese to their families, friends, connections in the country have exceeded total ODA since 2014 [5].
Selected financing indicators are set out in the table below. The reference year is 2021 because it’s the year where most data was available.
| Vietnam Snap-Shot | Current US$ (rounded) in 2021 |
| Population | 97,468,029 |
| Public expenditure by government on health, per capita | 8.97 |
| Private expenditure on health, per capita | 53.46 |
| Out-of-Pocket expenditure on health, per capita | 20.48 |
| ODA expenditure for heath, share of total finance | Estimated 3% between 2006-16 |
| Domestic general government health expenditure | 42.7% of GDP |
| Gross National Income (GNI) | 350,317,100,940 |
| External debt stocks | 139,852,972,474 |
| External debt stocks % GNI | 38% in 2022 |
| External debt servicing % GNI | 7% in 2022 |
| Reference: [5] | |
At date of this post, I couldn’t find an estimate of total economic value of the health sector in Vietnam, but some interesting considerations are:
- Medical device market was valued at US$1.5 billion in 2022, 90% of which are imported [6];
- Pharmaceuticals market was valued at approximately US$6.7billion in the same year [6], around half imported, half domestically produced;
- An estimated 85,360 medical doctors; 132,890 assistant doctors; 28,130 pharmacists; 110,580 nurses (based on [4]) as well as an uncertain number of community workers. Estimated salaries are unknown;
- Value of buildings & real estate within the health sector is unclear. Real estate in Vietnam is very expensive and valued at over US$4 trillion in 2024 [6]. Even a notional 1% of this would be large;
- Value of transportation activity within the health sector is unknown.
Gross National Income (GNI) is the total amount of money earned by a country. The Vietnamese economy has grown between 2000-2019 [6] so that by 2021, GNI was over US$350billion. An important part of that national income is value generated by the health system.
Climate Funds
When talk turns to finance for health system climate adaption and mitigation, there is an assumption that this means access to the global climate funds, so let’s take a look at these next.
By November 2024, there have been 5 Green Climate Fund (GCF) projects for Vietnam to a value of US$175.6million. These were mainly in the form of grants although GCF is acting as guarantor for significant loans into Vietnam’s energy sector [7].
Zero financing from the GCF has entered the health system [7].
This is where the ATACH announcement comes in. In late 2023, a Climate and Health Co-Investment Facility was established between the GCF, UNDP, and the WHO to promote climate resilient and/or low-carbon investments by leveraging public and private capital into health for 13 eligible countries, including Vietnam [7].
From the Adaptation Fund , Vietnam appears to have been part of two projects focused on the Mekong region to a grant value of $US10.8million. Vietnam does not currently have a national implementing entity for the Adaptation Fund [8].
Zero funds have been directed into the health system [8].
From the Global Environmental Facility (GEF), Vietnam has been part of 74 applications valued at over US$65million, though not fully disbursed. The GEF elements appears to have been largely grant [9].
Zero funds have been directed into the health system [9].
Vietnam adopted a Just Energy Transition Package (JETP) in 2023 to finance decarbonisation of the national energy system. This includes approximately US$7.75 billion in the form of loans, equity, and guarantees from high income country development banks on favourable credit terms, along with grant aid. The JETP also includes approximately $US7.75 billion in private funding at market prices with various strings attached [10].
There is one reference to health in the JETP related to social assessment criteria, but otherwise it appears that no funds are directed into healthcare [10].
Debt
Debt is a common way to finance mitigation and decarbonization efforts but can be risky in a context of already high national debt.
Vietnam’s externally held sovereign/national debt is just under 40% of GNI. The cost of debt servicing has been rising slowly and was 7% of GDP in 2022 (up from 5% in 2018). Vietnam’s debt is made up of long term and short term stocks. Most of the total external debt stock is long term, with a smaller portion (26% of external debt stock) being short term [11].
Anything that interferes with governments’ ability to repay or refinance outstanding debt will be problematic. For instance, typhoon Yagi in 2024 is estimated to have caused US$2 billion of damage and reduce projected GDP growth rate for 2024 by 0.15% [12]. This ultimately means reduced national earnings and therefore, available money to pay back debt interest and debt itself. Since Vietnam receives external loans, with relatively ODA coming into the country, a situation could arise in which Vietnam becomes a net financial contributor to the global economy.
Domestic debt in Vietnam has exploded. Rising household indebtedness has risen to around 60% of GDP by 2020 [9]. Some researchers argue that Vietnam has become a debt tolerant pro-consumption society: this may be reflected in increased private sector healthcare use. Spending on healthcare per capita is dominated by the private sector “driven by the increasing number of people in urban areas willing to pay for more rapid treatment in modern facilities” [4]. The downside of household debt is inability to deal with financial shocks including climate-induced shocks and catastrophic household expenditures on health.
Corporate debt continues to rise “due to a combination of rampant rent-seeking and inefficient corporate governance” [14]. Debt may be detrimental to long-term productivity and creativity because there is a tendency for the corporate sector in Vietnam to rely heavily on physical and capital assets instead of “creative processes, especially in times of turmoil” [14]. In other words, using debt to fuel company day-to-day operations and neglecting innovation to clean-up and improve productivity over the longer term.
Why does this matter to health?
It matters when climate change mitigation and adaptation are financed through debt and debt type instruments because of an erroneous assumption that debt generates economic growth enabling future debt servicing and repayment. It matters particularly for health (and other social safety nets such as education) in a context where multiple pressures on government budget exist and consequently, public spending on healthcare is deprioritized, shifting finance to the private sector.
This is one of the reasons that private health expenditure is high in Vietnam
On Budget
Does government then, have sufficient cash flow to finance the transition?
Central government domestic health expenditure (also called ‘domestic resource mobilization’) has focused on collection of social health insurance; increased public spending on health at a rate faster than the increase in overall public spending; and as of 2013, a surcharge on cigarette sales to fund activities for the prevention and control of harm from tobacco use [5].
Health insurance revenues are handled by an independent state social insurance agency (the VSS) in charge of collecting health insurance premiums, managing the fund, and reimbursing healthcare providers for health services used. While SHI has a mechanism to manage, reserve and reallocate the health insurance budget to ensure balance across provinces, spending has ballooned. This means that the SHI has been continuously in deficit since 2016 [4].
The VSS has been trying to control expenditure, by monitoring health insurance evasion by employers; focusing on continued enrolment of individuals who are only partially subsidized; enrolling more of the population working in the informal sector; identifying incentives to reduce unnecessary care; revising rates for, and list of, SHI reimbursable medicines and devices; and establishing treatment guidelines and reimbursement criteria for hi-tech and expensive services such as MRI, PET, and CT scans [3]. There is a hard budget cap for SHI expenditure in each province [4].
At the same time, central government uses hospital autonomy and Public Private Partnership (PPP) as two strategies to reduce health system reliance on government budget.
Turning public hospitals into autonomous revenue generating units (hospital autonomy) has been pursued since early 2000s and has resulted in various revenue‐maximising practices in public hospitals. These include “patient‐requested” services alongside “normal services” assigned by central government [14]. “Patient‐ requested” services attract higher fees for modern facilities, medical equipment, greater choices of doctors and treatment dates and less waiting time. Such services are organised by hospital leaders and included as part of staff appraisal in some hospitals. Under‐the‐table payments are also encouraged [14].
The policy of hospital autonomy means that large hospitals in the public sector are not motivated to reduce overcrowding. On the contrary, they are incentivised to attract as many patients as possible to safeguard their revenues. The policy of hospital autonomy can therefore conflict with the aim of getting to Universal Health Coverage. Its unclear whether autonomous hospitals are carrying deficit or long term debts. There are currently no mechanisms for bailing out public hospitals that do get into long term debt [4].
Forms of Public Private Partnerships have been strongly encouraged since 2015. The number of active health PPPs, though, was still very limited by 2020. Most were proposed by the private sector and developed in the provinces, with a focus on hospital infrastructure and curative services over preventive and primary health care. That is, they are oriented toward the higher income middle class in urban areas. Health PPPs are “asset-heavy, service-light” PPP models (equipment and facility) [16]. This connects into what could be called a Vietnamese approach to debt: pro-infrastructure and low on innovation. PPP legal and regulatory frameworks are unclear and central government lacks capacity to manage such contracts adequately [16].
In market economics, volumes can be profitable: selling more healthcare services, more pharmaceuticals, more medical devices make a profit for the seller. But volume without quality and appropriateness is detrimental:
“a frequently overlooked element of health care decarbonization is the need to avoid low value or inappropriate care, in which harms outweigh benefits” [17].
Around a quarter of all healthcare globally can be considered low value and this means there is a significant opportunity to avoid underuse of necessary health services (e.g., vaccinations, screening) and overuse of others (e.g., excessive diagnostics). Depending on the private commercial sector to deliver healthcare, whose business models prioritise volume could slow the Vietnamese transition to low carbon climate resilient healthcare.
Transition for the health sector “must move beyond a lens of low-carbon care delivery and include strategies to ensure appropriate care and to maximize opportunities for prevention and health promotion” [17 emphasis added].
And so…
Based on this very quick review, it looks like Vietnam’s healthcare policies are in conflict. Central government is still important for healthcare financing but public spending for health as a share of GNI is unlikely to increase due to increasing levels of public debt and budget deficits.
Strategies such as hospital autonomy, encouragement of PPP, and growth of the private sector aim to reduce immediate pressure on central government budget. However, inflated costs through ‘patient selected services’ and weak control on the SHI fund increases the cost of care, vastly inflates unnecessary care. These costs are then borne by government and citizens through increased OOPs thereby threatening Universal Healthcare Coverage and household financial viability.
In this context, grants will clearly be attractive. But the health system has not been able to capture available large climate funds. The newly established Climate and Health Co-Investment Facility is an attempt to change that. Attempts to use debt to mitigate and adapt to climate change will likely be counterproductive unless the health sector can change its focus towards prevention and responsible innovation.
Private healthcare providers in Vietnam are making numerous and significant decisions that affect the pollution footprint of the health system and its ability to adapt to a changing climate. Don’t forget private domestic and imported device manufacturers and sellers, as well as land and buildings managed in the private sector. It all adds up to a need for the private sector to somehow be persuaded to change the way they are managing their money for increased ecological health and population health equity.
It is clear that the Vietnamese health system has significant assets that can be used to support the transition through procurement, spending power, workforce and training and buildings and land. In managing all of these assets, a multitude of decisions are made every day that are and will affect Vietnam’s transition to a cleaner, greener healthcare.
References
[1] German Watch (2021) Global Climate Risk Index Who Suffers Most from Extreme Weather Events? Weather-Related Loss Events in 2019 and 2000-2019 https://www.germanwatch.org/en/19777
[2] International Living Futures Institute https://living-future.org
[3] Joint Learning Network for UHC (2021) Public Expenditure on Health in Vietnam: A Narrative Summary: Domestic Resource Mobilization Collaborative https://www.jointlearningnetwork.org/wp-content/uploads/2021/12/Vietnam-JLN-Health-Spending-01092021.pdf
[4] Tran et al (2021) Sustainability and Resilience in the Vietnamese Health System Partnership for Health System Sustainability and Resilience https://www3.weforum.org/docs/WEF_PHSSR_Vietnam_Report.pdf
[5] World Bank Open Data https://data.worldbank.org/
[6] Statista https://www.statista.com/outlook/fmo/real-estate/vietnam
[7] Green Climate Fund https://www.greenclimate.fund/countries/viet-nam
[8] Adaptation Fund https://www.adaptation-fund.org/
[9] Global Environment Facility Viet Nam www.thegef.org
[10] Government of Vietnam (2023) Resource Mobilization Plan: Implementing Vietnam’s Just Energy Transition Partnership https://climate.ec.europa.eu/system/files/2023-12/RMP_Viet%20Nam_Eng_%28Final%20to%20publication%29.pdf
[11] World Bank. 2023. International Debt Report 2023. Washington, DC. https://doi.org/10.1596/978-1-4648-2032-8
[12] Vietnam News https://vietnamnews.vn/politics-laws/1663207/government-unveils-recovery-plan-as-typhoon-losses-hit-2-billion.html
[13] Hanoi Times (2021) https://hanoitimes.vn/elevated-household-debt-remains-big-concern-for-vietnam-banking-sector-hsbc-317327.html
[14] Nguyen H.K et al (2019) The New Politics of Debt in the Transition Economy of Vietnam Austrian Journal of South-East Asian Studies, 12(1), 91-110
[15] Vo et al (2018) An Institutional Analysis of the Fiscal Autonomy of Public hospitals in Vietnam Asia & the Pacific Policy Studies https://doi.org/10.1002/app5.268
[16] World Bank (2020) Policy Note: Public Private Partnerships for Health in Vietnam https://documents1.worldbank.org/curated/en/588741592187782031/pdf/Public-Private-Partnerships-for-Health-in-Vietnam.pdf
[17] Sherman et al (2023) Sustainable and Resilient Health Care in the Face of a Changing Climate Annual Review of Public Health https://doi.org/10.1146/annurev-publhealth-071421-051937