Universal Coverage Scheme and out-of-pocket healthcare expenditure: evidence from Thailand

ABSTRACT

In order to provide healthcare to low-income people, especially those living in rural areas, the Thai government introduced its Universal Coverage Scheme (UCS) in 2001–2002, becoming one of the first low- and middle-income countries to do so. We employ a difference-in-difference-in-difference (DDD) approach to examine whether UCS effectively reduces out-of-pocket healthcare expenditure across income levels and regions. The empirical results note a significant reduction in medical expenditure for the post-UCS period in outpatient as well as inpatient expenditures. The impact of UCS on the difference in medical expenditure between the treated and control groups varies across regions, while there is no significant difference across income level groups. Thus, by helping to pay an affordable copayment for ambulatory care, UCS has overall softened the high medical costs and provides accessible medical resources for poor regions and middle-income people.

KEYWORDS:

• Health reform
• universal coverage
• difference-in-difference-in-difference
• Thailand

JEL CLASSIFICATIONS:

• C13
• I18
• L31

Acknowledgement

We are grateful to anonymous referees for helpful suggestions and comments. Chih-Hai Yang gratefully thanks the Faculty of Economics, Thammasat University for access to the Socio-Economic Survey of Thailand when he visited Thammasat University in 2011. The authors assume sole responsibility for all opinions expressed and any remaining errors.

Disclosure statement

There are no conflicts of financial and non-financial interest in the subject matter or materials discussed in this manuscript.

Notes

1. Another health insurance scheme, Type B Fee Exemption plan, was available to those who did not qualify for MWS and VHCS, but this plan covered only a minority of the population.

2. In 2012, Thailand's per capita GDP and the income inequality index measured by the ratio of top quintile to the bottom quintile were US$5,918 and 6.962, respectively.

3. As for VHCS, the voluntary nature was prone to suffer the problem of adverse selection.

4. Thailand's statistical yearbook classifies all provinces into five regions.

5. See Schreyögg and Grabka (2010) for a brief review.

6. One important assumption in DID is that these two groups are independent - namely, the policy is endogenous.

7. In the survey, the question regarding outpatient expenditure is: “How much money was spent on drugs, medicines and check-ups last month?” Inpatient expenditure includes the payments that occur in other provinces.

8. Females may spend different amounts of medical expenditure compared to males. However, the limited information prevents us from including the “number of males in a household” as a covariate.

9. In the first step, we run a logit model using all 59,590 observations for outpatient expenditures.

Additional information

Notes on contributors

Yu-Tung Hsu

Yu-Tung Hsu got her master degree from Department of Economics at National Central University. Her research interests focus on China and ASEAN economies. She now works at the China Affairs Commission, Democratic Progress Party in Taiwan.

Chih-Hai Yang

Chih-Hai Yang is a professor of Economics at National Central University, where he teaches courses on Economics of Innovation. He has published dozens of research articles in international journals, among which are China Economic Review, Economics Letters, Empirical Economics, Information Economics and Policy, Research Policy, Technological Forecasting and Social Change, and others. Prof Yang is a member of the editorial boards of Asian Economic Journal.