Objectives: Vietnam started its health reform process two decades ago, initiated by economic reform in 1986. Economic reform has rapidly changed the socio-economic environment with the transition from a centrally planned economy to a market-oriented economy. Health reform in Vietnam has been associated with the introduction of user fees, the legalization of private medical practices, and the commercialization of the pharmaceutical industry. This paper presents the user fees and health service utilization in Vietnam during a critical period of economic transition in the 1990s. Study design: The study is based on two national household surveys: the Vietnam Living Standard Survey 1992-1993 and 1997-1998. Methods: The concentration index and related concentration curve were used to measure differences in health service utilization as indicators of health outcomes of income quintiles, ranking from the poorest to the richest. Results: User fees contribute to health resources and have helped to relieve the financial burden on the Government. However, comparisons of concentration indices for hospital stays and community health centre visits show that user fees can drive people deeper into poverty, widen the gap between the rich and the poor, and increase inequality in health outcomes. Conclusions: An effective social protection and targeting system is proposed to protect the poor from the impact of user fees, to increase equity and improve the quality of healthcare services. This cannot be done without taking measures to improve the quality of care and promote ethical standards in health care, including the elimination of unofficial payments.