The search for an efficient health financing mix in Philippines

By Caroline J. Howard, ABS-CBN News Channel

Posted at Apr 17 2010 12:14 PM | Updated as of Apr 20 2010 12:59 AM

MANILA, Philippines - San Isidro, Nueva Ecija was a fifth class town until the Local Government of San Isidro tapped the potential of participative governance, integrated social and economic services and sustained the gains of institutionalizing its health program into the local government thru a five-step roadmap to participation.

It was a grassroots approach hinged on empowering people, giving rural health officers the discretion over rural health, and making rural health an economic enterprise. The program depended on listening and responding to people, assessing health programs with an understanding of the roles of implementors and participants, sustaining gains by encouraging the spirit of volunteerism in schools and nurturing the participation of health care providers.

Success story

The story of San Isidro's health financing success rested on local leaders who had enough political will to implement an equitable health agenda and make efficient use of available resources.

"The local government allocated 16% of the municipal budget to health," Mayor Sonia Lorenzo says. "36% came from PhilHealth payments and co-share of beneficiaries, 64% from the Internal Revenue Allotment. This allowed us to address a barangay-based health care system while maintaining a client-centered clinic with two doctors, two nurses, a dentist, two medical technicians, lab inspectors, five midwives nutritionists, a data encoder, and 170 barangay health workers." Residents of San Isidro contribute P200 for health who in turn get additional benefits apart from PhilHealth. By having a sense of ownership for the program thru active participation, Lorenzo says, the community has managed to sustain the community's health care needs.

From a fifth class municipality, today San Isidro, Nueva Ecija is a second-class municipality enjoying the quality of life the local government envisioned for residents.

Lorenzo says more than 10,400 families or 90% of the local population are enrolled in PhilHealth. Today, the town has the capacity to provide vital outreach services and make it an enterprise, allowing it to sustain the health care program by charging those who can afford to pay for health services. The local government also sources a permanent budget from PhilHealth to integrate health in education and support San Isidro's feeding program in 12 elementary schools.

"In integrating social services for farmers, and making a solid health program accessible to all," Lorenzo says "farm production surpassed targets."
 
Inequitable health care system

 
San Isidro, Nueva Ecija is where the rest of the country struggling with its health care system could be, but reality shows otherwise.

The Health Care Financing Strategy for 2008-2017 characterizes the country's health care financing as underfunded, offering limited protection against the cost of illness and having inefficient use of health care resources. Former Health Secretary Alberto Romualdez's assessment further underscored the "need to increase tax-based coordinated government spending and the reorientation of PhilHealth as a true social health insurance" (Health Outlook Forum 2010, Zuellig Foundation).

Studies show out-of-pocket expenses account for nearly 60% of health care spending in the country, private health care providers or HMOs account for 20%, while PhilHealth accounts for 12 to 15% of the country's total health care expenditure.

The number of uninsured has dropped significantly from 60% in 2000 to 25% in 2008. PhilHealth contributions are going up. (Latest statistics show, the Philippine Health Insurance Corporation has a reserve pool of P104 Billion. Considering the maximum allowable reserves equivalent to two years of the projected annual expenses, an annual expenditure of P27 Billion is low.)

Health experts say Filipino households are spending more for health care but not getting the benefits due them. (An average Filipino family spends P5,874 a month for hospitalization expenses, which is beyond the poverty threshold of P4,835 or what the general population can afford.)

Dr. Eduardo Banzon of the World Bank laments indigent patients do not know how to use social health insurance and can't afford out-of-pocket payments for Philhealth. Not only does the poor end up shouldering out-of-pocket expenses beyond the benefit ceiling covered by PhilHealth, they end up not being able to enjoy its benefits because many of them do not understand how it works.

Despite high contributions for social health insurance, the Health Department admits, access to health services and products is not enough and health care protection does not happen where it is needed most. It's a stark contrast to the real health care situation in the country where an estimated 40% of Filipinos die without the benefit of proper medical attention.

Research also shows, 9 out of 10 top users of the PHIC are private tertiary health facilities.

Despite the availability of national health insurance, the number of hospital beds have not gone up. Seventy percent of all health workers are estimated to be employed in the private health sector, which serves only 20-30% of the population who can afford to pay for health care. "We can try to have a good distribution of doctors," Dr. Eugene Ramos of the Philippine College of Physicians says. "The PCP has 8,000 members, 50% of them are in Metro Manila. But while while medical professionals have been trained to focus on technology, Ramos adds they are removed from the predicament of patients, making them unfamiliar with the health care financing.

"While there has been a push for primary health, we have a dichotomy of first class, tertiary hospitals and dilapidated and unmanned ones in the provinces," says DLSU Medical Center's Charles Yu. "We are in danger of two worlds, and that's the challenge for us today."

Finding the best mix

The need for reforms in health care financing and the delivery of health care services in the country was at the core of the "First Health Financing Summit" held early this week. It saw representatives from the UP System, AIM Center for Development Management, De La Salle Health Science center, and the Ateneo Graduate School of Business Health Unit, as well as major stakeholders come together in efforts to find the right mechanisms and reforms, and help pave the way for a working universal health care system.

Some countries have shown the way with successful national health services that benefits all.

The National Health Insurance System (NHS) in the United Kingdom is one of them.

Shaped around the needs and preferences of individual patients, the NHS works with all stakeholders, provides access to a comprehensive range of services and choices, and helps reduce health inequalities. Eighty-seven percent of all health expenditures for the NHS is sourced from general taxation.

In 2008, 3% of the U.K.'s GDP of was spent for NHS, 1.3% from private funds, while 10% of Britain has private health insurance.

Dr. Khai Hong Phua of the National University of Singapore says there is no model financing system, and finding a balance in the private-public mix is key. "Each country has to find what's affordable. In the Philippines and other parts of Asia, there is rapid development but also huge public spending. Government's share comes in form of taxing to match public spending or everything will come from out of pocket, and will be unaffordable to the poor."

Singapore allocates 3.1% of its GDP to health care, 36% of which come from public and 64% from private funds. Despite its low health expenditure, Singapore gets more value for its money. Phua credits this to good budgetary controls, government subsidies for public health and differential pricing for personal consumption, as well as a cost-sharing and co-payment system.

"Public and private goods must be differentiated," Phua says, adding it helps to have a segmentized market where government covers basic health care, and the rich and middle-class invest in public goods and services, and those who want high quality health care should pay the cost.

Experts admit it would be a dream to achieve the universal health coverage afforded by the United Kingdom, or neighbors in the region including Singapore. But while free health coverage may be next to impossible, offering the best essential services free of charge or at the least cost would be ideal.

Summit convenors believe this would be possible by finding a balance between the needs of patients and health care providers, pooling resources from private and public fund, making health care financing a shared responsibility and having an equitable distribution of health care resources. Improving the quality of health care comes with reducing adverse events or medical errors, reducing the cost of health services and medication, and giving incentives to health care providers.

Based on lessons learned from San Isidro, Mayor Lorenzo says, "people are willing to pay for health care as long as they are educated on why they should invest and see how they can access health services." But Lorenzo believes the work partly rests on the value local governments give to health. "Local government units should be mandated to prioritize health in the budget, revisit the strategy in health care and capacity building. If health is a low priority of government health will not be addressed." For Lorenzo, alloting a permanent budget for health from the local government fund is the best source for health financing.

Amid present challenges, summit organizers call on all stakeholders to take part in the future of the country's health systems.

Dr. Juan Nanagas says good health financing is essential for health, which, in turn, contributes to national security. "Health financing and national security are not exclusive. More spending on health means more spending on national security."

"No Filipino should die because he has no money in his pocket," Yu says. Not with a good health financing mechanism in the country, which will also spare Flipinos from having to pay out-of-pocket for basic health services.

To this end, Dr. Leizel Lagrada of the health department says both the DOH and PhilHealth have been instituting reforms. Indigents are enrolled in a cost-sharing mechanism between the local and national government. Local government units have a province-wide investment plan for health, and local chief executives are encouraged to invest more of their budget allocations in health. Lagrada adds PhilHealth has also begun filing segmentation for insurance, and developing a social health insurance package with the help of the World Health Organization.
 
Putting health care on the political agenda
 
Amid present challenges, and in the continued search for an efficient health financing system, summit organizers call on all stakeholders to have a stake in the future of the country's health systems. Health experts also challenge the country's future leaders to make a difference by putting health care reform high in the political agenda while keeping in mind economic growth and sustainability.

"The formula is not how much money we spend but how we spend it," DLSU Medical Center's Charles Yu says. "The challenge to the next administration is to get everyone to work together, not just to talk about the problem but to solve it."

Dr. Soe Nyunt-U of the World Health Organization says this election season is the best time to push for health reforms. Aside from developing the mechanism for an equitable distribution of health care in the country, a mechanism of incentives for doctors and reforms to the hospital service, infrastructure and the quality of health care must also be kept in mind.

"There is no free lunch," Soe says. "Someone has to pay for the care, and we need to have a mechanism of financing where tax-based money and insurance-based money can be combined so providers are properly remunerated. Financing means creating a win-win situation for patients and providers, especially those who work in rural, marginalized and neglected areas."