Principles of Social Principles of Social Solidarity,Solidarity,Equity, Quality Assurance Equity, Quality Assurance and Cost-Containment: and Cost-Containment: PHIC PHIC enrollment, coverage enrollment, coverage and expendituresand expenditures

Dr. Leizel P. LagradaHealth Policy Development and Planning Bureau

Department of Health14 April 2010

OutlineOutlineDoes the health financing system of the

country fulfill the principles of solidarity, equity, quality assurance and cost containment?

Market failures in the health sector are addressed through different mechanisms

PhilHealth as the main financing agent

The DOH-PHIC response: HCF Strategy 2010-2020

Does the health financing system of the country fulfill the principles of solidarity, equity, quality assurance and cost containment?

Philippine National Health Accounts, 1997

Total Health Expenditure is PhP 87.1B (3.6% of GDP)

Philippine National Health Accounts, 2005

Total Health Expenditure is PhP 180 B (3.3% of GDP)

Financing health care mainly from out of pocket indicates a sickly health system

Market failures arise from Market failures arise from health care markets because health care markets because health care goods and health care goods and servicesservices

Generate externalitiesAre public goodsAre likely to be produced and sold in monopolistic markets

Are subject in asymmetric information

Fragmented health Fragmented health financing systemfinancing system

CHD

Pharmacies

Informal providers

DoH

Overseas treatment

Donors

DBM

Households/ companies

Users

Financial flows Financial sources Financial agents Providers

Other subsystems

Philhealth

Private Medical

Insurance

All LGUs

Private providers

LGU hospitals

Health Financing Flows in the Philippines

User fees

Premiums

Premiums

Budget allocation

Reimbursement

Retained hospitals

RHUTaxes

National Health Insurance National Health Insurance Act of 1995Act of 1995Provides all citizens of the

Philippines with the mechanism to gain financial access to health services through the National Health Insurance Program

Aims to prioritize and accelerate the provisions of health services to all Filipinos, especially the poor

Source: Jowett, Banzon and Basa, 2007

PhilHealth Benefit Payments, PhilHealth Benefit Payments, 2000-20092000-2009

In Billion Pesos

Source: PhilHealth Stats and Charts, 2009

Every Link in PhilHealth Every Link in PhilHealth Value Chain must work to Value Chain must work to achieve financial risk achieve financial risk protectionprotection

FINANCIALPROTECTION

PROVIDED TO THE POPULATION

AccreditationEnrollmentClaims

Availment and Processing

Insurance Payments

Source: Solon, 2010

Weak social solidarity and Weak social solidarity and inequityinequity

Health expenditures by financing agent and by income quintile, 2003

0.0

10.0

20.0

30.0

40.0

50.0

60.0

Billio

n p

es

os

Out of pocket

PhilHealth

Local government

National government

Out of pocket 1.6 3.8 6.4 12.2 35.9

PhilHealth 1.4 0.9 1.7 3.2 5.2

Local government 4.6 5.1 5.2 4.9 4.1

Nationalgovernment

3.8 4.6 5.1 5.0 4.6

Poorest 2nd 3rd 4th Richest

Source of basic data: Racelis, et al. (2006)Source: Herrin A. 2010

PhilHealth Accredited number PhilHealth Accredited number of bedsof beds

90% claims made by hospital to PhilHealth.

Predominantly fee-for-service

Source: Jowett, Banzon and Basa, 2007

PhilHealth does not negotiate prices with

hospitals for its members

Illustrative Source: Jowett, Banzon and Basa, 2007

IllustrativeIllustrative Source: Jowett, Banzon and Basa, 2007

Illustrative Source: Jowett, Banzon and Basa, 2007

DOH-PHIC Response:DOH-PHIC Response:Health Care Health Care Financing Strategy Financing Strategy 2010-20202010-2020

HCF PRINCIPLES HCF PRINCIPLES

Solidarity in funding health services

No gray areas with respect to responsibilities and roles

More choice, less protection

New rules, easier time

HCF GOALSHCF GOALS

Resource mobilization

Universal membership

Allocative efficiency

Technical efficiency

Strategy One: Increase Strategy One: Increase resources for healthresources for health

2010 2014 2020

THE at 3.3% of GDP THE at 4% of GDP THE at 5% of GDP

Government spending on health at 5.5% of total public spending

Government spending on health at 6% of total public spending

Government spending on health at 7% of total public spending

OOP as major financing source for health expenses

Average premium level of PhilHealth to increase by 5 times the 2009 level in real termsPhilHealth as major financing source for health expensesOOP spending at 30% of THE

Strategy Two: Sustain membership in Strategy Two: Sustain membership in social health insurance of all Filipinossocial health insurance of all Filipinos

2010 2014 2020Formal sector (including casual and contractual): payroll contributions

OFWs: Fixed premium

OFWs: Premium payment as requirement prior to migration

OFW: Continuous premium payment

Informal sector: Voluntary

Informal sector: Partial subsidy from LGU with contributions linked to administrative licenses/ permits/ documentation

Informal sector: Some on partial subsidy from LGU; others fully paying members

Indigents: Sponsored program as a shared subsidy between LGU and NG

Indigents: Sponsored program fully subsidized by NG

Strategy Three: Allocate resources Strategy Three: Allocate resources according to most appropriate according to most appropriate financing agentfinancing agent

2010 2014 2020PhilHealth: Main payer of personal careDOH: Subsidies for salaries and MOOE of retained hospitals, subsidies and distribution of drugs through vertical programs

DOH: Subsidies for salaries of retained hospitals, subsidies for public heath in provinces without PhilHealth universal membership

DOH: Main funder of capital outlay for tertiary hospitals; limited role in public health funding

LGU: Subsidies for salaries and MOOE of primary and secondary facilities

LGU: Subsidies for salaries of all primary facilities and some secondary facilities

LGU: Main funder of capital outlay of LGU-owned facilities and community-focused public health interventions

PhilHealth: one of the funders of public health interventions through outpatient packages

Strategy Four: Shift to new Strategy Four: Shift to new provider payment provider payment mechanismsmechanisms

2010 2014 2020Capitation for outpatient benefits for Sponsored Program beneficiaries

Capitation as a major tool to pay for primary health care services for all Filipinos

Fee-for-service for inpatient care

DRG for in-patient carePer case payment under a case-mix systemBenefits to include outpatient drugs

Per case payment for maternity care package and surgical proceduresPhilHealth spending: PHP22 billion

PHP 40 billion PHP 162-234 billion

Strategy Five: Secure fiscal Strategy Five: Secure fiscal autonomy of facilitiesautonomy of facilities

2010 2014 2020

DOH retained hospitals with income retention

DOH retained hospitals receive salaries from DOH budget

DOH retained hospitals are fully corporatized and autonomous; they do not receive subsidies

LGU health facilities without income retention

LGU health facilities with income retention

LGU health facilities receive minimal subsidy

Revenues = local taxes

DOH and LGU fund capital outlay

DOH and LGU fund capital outlay

GOP spending on supply side: PHP 45 billion

PHP 60 billion

Initial Outputs of HCF Initial Outputs of HCF Strategy ImplementationStrategy ImplementationAdministrative Order 2009-0029:

Guidelines for the Implementation of HCF 2010-2020

Consideration of HCF estimates and strategic directions on Health Sector Expenditure Framework 2011-2012

Legislative track: Health Care Financing Bill vs. Amendment of NHIL (RA 7875)

Initial Outputs of HCF Strategy Initial Outputs of HCF Strategy Implementation Implementation Strategy On-going work

1: Increase resources for health

DOH: Health Sector Expenditure FrameworkLGU: PIPH and Local Health AccountsPhilHealth: efficient collection of premium contributions

2: Sustain membership in SHI of all Filipinos

Segmenting the Informal Sector to Strengthen the Individually Paying Program:

3: Allocate resources according to most appropriate financing agent

Development of Essential Health Package

4: Shift to new provider payment mechanisms

Contracting with Service ProvidersPiloting of Case Payment

5: Secure fiscal autonomy of facilities

Income Retention for DOH HospitalsEconomic Enterprise for LGU Hospitals

Thank You and Thank You and Good MorningGood Morning