JEREMIAS N. PAUL, JR.

Undersecretary, Department of Finance

Republic of the Philippines

Securing the Wins of the

Philippine Sin Tax Reform

OUTLINE OF PRESENTATION

I. Background

II. Wins of Sin Tax Reform

III.Expenditure Indicators

IV.Concluding Remarks

51.2

42.6

39.8 39.6 37.7

33.1 31.4

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10.0

20.0

30.0

40.0

50.0

60.0

Lao PDR Vietnam Sri Lanka Indonesia Philippines India Pakistan

i

n

P

e

r

c

e

n

t

Public Health Expenditure, as % of Total Health Expenditure, 2012

LMIC Average- 38.3

PH BELOW LMIC AVERAGE

Source: World Development Indicators

REPUBLIC ACT NO. 10351

• An Act Restructuring the Excise Tax on Alcohol and Tobacco Products (RA 10351)

(Signed into Law - Dec. 19, 2012)

• Landmark Legislation under the Aquino Administration.

• Primarily a health measure with revenue implications.

• Fundamentally a good governance measure with positive impact on both public health and fiscal health.

RATIONALE FOR REFORM

Help finance Universal Health Care (UHC).

Address public health issues relating to alcohol and

tobacco consumption.

Simplify the current excise tax system on alcohol and

tobacco products and fix long standing, structural

weaknesses:

Remove price/brand classification freeze.

Level the playing field.

Reduce number of tiers.

Make tax system more buoyant by indexing tax rates

to inflation.

Section 8 (C): After deducting the allocations under Republic Act Nos.

7171 and 8240,

Eighty percent (80%) for:

National Health Insurance Program (NHIP)

Attainment of the Millennium Development Goals (MDGs)

Health awareness programs (HAP)

Twenty percent (20%):

Medical assistance (MAP)

Health enhancement facilities program (HEFP)

Incremental revenues earmarked for health

REPUBLIC ACT NO. 10351

WIN FOR FISCAL HEALTH

Share of tobacco and alcohol excise collections

to GDP in 2013 highest since 2000.

Increased funding for Department of Health – 2014 budget

up 57% over 2013 levels, from Php 53.3 billion ($ 1.26 B) to

Php 83.7 ($1.90 B) billion. Bulk of this will be used to

finance Philhealth premiums.

24.631.8

42.2

53.383.7

0

10

20

30

40

50

60

70

80

90

2010 2011 2012 2013 2014

DOH Budget (In B PhP)

WIN FOR PUBLIC HEALTH

$ 0.54 B $ 0.73 B

$ 1.26 B

$ 1.90 B

$ 1.0 B

NATIONAL GOVERNMENT HEALTH BUDGET

0.00

10.00

20.00

30.00

40.00

50.00

60.00

70.00

80.00

90.00

Total Budget PhilHealth MDG & Others Health FacilitiesEnhancement

Program

Medical AssistanceProgram and Health

EnhancementFacilities Program

In Billion Pesos

FY 2013 GAA (Baseline budget w/o Sin Tax) FY 2014 GAA

WIN FOR PUBLIC HEALTH

$1 ~ Php 44.3103

In Billion Pesos

National Government Allocation

for Health Insurance Premiums for the Poor

WIN FOR THE POOR

$ 0.3 B

$ 0.3 B

$ 0.8 B

Sustainable Financing for Health from Alcohol and

Tobacco Excise Tax

WIN FOR UHC

$ 0.82 B

$ 1.02 B

$ 1.15 B

$ 1.30 B

Indicator

Monitored

2013 Accomplishment

(Baseline)

2014 Target/

Accomplishment

(as of)

Budget Utilization as of

August 2014

Coverage rate of

the Poor (Quintile

1 & 2)

5.3 M Principal members and

15.9 Dependents (A total of

21.2 Members)

ACCOMPLISHMENT

14.7 M Principal

Members and 30.53 M

Dependents (A total of

45.23 M members)

100 %

2014 DOH BUDGET UTILIZATION

Universal Health Care: National Health Insurance Program

Source: DOH Sin Tax Law Incremental Revenue for Health Annual Report

Indicator

Monitored

2013

Accomplishment

(Baseline)

2014 Target/

Accomplishment

(as of)

Budget Utilization as of

August 2014

Prevalence of

smoking among

Filipino adults

aged 20 years old

and above

31 %

TARGET

25.4%

30 %

2014 DOH BUDGET UTILIZATION

Health Awareness: Health Promotion

Source: DOH Sin Tax Law Incremental Revenue for Health Annual Report

Indicator

Monitored

2013 Accomplishment

(Baseline)

2014 Target/

Accomplishment

(as of)

Budget Utilization as of

August 2014

Percentage of

fully immunized

child

2.683 M Children

(aged 1 year old)

(89%)

TARGET

-2.731 M Children (90%)

-Provide Pneumococcal

vaccination to 300 T

infants

-Provide Rotavirus

vaccination to 2.4 M

infants (72%)

72 %

2014 DOH BUDGET UTILIZATION

Attainment of Health-related MDGs: Expanded Program on Immunization

Source: DOH Sin Tax Law Incremental Revenue for Health Annual Report

Indicator Monitored 2013 Accomplishment

(Baseline)

2014 Target/

Accomplishment

(as of)

Budget Utilization as of

August 2014

Number of Doctors,

Registered Nurses,

Rural Health

Midwives,

Community Health

Teams (CHT)

Deployed

Doctors: 276

Nurses: 21,930

Midwives: 2,738

CHTs: 48,519 teams

(222,128 members)

ACCOMPLISHMENT

Doctors: 319

Nurses: 11,202

Midwives: 2,700

CHTs: 44,735 teams

(212,388 members)

52 %

2014 DOH BUDGET UTILIZATION

Access to Quality Health Services: Deployment of Human Resources for Health

Source: DOH Sin Tax Law Incremental Revenue for Health Annual Report

Indicator

Monitored

2013 Accomplishment

(Baseline)

2014 Target/

Accomplishment

(as of)

Budget Utilization as of

August 2014

Number of

patients served

-

ACCOMPLISHMENT

25,136 patients

51 %

2014 DOH BUDGET UTILIZATION

Medical Assistance Program

Source: DOH Sin Tax Law Incremental Revenue for Health Annual Report

• Hospital Operations

Utilization of funds allocated – 10 %

Special Hospitals, Medical Centers, strategically placed nationwide

and serve as end referral centers

• Infectious Diseases

Prevention program for HIV/STI, Prevention and treatment activities

for Dengue – 65% Fund Utilization

• Elimination of Diseases such as Malaria, Schistosomiasis, Leprosy and

Filariasis

Malaria morbidity – 2.0/100,000 Malaria mortality - .004/100,000

Prevalence of Schistosomiasis - <1%

Filariasis – 26 disease free provinces

84% fund utilization

2014 DOH BUDGET UTILIZATION

Source: DOH Sin Tax Law Incremental Revenue for Health Annual Report

Universal Health Care Medium-Term Expenditure Program

List of projects and programs for UHC

Guidelines for the identification and qualification of funding support and monitoring of fund utilization

With expenditure tracking system

Guidelines and standards for monitoring and evaluating the effectivity of Service Delivery Networks

Guidelines for the deployment of physicians graduating from residency training programs in government hospitals

Guidelines for the assessment and monitoring of clinical competencies to ensure that all skilled health professionals meet the standards for service delivery

Evidence-based Human Resources for Health Master Plan with guidelines for determining, attaining, and retaining the ideal number of skilled health professionals and other allied health professionals

Performance monitoring measures such as the Benefit Delivery Rate approach, among others to measure UHC implementation and improve access to and availment of health services

OPERATIONAL GUIDELINES ON UTILIZATION AS REQUIRED IN THE SIN TAX IMPLEMENTING RULES AND REGULATIONS

CONCLUDING REMARKS

Aim high for health.

Sintax reform has generated substantial resources for UHC in the Philippines.

Reforming tobacco and alcohol taxation is a sustainable financing source for UHC.

Need to spend wisely. Importance of comprehensive, holistic approach under a medium term expenditure framework.

No room for complacency. Continued vigilance necessary to ensure effective implementation of reforms.

CONCLUDING REMARKS

Understand the mindset of Finance Ministry officials.

Predictable revenues are important to them.

How to balance the financing demands from various sectors, i.e. education, health, infrastructure etc.

UHC can be a bottomless pit, thus the need for cost effectiveness and efficiency measures. Looks at value for money.

Generally against earmarking as preference is One Fund concept which allows flexibility.

THANK YOU!