Health reforms pushed to lower Filipinos’ out-of-pocket spending

Health think tank Unilab Center for Health Policy (UCHP) has released two research papers putting forward recommendations on how to lower out-of-pocket medical expenses in the country. 

The first study, conducted by former UP School of Economics dean Orville Solon, Dr. Alejandro Herrin, and Dr. Michael Mo, delved into the Philippine National Health Accounts (PNHA) from 1991 to 2022 to see the trends and impacts of government reforms to improve health spending.

The results of the 30-year analysis showed that total health expenditure (THE) increased in “nominal terms” from only P40.3 billion in 1991 to P1.1 trillion in 2022. 

This translated to an average yearly growth of 10.95%, which was comparable with other economies in the ASEAN region. 

However, the researchers emphasized that “after correcting for inflation or what we call real terms, health spending grew by an average of 5.84% per year.” 

Considering that the population grew from 62 million in 1991 to 112 million in 2022, they said the health spending for every Filipino increased by an average of 3.90% annually. 

The study thus pointed out that the increase in spending is indicative that reforms like earmarking of sin tax revenues contribute to the steady rise in government spending. 

“Still, private out-of-pocket payments (OOP) have been consistently the biggest component of healthcare spending through the years. In 2022, for instance, OOP accounts for 45 percent of the country’s total health expenditure,” the UCHP said in a statement. 

As Filipinos spend more for inpatient care than outpatient services, the UCHP said that efforts to decrease OOP should be directed at reducing expenses for inpatient care.

According to the think tank, both the national and local governments contribute about 30% to THE, while private health insurance providers contribute about 10%. The share of the Philippine Health Insurance Corporation (PhilHealth), meanwhile, is at 14%. 

On the other hand, the second research reviewed the benefits payment system of PhilHealth and how it can be improved for better utilization of its funds.

“According to the UHC law, PhilHealth should be paying using a mechanism known as diagnosis related groups (DRGs). Currently, hospitals are paid through case rates. While case rates are simpler, DRGs are more nuanced considering complexities such as co-morbidities,” the UCHP said. 

The research was made by Philippine Institute for Development Studies (PIDS) senior research fellow Dr. Valerie Gilbert T. Ulep, who studied other countries like Thailand, Australia and Germany that are successful in implementing DRGs. 

The study noted that “in shifting from case rates to DRGs, it would be better for the Philippines to have an independent arm’s length agency that will oversee the release of payments to PhilHealth partner-institutions.”

Health Secretary Ted Herbosa welcomed the studies, saying that the Department of Health (DOH) is committed to integrating the insights into its policies and programs. 

“The proposal on provider payment governance addresses a critical component of health care efficiency. By exploring new ways to pay for health services, we can ensure that our resources are used wisely and that providers are motivated to deliver the best care possible,” Herbosa said. 

“By promoting evidence- and research-based decision-making, we aim to strengthen our health system and ensure every Filipino can access the care they need without financial strain,” he added. — BM, GMA Integrated News