Philhealth: The Rising Cost of

Healthcare
Problem

Based on available data from the Philippine Statistics Authority, Total Health Expenditures (THE) increased
between 2009 to 2017, at a magnitude that resulted in doubling of the cost in a span of 9 years.
While this may be affected by factors such as increase in population, the per
capita increase in health expenditures likewise increased at an average rate
of 8.66%, with a cumulative increase of 25% across 5 years (2013-2017).
This table shows that year-on-year, there is a steady increase in both THE and
per capita health expenditures, as the growth rate of THE is higher than the
population growth rate. Combined with inflation, this demonstrates a
steadily increasing health care cost.
 Table 1: Total Health Expenditures and Per Capita Health Expenditures

Year THE The Growth Per Capita Per Capita Contribution

Rate Growth Rate to GDP
2017 712.3 B 8.0% 6790.7 6.3% OOP(54.5%), 4.5%
Compulsory contributory
healthcare financing schemes
(33%)
Voluntary Healthcare Payment
schemes(12.5%)

2016 659.3B 10.5% 6388.8 9.5% Household OOP(54.2%) 4.5%

2015 592.8B 11.1% 5834.3 9.2%

2014 534B 11% 8.5% Private Sources(68.2%),
Government(18.9%)
2013 526B 11.7% 5859 9.8% 4.6%
2012 467.8(471)B 12.3% 5400 Private Sources(63.1%), 4.5%
Government(27%)
2011 416(431)B 13.2% 4881 4.4%
2010 380.8B 11.3% 4.2%
2009 342.2B

Figures were directly lifted from available PSA reports for the years covered, inconsistencies with the figures & computations
across different reports cannot be explained
Source: PSA website
Table 1
• Every year 50% of cost is shouldered by OOP
• Government coverage accounts for around 20%
• Based on the trend, per capita health expenditure steadily increased
by around 8% each year
There is a dire need to address the increasing out of pocket cost
for healthcare services for the following reasons:

1. There is a higher probability of catastrophic household financial

outcomes from medical treatment for common chronic health issues,
specifically the depletion of the finances typically allocated by the
household to basic necessities.

2. Because of the prohibitive costs, there is inaccessibility of the

appropriate healthcare services to households at a lower income
bracket.
3. It is also increasingly evident that the capability to detect and
respond to outbreaks depends on a health care system that reaches
everyone - in the absence of this, outbreaks may be discovered only at
a late stage where preventive measures can no longer be applied. This
leads to higher morbidity and mortality from a situation that may have
been mitigated much earlier.
4. Access to healthcare is a basic human right, but when the cost is
prohibitive, the right is not exercised.
5. Poor/ill health of citizens leads to lower productivity and
increase in unemployment.
6. On a macro level, less uptake of healthcare services due to high
costs negatively impacts the country’s GDP.
Philhealth or the evolved version Universal
Health Care(UHC)
UHC sub issues:

1. Achievements of the UHC depend on an efficient, equitable and

sustainable healthcare system that can maximize health gains
2. The ability of health insurance programs to contribute to such
system is determined by many factors such as financial capacity(or
bargaining power) of the funds, management of consumer claimns
and cooperation across funds
Philhealth
• 1960
• PMA’s MARIA Project
• prioritized aid to communities in need of medical assistance.
• Precursor to the country’s Medicare program
• 1969
• RA 6111 of the Philippine Medical Care Act of 1969 by Ferdinand Marcos
• 1971
• Philippine Medical Care Commission(PMCC)
• Overseeing program implementation over the next 25 years
• 1990
• Passage of several bills for responsive government health care program
• 1995
• HB 14225 and SB 01738 became the National Health Insurance Act of 1995
RA 7875 promulgated by President Ramos.
• Paved the way in the development of Philhealth
• Aim of providing health insurance coverage to all Filipinos within 15 years
Philhealth Mandate
• To provide health insurance coverage and ensure affordable,
acceptable, available and accessible health care service for all citizens
of the Philippines
• It shall serve as the means for the healthy to health. Pay for the sick
and for those who can afford medical care to subsidize those who
cannot
• The program slall include a sustainable system of funds constitution,
collection,. Management and disbursement for financing availment of
a basic premium package and other supplementary packages ihf
health insurance benefits by progressively exoanding proportion of
population
• It shall be prohibited from providing healthcare directly, form buying
and rendering care, and from owning or invest in healthcare facilities
pharmaceuticals, from employing physicians and other professionals
for the purpose of directly dispensing drugs and pharmaceuticals.
Analysis
• Philhealth is not designed to be a health care provider- instead
• Administer the National Health Insurance Program
• Supervise the provision of health benefits and sets standards, rules and
regulations necessary to ensure quality of care, appropriate utilization of
services, fund viability, member satisfaction and overall accomplishment of
Program Objectives
• To formulate and implement guidelines on contributions and benefits,
portability of benefits, cost containment and quality assurance
Benefits of Philhealth
• Inpatient
• Benefits are paid to the accredited Health Care Institution through All Case
Rates

• Outpatient
• Day surgeries, Radiotherapy, Hemodialysis, Z benefits
The Role of Economic Principle
• Let the truth be told.

The person who makes it, sells it. The person who buys it, never
uses it.The person who uses it doesn’t know they are.
What is it?
Role of Economic Principle
• Concept of Incomplete Market
• Principles of Cost and Benefits
• Principles of Market Failure
Concept of Incomplete Market
• Incomplete market occurs when consumers desire a product but
none is provided by a private business.
• Individuals may desire health insurance or health care, but none is
available at the price they are willing to pay.
• Some may find and would normally not expect to incur much in
healthcare costs, and may go without health insurance, finding it
costly compared to their expected risk of illness.
Principles of Cost and Benefits
• If the benefits of having a universal health care outweigh the costs,
then there maybe justification for adopting and providing it.
• Costs and benefits are often divided into 2 types
1. Equity (effect on individuals)
2. Efficiency (effect on economy)
Equity
• The reason for providing health care for all is to preserve the life and
dignity.
• Treating others fairly includes providing healthcare.
Efficiency
• Universal healthcare can negotiate lower health care payments to
adequately reflect the costs.
• Universal healthcare might lower administrative cost by having only
to apply the rules of one plan to each person’s coverage.
Concept of Market Failure
• When allocation of goods and services is not sufficient.
• Health care like other commodities is scarce and therefore requires
allocation and institutions to organize it.
• it is an essential basic human need.
Characteristics of Market failure in Health
care
• Government intervention.(Taxation,subsidies and regulation)
• Patient uncertainty (inability to calculate own cost of
treatment,uncertainty to the effects of medical treatment)
• Economies of scale . In markets where there are high volume of
production, there are typically a few large companies that dominate
the sector, as smaller unable to access the capital nor the markets
either to overcome the barrier to entry or to reach sufficiently high
economies of scale to make the investment worthwhile
 Characteristics of Market failure in Health
care
• Assymetrical information :consumer may not even realize that they are sick
and their entrance into this market usually rarely and their knowledge or
past experience maybe outdated while the urgency of some condition
require urgent attention. They may seek for second opinion but usually
doctors are not very keen to provide conflicting information to disagree
with their associates.
• In other way, the doctor will act as the consultant on behalf of patient and
agent to the supplier. This will cause exploitation of the consumer
depending on the price of healthcare and the method used to pay for it.
Relative Importance of problem in Various
Developing Countries
• The opportunity cost of highly sophisticated health care within
resource-constrained health systems may be high morbidity and
premature death among poor people.
• There is the problem that equal financial access that may be
facilitated by health insurance does not necessarily mean equal
physical access to high quality health care. Health insurance holds an
empty promise if there are physical barriers to health care, high
quality or not.
• Devoting a nation’s scarce public financial resources to construction
of highly sophisticated hospitals meeting modern day Western
standards actually may harm the health of poor people who then are
neglected, all for want of access to much cheaper primary care.
Goals and Objectives
Policy Alternative
• Universal Health Care
• Systematic approach to costing