An Overview of Universal Health in the Philippines

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Philippines Health; Universal Coverage

An Overview

David J. Gregg MBA

11/3/2011

The purpose of this paper is to provide an overview of the Philippine’s Phil Health program.   This paper compares and contrasts private vs. public hospitals, utilization of care for the rich and the poor and government health care expenditures versus that of other countries.  Are more hospitals necessary?   Is Phil Health a good model for other countries?   This paper was developed using entirely secondary research.

Philippines Health; Universal Coverage

An Overview

November 3, 2011

Age Distribution & Life Expectancy

From 3.19 million in 1990, the senior citizen population in the Philippines increased to 4.59

Million in the year 2000.  The older population is growing faster than the total population of the Philippines.

Population projections indicate that senior citizens will be 10 percent of the Philippine population by 2030, with the female population attaining such proportion five years earlier than the male population.

The average Filipino male has a life expectancy at birth of 66.6 years, while the Filipino female has

71.8 years, according to 2006 data.

This increase in the older population places additional demand on the health care system.   This demand will place an additional strain on government spending.

Health Care in the Philippines

The Philippines has what is called a dual health care system consisting of modern (Western) medicine and traditional (voodoo) type medicine.  The traditional approach assumes illness is caused by a breach of taboos set by supernatural forces.  It is not unusual for an individual to alternate between the two.  As an example, if no visible benefits or improvement is seen using Western medicine, people will switch to traditional medicine.

The traditional approach to health care is driven by ancestry and is driven by the lack of funding for formal healthcare.  Without traditional medicine, people will either go without care or create a greater utilization of formal health services.

Although medical treatment has improved and services expanded, pervasive poverty and lack of access to family planning detracted from the general health of the people.  In 2006, approximately 44 percent of the population was living on less than $2 US dollar a day.  The Philippines must put more people to work.  Lifting people out of poverty will reduce the incidence of communicable diseases such as dengue fever. 

Heath care spending per capita in the Philippines in 2009 was $129.  The Philippines ranks very low (141) on the list of World Health Organization countries on health care spending per capita.  Compare this to France:  $3851; Australia: $3,365, United Kingdom: $3,222, South Korea: $1806; Malaysia: $621 and Thailand: $328.  The Philippines spends the same percentage of Gross National Product on health care as other countries.

 Hospitals in all systems have to deal with rising expectations and, more often than not, a need to contain the costs of health care. Outside the developing countries the generic response to this has been to reduce hospital stays and to improve the efficiency of the system, a strategy which seems to be at least partly successful. 

The current global trends of increased efficiency, substitution between inpatient and outpatient care, and changes in clinical management are likely to continue. There is substantial potential to increase the proportion of outpatient care undertaken.  Hospital planners will have to continue to keep pace with rapid changes in the requirements for secondary care.

Out of pocket spending as a share of total health care expenditures has increased in the past few years owning to budgetary constraints on government expenditures.

 In-patient beds density is one of the few available indicators of thelevel of health service delivery.  In 2006, the Philippines had 93,200 hospital beds; equivalent to 1.2 beds per 1000 population.

The presence of medical care facilities, however, does not guarantee that access and utilization of these facilities is equal among resident populations. A number of factors influence utilization of medical resources and services, including trust in both the medical care delivery system and individual provider, severity of disease or illness, and physical proximity of medical resources.

Total health care expenditures by source of funds in 2005 were as follows:

Private                         11%

Out of Pocket                         48%

Government                29%

Social Insurance          11%

Other                           1%

Most hospitals require a down payment of estimated fees in cash at the time of admission.  Hospitals frequently refuse to discharge patients or release important medical documents until bills are paid in full.

The primary cause of death in the Philippines is diseases of the heart; second is pneumonia.  In terms of prevalence of illness, diarrhea topped the list.

For a list of public and private hospitals in Cebu Region VII, refer to Exhibit I.

Phil Health

“The National Health Insurance Act of 1995” or Republic Act 7875, paved the way for the creation of the Philippine Health Insurance Corporation (Phil Health); mandated to provide social health insurance coverage to all Filipinos in 15 years’ time.

In 2005, Phil Health contributed 11 percent or Php 19.2 billion to total health expenditures.  Total expenditures were 180.8 billion.

Under the Phil Health system, no formal system of fixed deductibles or co-payments exists.  Health care providers are allowed to balance bill; charging between the Phil Heath benefits and total cost of care.  This is atypical of most government health programs around the world and can lead to abuse buy providers and thus limited access for the poorest.  Potential abuse of billing by providers in the healthcare sector (balance billing) has a large impact on the poor and rural communities.  Because the poor cannot afford private healthcare or they cannot pay potential overcharging by providers – including possibly even charging for services that are supposed to be free, the poor are sometimes discouraged from seeking professional help.

The benefits section of the Act read as follows:

SEC. 6 Coverage – All citizens of the Philippines shall be covered by the National Health Insurance

Program. In accordance with the principles of universality and compulsory coverage enunciated in Section 2 (b)

And 2 (1) hereof, implementation of the Program shall, furthermore, be gradual and phased in over a period of

not more than fifteen (15) years: Provided, That the Program shall not be made compulsory in certain provinces

and cities until the Corporation shall be able to ensure that members in such localities shall have reasonable access to adequate and acceptable health care services.

SEC. 10. Benefit Package – Subject to the limitations specified in this Act and as may be determined by the

Corporation, the following categories of personal health services granted to the member or his dependent as

medically necessary or appropriate shall include:

Inpatient hospital care:

1) room and board;

2) services of health care professionals;

3) diagnostic, laboratory, and other medical examination services;

4) use of surgical or medical equipment and facilities;

5) prescription drugs and biologicals;

6) inpatient education packages

Outpatient care:

1) services of health care professionals;

2) diagnostic, laboratory, and other medical examinations services;

3) personal preventive services; and

4) prescription drugs and biologicals, subject to the limitations

Below is a sample of some reimbursement rates (in pesos) paid by Phil Health to facilities and medical professionals.

Dengue 1:                     8,000

Dengue II:                   16,000

Pneumonia I:               15,000

Pneumonia II:                         32,000

Essential Hypertension:   9,000

Cerebral Infarction      28,000

Surgical Cases

Radiotherapy:                           3,000

Hemodialysis:                           4,000

Maternity Care:             8,000

Cesarean Section:        19,000

Appendectomy:          24,000

Cholecystectomy:       31,000

The professional fees for the above medical cases are 30% of the reflected amounts while that for surgical cases shall be 40 percent.

No balance billing applies when admitted in government facilities/hospitals.

Program Effectiveness

Thirty two percent of Phil Health members from the richest income sector used Phil Health benefits within the last 12 months – only 17 percent of the poorest availed of the benefits.

The higher rate of utilization by upper incomes is due to 1) more available out of pocket resources; 2) better access to Phil Health facilities and 3) better ability to handle claims paperwork and procedures.

 Characteristics – Public vs. Private Facilities

Government hospitals are categorized as either Department of Health (DOH)-retained.   These entities are funded by through taxes.  Most Filipinos seek advice from government hospitals as it offers free medical services.

Private hospitals are classified as primarily for-profit business entities.  They are market oriented and financed primarily by patients paying for utilized services.

According to the health department, the private sector accounted for fifty percent of the 93,200 beds in 2006.

Eight of ten hospitals licensed by the Department of Health are accredited by Phil Health.  Private hospitals account for 61 percent of those accredited by Phil Health.

Two disadvantages of public hospitals include increased work load per nurse and fewer supplies and equipment.  Fewer budget dollars are available to purchase supplies, which affects the quality of care provided.

On the other hand, private hospitals have highly sophisticated equipment such as state-of-the-art cardiac monitors and other life saving machines used by hospitals in first world countries. Hospitals with specialized medical services are critical for decreasing fatality as well as improving the quality of life for individuals who suffer from chronic disease and illness.  

Areas with several hospitals

Baguio City (population 250 thousand) is an example of an area with several hospitals.  Baguio City has six private hospitals.  Interestingly, the big hospitals are in close proximity to each other (including a DOH hospital).  Despite this, these hospitals have created a cooperative rather than a competitive environment.  To illustrate, each hospital has a specialized ancillary service which they share with other hospitals.

Areas with a Lack of Hospitals

Recognizing the lack of facilities in certain parts of the country, some hospitals are thinking of expanding or putting up satellite hospitals.

Demographics Served

Seventy seven million (or 82%) of 92 million Filipinos are covered by Phil Health as of March 2005.

Seventy two percent of 4.7 million indigent families are enrolled in Phil Health. 

Utilization

Utilization of private hospitals is driven by Phil Health and socio-economic status.  Those with Phil Health are more likely confined in a private hospital than those without Phil Health.  Seventy four percent of the rich are more likely to be confined in a private hospital.

To provide needed services, the DOH recommends  a bed-to-population ratio of 1:1000 per province.  In the Central Visayas region (VII), which includes Cebu City and Bogo City (see exhibit II), 50 percent of provinces do not meet the recommended ratio.

Hospital care is the most expensive component of medical care.  To reduce costs, advances in medical technology have expanded the types of procedures that could be provided in an outpatient setting. In the United States, the introduction of the Medicare prospective payment system (PPS) also contributed, given its payment incentives that encouraged reductions in inpatient lengths-of-stay and a shift of some care to outpatient settings. Finally, managed care was a strong force between 1980 and 1995, and health maintenance organizations (HMOs) in particular focused on utilization management to reduce unnecessary hospitalizations and hospital days.

Phil Health’s socialized medicine can help reduce medical costs by encouraging cost reduction practices, reducing the length of hospital stays and also by capping costs for medical procedures.

Disparity between Rich and Poor

A 2006 study showed more Phil Health funds go to well to do families instead of the less privileged.

According to the study, P5.2 billion in Phil Health reimbursements in 2003 went to the richest 20 percent of beneficiaries; while only P1.4 billion went to the poorest sector.

Premiums and Low Income Funding

Coverage premiums are categorized as follows:

  •  Formal sector
  • Indigents financed by central and local governments
  • Retirees who paid 120 months of membership.
  • Individual paying programs.

Benefit packages are the same for all groups.

The formal sector is made up of workers and they are enrolled on a mandatory basis.

The Indigent sector receives program qualification for Phil Health by the local government.  The local government then enrolls those that are determined to be poor. 

For the rest, there is an enrollment option.

Enrollment is mandatory only for the formal sector.  Employers pay three percent and employees pay three percent.

Premiums for the indigent and informal sector are 1200 pesos annually. 

Premiums for the poor  are paid by local government  contributing 25 percent and the national government contributing 75 percent.

Confinement in the Department of Health hospitals is free for indigents.

One issue regarding low enrollment  among the indigent population is the lack of required birth certificates and marriage certificates  be provided.  The indigent population usually does not have marriage or birth certificates. The government must address this issue.

How coverage is financed.

Revenues of private hospitals amounted to Php 46 billion in 2006.

On the average, private hospitals spent PhP 3 billion on capital expenditures, averaging 5.7 million per hospital.

A high proportion of patients confined in both public and private hospitals use out-of- pocket payments to finance their hospitalization.  Higher Phil Health utilization occurs among patients confined in private hospitals (51%) compared to public hospitals (24%).

Hospital revenues per admission varies by location.  Areas with the highest income were charged, on average, 14,648 PhP per admission.  A hospital servicing a lower end income may earn, on the average,  PhP 4,398.  The number of private hospitals is highest in areas with a low incidence of poverty.  However, a significant portion of the patients confined in private hospitals borrow money from others for the payment of their confinement.

Outreach

More indigent outreach programs are necessary to improve the number of people enrolled.  Rather than providing a walk-in office for indigents to enroll, the government needs to go directly to the people.  One suggestion would be to recruit volunteers and set up a door to door enrollment campaign.  Many rural areas have door to door solicitors selling everything from food to clothing.  This example shows how this approach to enrollment can be successful.

Universal Coverage

Regulation RA No. 7875 targeted 100 percent of the indigent population by 2010. To date, only 72 percent of indigents have Phil Health.   Local government is not making a concentrated  effort  to offer Phil Health to the poor.  In addition, the national government has not made Phil Health mandatory for all populations.  Therefore, universal health coverage is nearly impossible

Conclusion

While many countries, including the United States, have millions of uninsured with no means to pay for the high cost of medical care, the Philippines has developed Phil Health; universal health coverage which is intended to insure 100 percent of the population.

While the rich have benefited greatly from utilization of the Phil Health program, the poor have very low utilization.  Better education, a greater level of enrollment and improved access to care will help increase utilization.

The Philippines is in an excellent position to utilize cost saving principles similar to Health Maintenance Organizations (HMOs) because the government  controls half the hospitals in the country and the government provides insurance through the Phil Health program.

For the healthcare system to function efficiently, high standards of care must be maintained in government run hospitals.  In addition, the use of private hospitals providing a higher level of care and the traditional approach to health care are two systems necessary to augment a very limited government health care budget.

Outreach strategies must be improved to provide health care coverage for the indigent.

References

Department of Health. AO 2005-0029; Amendment to AO No. 145 s. 2004: Amending AO No. 70-A series 2002 re: Revised Rules and Regulations Governing the Registration, Licensure and Operation of Hospitals and other Health Facilities in the Philippines.

Department of Health, Hospital statistical reports, 2006-2—8

Department of Health-BHFS. 2009 List of Hospitals and Other Facilities

Department of Trade and Industries Types of Business Enterprises.  www.dti.gov.ph

Health Care in the Philippines, Expatformum.com

Healthcare in the Philippines, www.allianzworldwidecare.com/healthcare

National Statistics Office and ORC Macro.  National Demographic and Health Survey 2008

National Statistics Office.  Census for Philippines Business and Industries, 2006

Philippine Commission on Women.  RA 6938.  Cooperative Code of the Philippines.

Philippines Special Report, December 2001.

Profile of Private Hospitals in the Philippines, Philippine Institute for Development Studies, 03/11

The Republic Act 7875, amended August 11, 2011.

Exhibit I                                        Government Owned Hospitals

Central Visayas Region

Badian District Hosp

Balamban district hospital

Bataan District hospital

Bareli District hospital

Camp lapulapu army station hospital

Cebu City Medical Center

Daanbantayan District Hospital

Danao District Hospital

Dr. Jose Ma V Borromeo  Memorial Hospital

Eversley Child Sanitarium

Guba Community hospital

Isidro Kint anar memo. Hospital

Jesus M. Paraz Memorial District Hospital

Juan B. Dosado Memorial Hospital

Lapulapu City District Hospital

Mactan Benito EbuenAir Base Hospital

Mandaue City Hospital

Mariano Jesus Cuenco Memorial Hospital

Minglanilla District Hospital

Oslob District Hospital

PNP Hospital

Ricardo Maningo Memorial Hospital

Severo Verallo Memorial Hospital

St. Anthony Mother and Child Hospital

Sta. Rosa Community Hospital

Talisay District Hospital

Toledo City General Hospital

Tuburan District Hospital

Vicente Sotto Memorial Medical Center

Exhibit I (cont.)

Private-Owned Hospitals

Central Visayas Region

Argao Communty Hospital

Baking Medical Clinic

Bogo-Medellin Medical Center

Camotes-Loac Medical Clinic

Cebu Doctor’s Hospital

Cebu North General Hospital

Cebu Puer Center and Maternity House

Cebu TB Pavilion

Cebu Velez General Hospital

Chong Hua Hospital

Deiparin’s Medical Clinic

Dr. Ignacio M. Cortes General Hospital

Dr. Ildefnso Alcantara  Memorial Hospital

Dumdum Medical Clinic

H.W. Miller Santarium

Julio Cardinal Rosales Memorial Hospital

Mactan Community

Our Lady of Rule Maternity Hospital

Pantinople Medical Clinic

Perpetual Succor Hospital

Reihard Wirtgen Memorial Hospital

Sacred Heart Hospital

Seaman’s Hospital

St. Vencent General Hospital

Tojong Inc. Maternity and General Hospital

Vicente Gullas Memorial Hospital

Visayas Community Medical Center

Bogo City (which is part of the Central Visayas  Region VII)

Severo Verallo Memorial District Hospital

TayTayan, Bogo City, 6010 Cebu

Hon. Gwendolyn F. Garcia –CEO

Dr. Carlos F. Layese, Jr. – Chief of Hospital

Ms. Imelda A. Calungsod – Administrator

Exhibit II

Population

Central  Visayas Region VII

Bohol        1.1 million

Cebu          2.1 million

Negros       1.1 million

Siquijor      8.7 thousand

      Population of major cities, shown as a subgroup:

                  Cebu City                    718 thousand

                  Lapu Lapu                   217 thousand

                  Mandaue City             259 thousand

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