Health Financing: Are We Progressing Towards Equitable and Efficient Financing?

1. Health Financing: Are We Progressing Towards Equitable and Efficient Financing? Comments

2. Assessing sector’s performance on health financing • Goals/ objectives define metrics/ indicators • Review goals/ objectives of health financing system vis-à-vis metrics • Is there need for more indicators? • To better diagnose problems, perhaps? • Policy implications moving forward

3. Assessing sector’s performance on health financing • Goals of health financing system • To ensure to that funding for health care is available • To establish right financial incentives to health care providers • So that all individuals have access to effective public health and personal health care • Context • High out-of-pocket expense • NHIP problems • Inadequate benefit support • Limited coverage • Weak benefit delivery and provider payment mechanism

4. Assessing sector’s performance on health financing • Goals of health financing system: alternative specification • Financial risk protection • Universal coverage • Equitable financing • Equitable access • Operational efficiency • Complementary reforms • Mobilize resources – SDAH • Coordinating NG-LGU spending • Focusing direct subsidies to priority health programs through performance based financing

5. Total health expenditures (THE) as % of GDP Total gov’t expenditure as % of THE Formulation of HSEF/ installation of OPIF & PBB Coordination of NG-LGU spending Utilization rates for DOH appropriations Ensuring funding is available Ensuring funding is available Allocative efficiency Allocative efficiency Operational efficiency Metrics/ Indicators vs goals

6. Total social health insurance as % of THE OOP expenditure as % of THE SHI coverage as % of total population Benefit support value as % of total cost Financial risk protection Financial risk protection Financial risk protection/ universal coverage Financial protection/ universal coverage Metrics/ Indicators vs goals

7. Progressivity of premium contributions Geographic distribution of accredited health facilities, particularly those with OPB package Equitable financing – establishing a pre-payment mechanism that is progressive in terms of HH income Equitable access Metrics/ Indicators vs goals

8. Impact of health financing reforms • Key indicators show that health financing situation has worsened • THE as % of GDP – 3.3% in 2005 even lower than level in 2003 and 2004 • Gov’t spending on health as % of THE declined • Share of SHI increased only minimally from 7% in 2000 to 11% in 2005 • OOP expense of HH rose from 51% to 59%

9. Coverage rate by program (PhilHealth) Leakage rate of Sponsored Program Availment rate by program Indicator/s of impact of performance based budgeting on generating additional resources On operational efficiency on cost effectiveness Financial risk protection Equitable financing/ Operational efficiency Financial risk protection/ universal coverage Securing additional resources, operational efficiency Additional metrics/ Indicators that may be considered – to identify problem areas

10. Low coverage rate for private employees and individually paying members • Share of gov’t and private employees to total benefit payments greater than share in total number of members • Contribution-to-benefit-payment ratio for sponsored program and individually paying program less than 1

11. Enrollment in SP not sustained • Many provinces enrolls more HHs in SP than the actual number of poor HHs as per FIES • At best, leakage rate of 24% for sponsored program

12. Moving forward …. • reforming social health insurance – multi-pronged; reforms have to be done simultaneously • Low support value may be attributed to: • “first peso coverage up to a cap” feature • Paying providers on basis of fee-for-service • Absence of regulation on fees that providers charge • Low support value may have negative impact on expanding coverage, esp. IPP

13. Moving forward …. • reforming social health insurance – multi-pronged • Need to: • Raise benefit ceiling • Introduce cost sharing mechanisms like deductibles and co-insurance to minimize moral hazard • Introduce fee regulation or shift payment system from fee-for-service to capitation or case payments • Need to introduce greater progressivity in level of premiums by and increase premiums of IPP

14. Moving forward ….. • Expanding coverage of Sponsored Program and improving selection of beneficiaries - critical • SP provides poor financial protection against illness • Achieving universal coverage supports HSRA by making public hospital system more sustainable • At least 33% of total number of poor households are not covered by SP • Some of so-called poor HHs enrolled in SP are not poor, bringing undercoverage to 50% or more

15. Moving forward … • Proposal to sustain enrollment of poor in SP by making NG shoulder 100% of premiums for indigents & by having LGUs facilitate enrollment and, possibly, partially subsidizing premium of IPP members – step in right direction • proposal will eliminate political economy issues associated with practice of LGUs identifying the beneficiaries of SP • Proposal is consistent with current practice of a number of LGUs which ask enrolled beneficiaries to co-share premium contribution

16. Moving forward … • Proposal to sustain enrollment of poor in SP by making NG shoulder 100% of premiums ….. – step in right direction • If NG enrolls all poor HHs, PhilHealth coverage will increase from 76% to 85% of the population • Cost of doing this is PhP 6 B, PhP 1 B more than allocation in 2009 GAA • If LGUs continue to allocate PhP 1.4 B they are currently setting aside for SP & use the same as subsidy to IPP members, then total no. of beneficiaries could increase by another 12%, bringing total coverage up to 97%

17. Moving forward … • Promoting fiscal autonomy among LGU hospitals • “Corporatetization” model a la La Union Medical Center via legislation • Use of local economic enterprise model • need Sangguniang Panglalawigan ordinance • Need to strengthen financial management of LEEs – to ensure ringfencing of LEE account

18. Moving forward … • Need to constantly leverage LGU financing of public health programs via Service Level Agreements • Implication on budget of DOH re performance-based grants

19. Thank you. Thank you. Thank you.