Cheaper health care through less regulation

The cold weather the past two months induced by a cold front has caused various illnesses to many people including this writer who was knocked down by a bad cough. Even some crops and farm animals were adversely affected by the cold weather.

I saw a doctor through my health maintenance organization (HMO). After a routine check-up, my doctor prescribed some antibiotics and adviced me to take plenty of fluids. I got well. After a few weeks, partly due to some late night Christmas parties and reunions I attended and the persistent cold wind, my cough came back.

The other doctor in the same HMO suspected there could be something wrong because my cough came back in a matter of weeks. So he requested for a chest X-ray; he did not prescribe any medicine but advised me to take more water and juice and wait for the result. When I went back to him after a few days with the X-ray result (which said my lungs were clear), my cough has subsided. He said that I should continue drinking lots of fluid, no medicine, go home and get more rest. I got well.

And this leads us to at least three important points.

One, when a person is sick, the first thing that he would do is to see a physician, not buy any medicine. After the initial check up, the physician may not even prescribe a medicine yet and request for some diagnostic tests (blood test, urine test, x-ray, etc.), wait for the result, before prescribing (if necessary) any medicine.

Two, it is important to get a private HMO (many companies here do this). Physician visits, certain diagnostic tests and hospital stay when necessary, are covered. This gives some peace of mind to people. For many poor people who do not have health insurance when they get sick, the first thing they do is to self-medicate: go for some herbal products, buy the “usual” and cheap medicines, and see a doctor only when the pain gets worse, perhaps because they bought counterfeit medicines or took medicines that were inappropriate or could trigger some side effects to their other diseases.

Three, competition among private HMOs make their services to their clients more efficient and fast. What often harms the pockets of patients is not medicine prices, but the cost of diagnostic tests, clinic or hospital stay, and the physicians’ and other health professional fees, especially if one goes through surgery.

So if diagnostic tests, physicians’ fees, hospital stay are among the expensive aspects of public health care, do we expect new laws and government regulations like “Cheaper diagnostic tests law”, “Cheaper physician fees law”, “Cheaper hospital stay law”, along the lines of the recently-enacted “Cheaper medicines law”? Will we see price control in diagnostic tests, physician fees and hospital stay, the same way that the government enacted medicine price control? And will we see the retention of VAT, import tax, import documentary stamp tax and other taxes on hospital/clinic laboratory and medical equipment, high corporate and personal income taxes on hospital and health professionals’ income, the same way that the government retained those multiple taxes on medicines while pontificating that it wants “cheaper medicines”?

The HMO sector should be spared from current and future attempts at more government regulations. Regulations by nature mean prohibitions. They are meant to create paralysis, even temporarily. Government regulators say, “Don’t move, don’t start anything, until you pay various taxes and fees, until you get our signatures and permits first.”

There are not many private HMOs in the Philippines. Private HMOs are non-mandatory, which force these private companies to deliver efficient services at more affordable costs to attract more clients. The Philippine government’s health insurance monopoly, PhilHealth, is mandatory and corporate membership and registration is done by force. And since it is a political institution created by law and funded by mandatory -- not voluntary, contributions, we would hear lots of political intervention, inefficiencies, even corruption charges.
A monopolist with guaranteed income from forced contributions can afford to be lazy and inefficient since there is very little possibility of losses. And should huge losses show up later, there is no possibility of bankruptcy because there are always billions of pesos of tax money to bail it out.

The medicine sub-sector of Philippine health care system has been lost to huge government intervention and regulations. From patent confiscation (through compulsory licensing, government use and parallel importation) to medicine price control, to generics only for government physicians plus many other provisions, the extent of government intervention is wide.

It is important therefore that the other sub-sectors of the country’s health care system should be spared from further government encroachment and heavy regulations. These sub-sectors include the HMOs, hospital and clinic expansion and branching, and medical education. Protection of the public is best assured by competition among players and brand or corporate integrity, not more government taxation, regulation and sometimes, cronyism.