Wednesday, August 25, 2010

PhilHealth Watch 1: Claims vs. reimbursement

This afternoon, I went to the Philippine Health Insurance Corporation or PhilHealth, Manila office at Quirino Ave. My purpose is to file the form for reimbursement (plus official receipts) of my wife who was hospitalized last month.

The claims and membership assistance section is on the 4th floor of the building. Outside the room there is this flowchart on steps for claims. Sorry, my camera phone is low-tech and can only give a low res picture. But at least there is effort by PhilHealth to inform members of some steps to go.

Inside the room though, there are plenty of people waiting for their number to be called. I entered that room and got my number around 2:25pm, was entertained around 4:30pm (or about 2:05 hours waiting). It's not a good way to spend your working day, waiting for 2 hours or more. Anyway, the staff are helpful and professional, except that they are still few compared to the big number of members and fund contributors filing for claims and other purposes.

The reimbursement will be given after at least 60 working days, or about 3 months at least, wow! One may wonder why it takes that long for PhilHealth to give the reimbursement, considering that members and fund contributors are paying on time. If they are not updated in their payment, they may not be eligible for reimbursement.

Perhaps PhilHealth needs to check and re-check the papers and receipts presented, in order to weed out bogus or excess claims by some opportunist members, or opportunist physicians, hospitals, etc. I think there should be some ways to shorten the period of reimbursement. My wife's expected reimbursement is not big, only P5,000+.

I just checked PhilHealth's website, I was looking for some statistics about membership. It's not there anymore, it's gone. They used to have a powerpoint presentation for the latest quarter of the year available.

In some of my papers last year, I slammed PhilHealth for exagerrating their number of beneficiaries, saying that they have already covered up to 85 percent of all Filipinos as of mid- or end-2009. It's not true, it's a misleading data, if not a lie. I think their actual coverage, including dependents of members, will not be more than 40 percent of the entire population.

Hospital data, both public and private hospitals, show that PhilHealth reimbursement constitutes only about 15 percent of their revenues, with the bulk, about 50 to 60 percent are out of pocket (OOP) expenses, about 20 percent from private health maintenance organizations (HMOs), about 5 to 10 percent from other government entities (local governments, PCSO/Pagcor, DSWD, etc.).

PhilHealth got lots of money, P100 billion plus in reserves. That's why it is a big candidate for politicized funds.

Meanwhile, I wish that they can speed up the reimbursement period to their members. They owe that to those who were forced and coerced to become PhilHealth members.

Meanwhile, I wrote two similar articles over the last few months.

(1) Health Insurance and Government Failure

August 21, 2009

I presented this paper last Monday here in Manila during the "Social dialogue on health care". It's 7 pages including a 1-page annex.

Among my arguments there are the following:

1. Market failure and government failure: Sectors with little government direct intervention

In food, there is not a single government restaurant or government carinderia or “turo-turo”, or government supermarket, and yet people are eating. Some food are cheap, some are very expensive, but most people eat at least 3 meals a day.

In clothing, there is not a single government clothing and jeans corporation, or government shoes and slippers corporation, but people have clothing and slippers. Some are cheap, some are very expensive, but people have something to protect their body and feet.

In transportation, there is not a single government bus line, government jeepney or taxi or tricycle corporation, government shipping or airline company. But people are mobile. Those who can afford buy their own private vehicles or private boat or private plane.

Compare that in health care where there are government hospitals and clinics, government pharmacies and drugstores, and government health insurance. On top of that, there are plenty of government regulations of private enterprises and corporations in the healthcare industry, like the current drug price control of selected medicines. And yet public health problems are often more pronounced than food, clothing and transportation problems.


Competition and market dynamics respond to whatever big market failure is existing. Whereas more politics and more intervention exacerbate whatever is an ongoing government failure.

Product differentiation and market segmentation – different prices for different products and services for different people with different needs and different budget – is an excellent tool to correct any market failure. Different suppliers and sellers target their specific buyers and consumers, and the latter send certain signals (like price and quality preferences) to the former, which allow the former to adjust the products that they supply and sell to the public.

This spontaneous and quick adjustment is difficult and very slow when government comes in to politicize the delivery of certain services, like healthcare. Things become rigid and less flexible once politics comes in. The bureaucracies and rent-seeking behavior associated with various regulations and taxation get in the way as government comes in.

2. Taxation and hypocrisy

From “expensive medicines”, the government says it wants cheaper medicines, thus the “Cheaper medicines law”. And yet government slams various taxes on medicines that contribute to their high prices. There is clear hypocrisy there.

When PhilHealth was created (RA 7875, February 1995), it is explicitly stated.

“SEC. 15. Exemptions from Taxes and Duties – The Corporation shall be exempt from the payment of taxes on all contributions thereto and all accruals on its income or investment earnings.”

So government recognizes the distortionary impact of income tax and related taxes, that it has exempted PhilHealth and other government corporations from such taxes. So while private health insurance corporations that also provide healthcare services to the public are slam-dunked with various taxes and duties, the government health insurance corporation is exempted from such taxes and duties.

There is dual hypocrisy there. Taxing medicines that contribute to their high prices and still loudly call for cheaper medicines. Exempting a government corporation from taxes when the government wants more and higher taxes from almost everything and from everybody.

This explains, partly or largely, why the government has low moral ascendancy in expecting public support for its various programs.

3. So, is there government failure in health insurance?

Yes, there is. The same way that there is also market failure in health insurance. The only difference is that there are market solutions to market failure that are quicker to emerge if politics should step aside. Whereas government solutions to government failure results in more expensive and more bureaucratic way of solving problems.

Despite the “compulsory coverage” provision where “all citizens of the Philippines shall be required to enroll in the Program”, PhilHealth membership remains low, only 13+ million of paying members out of the 35 million employed Filipinos. If PhilHealth membership is voluntary and not mandatory, there should be less than 13+ million members, probably only one-half of that number.

See the full paper here,

(2) Health financing and market segmentation

April 20, 2010

I just produced a new paper, Socialized healthcare vs. Market segmentation, dated April 6, 2010, 6 pages.

I believe that market segmentation of healthcare financing via health maintenance organizations (HMOs) deregulation and more local government provision/participation will allow the majority, especially the poor, to have greater access to better healthcare.

National health agencies like Philhealth and the DOH should step back a bit, and allow more roles for local government (like in San Isidro, Nueva Ecija case) and the HMOs. Let them be engaged in fierce competition to get more patients. When the national government comes in the provision of health financing and insurance, there is zero competition. When the design of the project is lousy, it will become lousy when it is implemented. If there are waste, inefficiencies and corruption at the top, such wastes are repeated at the bottom.

My hypothesis is that a better, wider coverage of health financing, can be done through more HMOs deregulation, more LGU participation, as add-on to PhilHealth membership.

PhilHealth is lousy. They say they have covered up to 85% of all Filipinos already. If that is true, why is it that in many hospital records, between 50-60 percent of costs come from out of pocket (OOP), only 12-15 percent come from PhilHealth?

So if PhilHealth is lousy after about 15 yrs in existence, why should we work to further expand PhilHealth power and mandatory contribution?

Let us try other modes, like more HMOs competition, more cooperative and LGU health card system. If we combine competition among HMOs, cooperatives and LGUs, it should be fun and challenging. Those who are lousy in providing health financing will lose clients. But not PhilHealth, because membership there is by coercion, by force. Whether you like it or nor, you become a PhilHealth member. That is the only way why Philhealth is making money, by forced and coercive contribution.


Sandae said...

Good article.

Anonymous said...

i agree with your article... sad truth about philhealth!!!

maribel said...

ay naku tlagang lahat s pil. mtgal ang proseso,konting pera n bbigay s yo n s iyo nmn e god phils.parang nkkatamad n mgbayad.

Anonymous said...

wla n tyong mpuntahan n maayos ang proseso parang palaging matagal.sad to say...phlhealthrp

Anonymous said...

yan talaga sa atin ang hirap,sa akin 4mos.nku nag claim wala parin ka kunting halaga lang sana.

Rey said...

On a related topic, is it true that our Philhealth benefits have been reduced? Example: the claimable amount before for a caesarian childbirth was P 30k, but now the claimable amount is just P 15k. Radio commentators were talking about this last year. They said that the membership claims reduction was necessary so Philhealth can do their membership expansion projects and increase the benefits for newcomer members. If this is true and has really happened under our noses, then this is downright criminal!!!