PhilHealth Watch 8: Alternatives to PhilSick Monopoly

After posting Part 7: Deregulate PhilSick to a private email loop including CHAT googlegroups, it attracted several comments from some friends. Let me post them here.

1. Is Philhealth equal to the National Social Health Insurance Program or is it just one of the main players of the National Health Insurance Program?

2. The private health insurance companies (HMOs) are in fact a deregulated group if not unregulated. I do not know of any government agency that looks over them and their operations. They are not even under the insurance commission unlike the life insurance companies. Nobody is required to be their members unless if their employers or associations get them as health providers as part of benefits. They are taken anyway because of convenience. They are loosely self regulated by their association.

Inherent to the issue of the HMOs among hospitals and doctors are their delayed payment and delayed processing of claims. And under the guise of "utilization management", HMOs control appropriate illness management as each illness is capped by a finite amount that the HMOs unilaterally determine. Then again, not all is bad with them. All I am saying is that they can be a good alternate source of healthcare, but appropriate regulatory safety nets must be in place to prevent abuse and at the same time protect them from "patient and healthprovider abuse" and remain financially viable.

3. Thank you for your thoughts. We do respect your views and if you wish we can discuss these when you are back . Just as a thought, the idea of social health insurance is to spread the risk. Thus, in terms of scale, smaller insurances from associations might not have enough scale to give relevant benefits. To illustrate, a hundred people (small association) would have to contribute more/higher premiums for the same benefit versus a million people contributing for the same.

As an advocate of free markets, I would like to ask for your opinion, do you think there will/is a model that can offer effective competition enough to allow low premiums but relevant benefits to be provided for all? Wouldn't having too many choices in this sense limit the spreading of the risk? There are also issues of portability and social equity. I think the latter two are what constitutes the "monotony". This is why we are exploring Contracting of service providers to try to get more. PhilHealth is not a stagnant institution, or at least not anymore. There is some dynamism and everyday poses new challenges for us that pressures us to evolve. And we are willing to work with the whole group to see the best way to move forward. And yes I agree, there are a lot of things that need to be done in PhilHealth to improve the NHIP administration. Mindsets are among the problem.

On #1, the Philippine Health Insurance Corp. (PHIC or simply PhilHealth) is the national social health insurance program (NHIP). The law says ALL filipinos should become members of PHIC, meaning membership there is mandatory, by force and coercion. Like membership in SSS. They simply cannot implement it at the informal or underground sector.

The government has created so many coercion and mandatory contributions in business and entrepreneurship (income tax, VAT, PHIC, SSS, Pag-IBIG, local govERNMENT business regulations and taxation, etc.) that many micro, small and medium enterprises have gone informal trying to minimize if not avoid those coercive regulations, taxation and mandatory contributions.

That is why my proposal is to remove the "mandatory membership" in PhilHealth and deregulate the health insurance sector. What should be made mandatory is that people should HAVE their own health insurance, say they take out an insurance through their village or neighborhood association, through their cooperative, through their labor union, through their employees association, through their barangay,, etc. Give people options and choices, not monotony of service like PhilHealth.

PHIC need not be abolished or be privatized. It can be retained as a government corporation, but it will not be a national monopoly. It will be forced to compete with the various health insurance providers, and I think it is the ONLY way to reform PhhilHealth and provide really good services to its members, so that it will not appear that it is PhilSick.

On #2, I thought the health maintenance organizations (HMOs) are under the insurance commission. Nonetheless, the fact that HMOs survive despite their membership not being mandatory, means that companies and individual subscribers find value for their money. I am not aware that they also delay their payment to physicians and other healthcare providers, but as a user of HMOs -- have been into 3 HMOs under my past two plus current jobs -- I find them convenient and useful in preventive HC, like the annual medical check up, the free physician visits/consultation, some diagnostic tests like X-ray, dental check up and cleaning.

The presence of private HMOs would give a deregulated image of the health insurance sector in the country. But the fact that people in the formal sector have zero choice but become members of PHIC and are forced to contribute to it monthly even if they do not want to, makes PhilHealth a national monopoly.

On #3, I have to apologize if my language sometimes would appear unkind to PhilHealth, especially to its more hard working and reform-minded staff. I have stated earlier my personal experience of having been working for a quarter century, been a member of and contributor to, Medicare then PhilHealth all those years, and receive zero benefit as I take care of my body consciously so I will never ever be hospitalized as much as possible, and so on. Thus, my frustration with the government-run health insurance system is high.

About the idea of spreading risk, there should be no one-solution-fits-all. Less health risky people need not join big insurance scheme with high premium, or join an insurance system with zero preventive HC coverage like PhilHealth -- no annual medical check up, no outpatient services, no dental check up, no vaccination like flu shots, etc.

People who have chronic diseases and are likely to be hospitalized should get PhilHealth type of service + private health insurance that covers outpatient and preventive HC services. The latter normally shoulders hospitalization bills too. So in case of hospital confinement, the patient can draw on two sources -- PHIC and private health insurance -- and minimize OOP spending.

A truly deregulated health insurance system will allow market players to offer different prices and premium for different services for different people with different budget and different health needs. For instance, Company A can have package A1: P1,000 per year premium to cover up to 3 physician visits + 2 diagnostic tests (say CBC and chest XRay), no hospitalization benefit; package A2 at P2,000 per year premium to cover up to 5 physician visits, 2 diagnostic tests, up to P5,000 hospitalization bill, and so on. Then Companies B, C, D... Z will provide similar packages to A1 (call them packages B1, C1, D1,... Z1) at a slightly higher or lower premium, a similar package to A2, and so on.

A highly customized and patient-tailored health insurance scheme will spread and reduce risk at the individual or patient level.

About your question, "Do you think there will is a model that can offer effective competition enough to allow low premiums but relevant benefits to be provided for all?"

I think this news report which I posted a year ago can provide an answer, Healthcare competition 1: Switzerland, August 28, 2010:

Swiss welfare runs like clockwork

James Bartholomew
17 July 2010
Spectator magazine UK

... Switzerland has arguably the most successful system of healthcare in the western world. It is an insurance system with a twist. You are obliged to take out health insurance but you can choose which company to use. There is no state monopoly. So you can choose an insurance group which is connected to your line of work. Or you could go with a trade union-run insurance co-operative. Or a private, commercial company. That means there is some competition among these companies to provide the best possible service for the lowest possible price. Then these companies, in turn, have some choice over which doctors and hospitals they commission to work for them. So again, the doctors and hospitals have to compete to offer the best facilities and treatment at the lowest possible cost. Poorer people get credits which enable them, too, to choose insurance.

The Swiss health service is decidedly superior to that in Britain, too. It has more doctors per capita, more advanced scanners, better results in treating cancer and so on. All right, it is not perfect. People get treated for free, effectively, and, since the service is easily available and good, they tend to overuse it. Thus the costs have been rising worryingly, as with other social insurance systems. The Swiss model remains, however, one of the best around. It provides less of a barrier to employment than most social insurance systems. The cost of the premiums is borne by individuals, not shared among companies as it is in Germany...

A friend made another follow up comments.

4. What I like with my exposure in the German system – well I observed it in 1995 am afraid, rather stale (which maybe also practiced in Switzerland) is when the competing health insurance groups or companies annually bargain with the health care providers for unit costs and ceilings or caps. Then it is the health care organization who will police its own members. Can we imagine the PMA policing its doctors into prescribing rationally? Or managing fees or costs? Most of all, account for quality of health care provision.... What am hinting at here is that the western world have achieved a rational culture or behaviour. Maybe because their unemployment rate as is in Switzerland is so low, and per capita income is so high compared to countries like us. I also saw the storage of data in a secured safe... Where the insurance systems can monitor “moral hazard” behaviours at all levels anytime.

Now, what do we do with a society with high unemployment rate? With variations of income from a million or so a day to Php 50 a day, where the most number lean towards the Php 50 a day. What I see that is very sad is that even when the sponsored program members are covered, and the benefit is In-patient, where do the patients in Cagamutan, Garchitorena, Camarines Sur or Sagrada, Balatan, Cam Sur and hundreds more like them go to avail of that benefit? Well, if we are lucky that it is only primary curative care then the present program tells us, they can go to the RHU accredited OPB. Yes, they can pay how much in a banca and go to the nearest RHU if it is an island or pay a habal-habal when they come from the mountains and when they are in the RHU, the story continues on when you interview the PHN and the supervising midwife there.... Now the real question is what if it is life threatening that needs hospitalization? They look at their Philhealth card, and they say, “What do I and my family get if I have this?”

My road is the road of let us all work together. Get the good things of your suggestion to customize (through regulation) how the private health insurance system can align. Expand the present Philhealth program (through good IRR and civil society guardianship), and how do we rationalize costs and quality of health care services? My little understanding is that Philhealth can use its leverage as a payor/purchaser, while DOH can optimize its regulatory and technical support functions – that was started with the HSRA, then F1 and now UHC.... But to be honest, there are communities that I visit that still have to feel the benefits of these reforms.... After more than 10 years.

By the way Noy, if you were not able to use your Medicare/hilhealth card after 25 years of paying (me too), then we should be happy we partly subsidized the sick who luckily availed of the service and contributed a lot to the Philhealth Reserve investments. Proud to be a Philhealth investor.

My comments are as follows.

a. "Competing health insurance groups or companies annually bargain with the health care providers for unit costs and ceilings or caps. Then it is the health care organization who will police its own members."

Yes, this is a good scenario which is not present under the PhilHealth system. I heard that several doctors avoid patients whose main payment is PhilHealth because (a) they will be paid less, and (b) they will be paid after 3 months or longer.

b. "Even when the sponsored program members are covered, and the benefit is In-patient, where do the patients in Cagamutan, Garchitorena, Camarines Sur or Sagrada, Balatan, Cam Sur and hundreds more like them go to avail of that benefit?"

That is the problem when government is a regulator and a player at the same time. Private players will be scared or discouraged to put up a business where government can easily wipe it out, like in far away municipalities. Consider food shops and carinderia. There is no government food or carinderia corporation, or government food insurance corporation. It is a wholly and 100% private sector endeavour, people can put up a carinderia from the most urban to the most rural municipalities, and you have many carinderias there competing with each other. People in poor communities are served better if government steps back. People can choose from the more expensive to the cheapest carinderias, people have options.

Tere is also no one stopping the local governments from providing basic HC to their poor constituents. Or LGUs can pay for package A1 or A2 (or alternatively, packages B1 or B2, C1 or C2, etc. mentioned above. Local politicians in power are afraid of losing votes from the poor, so it is almost assumed that they will provide basic and primary HC to the poor.

c. "If you were not able to use your Medicare/hilhealth card after 25 years of paying (me too), then we should be happy we partly subsidized the sick who luckily availed of the service and contributed a lot to the Philhealth Reserve investments."

I think that is not the case. I think its more that all my forced contributions for the past 25 years or more went to the salaries, perks and bonuses of Medicare-PHIC personnel and directors. Ask the directors of PHIC how much they receive per month in pay, honorarium, travel and housing benefits, etc. My bet is that they will NOT tell us. It should be a big amount that must be kept secret, courtesy of people like us who have to contribute to that fund whether we like it or not.

When my wife got hospitalized to give birth to our 2nd child, PHIC reimbursement was only about 1/8 or 1/7 of the total hospital bill. That's how stingy/kuripot PhilSick can be, and it collects from me and my wife monthly. Doble kita, tipid bayad, 3 months delayed pa, and nothing after that since we don't get hospitalized and we don't intend to.