Healthcare Competition 10: Alternatives to Government Health Monopoly

* This is my article today in thelobbyist.biz 

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Attaining universal health care (UHC) for all Filipinos is among the key social reform programs of the government. The recent passage of the Sin Tax law as well as the huge hike in the budget of the Department of Health (DOH) are  linked to covering as many poor people as possible in health insurance and hence, attain UHC.

I am in favor of achieving UHC based on two important premises.

One, everyone -- from newly born babies to the oldies in this country, employed or unemployed, married or unmarried -- should  have a health insurance. And that everyone should have his/her individual health card, not just the heads of family as currently practiced by the Philippine Health Insurance Corporation (PHIC or PhilHealth).

Two, UHC does not mean government monopoly of healthcare like PhilHealth. Competition among various healthcare providers – corporate health insurance firms, health NGOs, health cooperative, barangay or village health insurance, municipal or city health insurance, and so on – is possible and feasible.

In the few remaining days of Congress in session, many civil society organizations are pushing the passage of a bill expanding the powers of PhilHealth. I saw the signature campaign and I was not impressed by this bill, Senate Committee Report No. 49 or SB# 2849. It does not seem to have major value added to existing and recent developments.

First, the DOH budget has been rising by an average of P10 billion annually in recent years: P24.65 billion in 2010, P31.83 billion in 2011, P42.08 billion in 2012, P53.06 billion in 2013.

Second, the new Sin tax law is estimated to provide P31.35 billion for UHC this year alone, and about P154.56 billion by 2016 or P39 billion a year on average.  This is on top of regular appropriations for DOH allotted for UHC.

Third, there are increases in mandatory contributions to PhilHealth: (a) those in the formal sector, from 2.5 percent to 3.0 percent of salary; (b) the sponsored program and non-poor informal sector, from P1,200 to P2,400 per annum; and (c) for OFWs, from P900 to P1,200 per annum.

These three measures mean only one thing: more money for UHC every year and they are already in place and implemented even without a new law from Congress. So there is little, if any, value added by  proposed bills on PhilHealth.

Now, there are certain PhilHealth policies that limit or restrict the attainment of UHC itself. Among them are the following.

One, while immediate family members are supposedly automatic dependents of the head of family, there are several restrictions. Among those who can NOT be declared as dependents are:

a. unmarried non-working spouse, or working in the informal sector,

b. children who are above 18 years old, even if they are still studying, and

c. parents who are below 60 years old, even if they are jobless and just taking care of the grandchildren or a sick child. 

The above mentioned groups of people must get or pay their own PHIC membership.

Two, even if members have been religiously paying for many years, but they suddenly forgot or became unable to pay one or two months and thus have not fulfilled the "9 months straight payment" prior to hospitalization, they and their dependents immediately become ineligible for PHIC hospital reimbursement if suddenly one family member is hospitalized.

These technicalities partially defeat PhilHealth's goal of 'UHC for all". In statistics, PhilHealth reports  that they have covered as many Filipinos as possible, that they have covered 85 percent of the total Philippine population. But in reality,  PhilHealth wants to exclude as many people and hence, pay as few members as possible. 

If PhilHealth is serious in covering as many Filipinos as possible, it should remove those exclusions. How can they serve many people if they also exclude as many as possible from the benefit or hospitalization reimbursement system? It is somewhat puzzling why the PhilHealth Board and administrators have not thought of bridging that  service gap. They did not remedy this even though this problem did not happen yesterday or last year, but since PhilHealth was created in 1995 or 18 years ago.

It is also not true that PhilHealth has attained "85 percent UHC coverage” of the Philippine population, What they did in coming up with such conclusion is that they assume that all members have one or two dependents, so they made a two or three multiplier for each PHIC member.  This is wrong and not feasible as many members are young and unmarried, or married but have no kids yet, the older ones may have kids but already 18 years or older. See a longer discussion here, PhilHealth Watch 14: Not Yet 85 Percent Coverage.

Instead of healthcare nationalization and monopolization, we should have healthcare competition. One way to do this is for the DOH to issue a healthcare voucher for all people, say P5,000 per person per year. Thus, a household of four members, couple plus two kids regardless of age, will get a P20,000 per year healthcare voucher.

Let the households and the people choose where to get their health insurance. To private health insurance firm A or firm B, or to health NGO C or D, or to company insurance E or F, or to Barangay or village insurance G or H, or to municipal/city health insurance I or J, or remain with PhilHealth, and so on. 

In the food sector, there is no government restaurant or carinderia corporation, no government supermarket or talipapa, all such shops are private, and people are eating. People have options where to eat or buy cooked and uncooked food.

The same policy can apply in healthcare while government does not let go of its big role in public healthcare. Different healthcare providers, private or civil society or local governments or PhilHealth, are competing with each other to attract the public. The opportunists and greedy will lose clients, the efficient and service-oriented will attract lots of clients.

There are issues raised against private health insurance, that they promise high hospitalization coverage when in fact they pay only after the PhilHealth hospitalization coverage. This is true as these private firms charge lower premium to people who are PhilHealth members.

What the private health insurance providers usually give that PhilHealth does not give, are: (a) annual medical check up, a form of preventive healthcare, (b) dental services, (c) unlimited physician consultation for outpatient services, (d) free diagnostic tests for basic services when necessary, like chest X-ray, blood test, urine/stool lab test, and so on. In case of hospitalization, (e) additional payment after PhilHealth deduction in the total bill.

Where there is healthcare monopoly, options for the public is limited if not zero. Even if PhilHealth  services and health coverage are not good, people have to contribute to it monthly by force and coercion.

Certainly, competition among different healthcare providers is the way to ensure efficiency and non-costly healthcare delivery to the public.

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See also:
Healthcare Competition 6: United States, May 05, 2011
Healthcare Competition 7: Moral Hazards in Healthcare Subsidies, May 24, 2011
Healthcare Competition 8: Centralization vs. Deregulation of Healthcare, December 31, 2011
Healthcare Competition 9: Deregulate Further the Supply of Healthcare, August 25, 2012
Healthcare Monopoly 6: Cuba Socialism, January 14, 2013