Healthcare Competition 11: Postscript to the Filipino Horror Story

* This is my guest post today in antipinoy.com
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Tuesday  this week, an article from the Inquirer, Filipino horror story, was circulated and shared in facebook and other social media.  It was written by Dr. Korina Ada D. Tanyu, 27, a pediatrics resident at the Philippine General Hospital (PGH).

It was indeed a heart breaking story about a five years old boy named Jamjam from a poor family in Cavite, who has been coughing for two months already, later losing weight and has  recurring fever. The mother brought him to the health center, the boy was given carbocisteine, the cough continued and he kept losing weight.

The nearest hospital to them is privately owned and the consultation fee is at least P500, aside from the costs of the lab tests. The nearest government hospital according to the author is in Manila, the PGH. After two months of this bad condition of the boy, the mother brought Jamjam to PGH. At first she was turned down because the hospital’s emergency quota of 60 new patients a day on top of old and returning patients has been reached. One doctor attended to Jamjam that day seeing his bad condition.

They found out that Jamjam has tuberculosis complicated with severe pneumonia; the infection has spread through his blood. When he was brought to the PGH, his condition was already very serious. After several attempts by the doctors and nurses at the ER resuscitating Jamjam that day, they failed. Jamjam died. A heart breaking story.

I commented at the walls of my friends who posted that story, that the main problem was the lack of health insurance by that poor family. The government barangay health centers are supposed to be the de facto health insurance for the poor because they can go there for free treatment, but the health center only gave the boy Carbocisteine, an anti-cough syrup without checking what caused the cough in the first place.

The barangay health centers should provide primary treatment. If they cannot handle the situation, say they suspect that there is a bigger cause to a symptom, they should refer the patient to government secondary or even tertiary facilities, like the municipal health center or a district or provincial hospital. It seems that the barangay health center did not do this job, and the government provincial hospital seems far from the family’s house.

When the parents endured for two months not to bring the child to a physician due to poverty, the disease has already mutated to something serious. Pneumonia is actually easy to treat, if detected early. Some anti-biotics plus regular hydration and good rest would usually allow a patient to recover from the disease. But if pneumonia has become severe, even hospital treatment can be too late.

There were discussions to increase really high the budget of the PGH and other DOH hospitals. This might help, and assuming that the government has no big public debt to grapple with. But the more cost-effective way to solve a similar case like this is to improve preventive healthcare through a reliable and competitive health insurance system for all households especially the poor. Health insurance especially for outpatient services should be deregulated.

PhilHealth card is often useless for outpatient services. One can use it only if he/she is already hospitalized, when the disease is already serious and the patient is about to die. For diseases like pneumonia or TB, patients can be treated at home provided that correct diagnosis and treatment is given. When the condition has become complicated, that is the time to bring the patient to a hospital for confinement.

Community (barangay or municipal level) or private health insurance in a deregulated environment where there are plenty of competing players, is the solution. Government can pay for the annual premium of the poor and the latter can look for a private or NGO health insurance provider, instead of maintaining inefficient or costly health centers. In the case of Jamjam, can the family complain of the barangay health center for just giving them Carbocisteine instead of referring them to a district or provincial hospital early enough?

Government healthcare monopolization and nationalization is wrong. 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. Compare that in healthcare where there are about 40,000+ barangay health centers, hundreds of provincial, district and city government hospitals, dozens of DOH hospitals, dozens of hospitals from other agencies (AFP hospital, PNP hospital, Veterans hospital, UP-PGH, etc.), there are thousands of government pharmacies (Botika ng Barangay, Botika ng Bayan) there is drug price contro policyl, mandatory discount for senior citizens, there is government health insurance monopoly, etc.  And healthcare problems are expanding, not declining.

Repeated statement and plea of "not enough public spending on healthcare" is wrong. Maybe they can talk of "not enough PGH budget" as the story above has illustrated and that is true. But overall, nationwide, public healthcare is among the heavily budgeted, and most probably, heavily wasted sector.

There are lots of government spending on healthcare already via (1) DOH, P53 B this year alone, (2) PhilHealth with P100+ B in reserve funds alone, (3) LGUs, from provincial health centers and hospitals down to barangay health centers, (4) other agencies' spending like UP-PGH, AFP hospital, PNP hospital, etc. (5) Health spending by different agencies for their personnel and their respective dependents, and (6) PCSO and PAGCOR support, indirectly through LGUs’ and DOH hospitals (usually free ambulance, mobile clinics) or directly to patients in the form of hospitalization cover.

When I was working at the House of Representatives in the 1990s, our healthcare protection was OA. Consider this: (1) we have PhilHealth membership with huge employer (HOR) contribution, (2) we have private HMO, Intellicare at that time, I don’t know now, and HOR is paying for the annual premium of all employees, and (3) we have a medical and dental office right at the HOR with full time doctors, dentists and nurses, with free basic medicines, etc. All this spending for healthcare by the HOR for its officials and employees is not counted as “public health spending” but “legislative spending”.

So when the WHO, ADB, WB, UN, etc. would say that the Philippines’ health spending / GDP ratio is only 3% or so, they are wrong, the numerator they use – DOH spending, PhilHealth disbursement, estimated private sector spending, etc. – is understated. They miss health spending by all other government agencies, local to national, that are not included in the numerator.

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See also:
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
Healthcare Competition 10: Alternatives to Government Health Monopoly, February 06, 2013

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

PhilHealth Watch 13: SHInES on Social Solidarity

PhilHealth President, Dr. Eduardo "Dodo" P. Banzon, gave a nationwide lecture via teleconference this afternoon (2-5pm). It's the PhilHealth SHInES (Social Health Insurance Educational Series) at the Asian Institute of Management (AIM) in Makati and to aired live at Central Philippine University (CPU) in Iloilo City; Silliman University in Dumaguete City, USEP in Davao City, Ateneo De Naga in Naga City, and  SPU in Tuguegarao City. The Zuellig Center at the AIM organized the forum.

My events alarm failed to remind me of this important forum, I realized it only past 5pm when I saw the email invite from Zuellig Center. Oh my, signs of ageing I guess.

So I better write about the event. The objective of this exercise is for PhilHealth together with the Department of Health, further inform the public so that

The country can attain Universal Health Care (UHC) or Kalusugang Pangkalahatan (KP). Through the National Health Insurance Program (NHIP), PhilHealth seeks to provide financial risk protection to all Filipinos and ensure that no Filipino will be afraid of getting sick. There is need for a thorough understanding of the philosophy behind social health insurance – social solidarity and equity.

Dr. Banzon would talk on five presentation Topics:

1. Social Health Insurance and Social Solidarity
2. Legacies of Social Health Insurance
3. Health Inequalities in the Philippines
4. Universal Health Care, Redefined
5. Social Health Insurance Towards Universal Health Care

I think many of those topics are self-explanatory, like UHC, meaning all Filipinos and Philippine-based foreigners, will get government-health insurance at least portions of their total bill when they are hospitalized, which is good. Currently, PhilHealth also gives outpatient coverage for the poor, the CCT beneficiairies. But there are two subjects that I think are misunderstood or misdefined by PhilHealth: solidarity and health insurance..

On social solidarity, for me this is voluntary, it is never done via coercion. Each huge flooding in the Philippines for instance affecting hundreds of thousands of individuals or households, millions of Filipinos and foreigners who were not affected or only slightly affected, would quickly send in whatever resources they have -- canned foods, drinking water, medicines, old clothes, shoes and blankets, construction materials, money, and so on. This is solidarity, spontaneous assistance to the less privilege without coercion or a big agency like the government penalizing people if they will not give anything.

Thus, "social solidarity" cannot apply in the context of government-mandated programs. PhilHealth membership and contribution is not done via volunteerism but via coercion, like membership and contribution in Social Security System (SSS) and housing fund (PAG-IBIG). Whether people like those government services or not, whether they benefit or not, they have to pay a monthly or yearly contribution to the government.

On social health insurance, I do not think that this should imply government monopolization or nationalization of the service, something that is happening in many countries around the world, in both the rich and developing countries.. The important point is that all people, each individual, young and old, rich and poor, men and women, legitimate or non-legitimate children, should have a health insurance card that will cover not only hospitalization or in-patient services, but more importantly, outpatient services. Serious illness and diseases leading to hospitalization can often be prevented if people get treated early enough.

In food, there is no government restaurant or carinderia corporation, or a government supermarket and talipapa. There are a few government restaurants in government schools and offices but majority are privately-owned and operated. And yet people are eating. Why? Because of differentiated pricing, of market segmentation. People can choose to buy or cook food from the cheapest to the most expensive price levels. So the one that gives "food insurance" to the people is access to different food products at different prices for different needs and food taste of different people. There is no single price for each food item.

When government insists on service monopolization, it is courting financial disaster, either for the patient or for the government coffers in the long term, or both. In many countries in welfarist Europe, their public spending for healthcare is among the biggest items in their annual budget, which significantly contributes to their huge public debt and economic instability. A "free" or a heavily subsidized service like healthcare would attract huge demand, which outpaces the supply, always.

Demand larger than supply in healthcare shows in various ways. One is lousy service, say a government physician sees a patient, writes a few prescription and calls the next patient after just one or two minutes. Since government healthcare personnel are on fixed income, whether they treat 10 or 50 or 100 patients a day, the pay is the same. So in cases of high volume patients, the tendency is to cut the quality of service or the average time spent for patient education and preventive healthcare.

Two is modest or good service but patients have to wait for several days or weeks before they can get an appointment with a government physician or other healthcare professionals. If a doctor has to spend at least 30 minutes for each patient and he can spend only five hours a day on consultations as he has other work to do like hospital or school administrative assignment, or teaching in a medical school, or doing a clinical research, or oall of them, then he can see only 10 patients a day maximum. If there are 30 or more patients wanting to get his service, then the other 20 have to wait for days or weeks before the physician can see them.

Three is high number of government physicians and other health professionals to take care of high number of patients to minimize or eradicate long waiting period, but this will result in huge public spending and perennial budget deficit, leading to ever-rising public debt. Healthcare, preventive or curative, is not composed of seeing a physician alone. There are diagnostic tests to take, from urine test to blood test to X-ray to CT scan, etc., and these procedures are more often than not, very costly. So if we add up the professional fee + diagnostic tests fee + other hospital or clinic fee, the cost per patient will easily rise.

In order to avoid these pitfalls and financial catastrophe, both at the short- and long-term, it is important to give huge leeway or room for personal, parental, corporate, and civil society responsibility in healthcare. Government responsibility in healthcare should be a supplement only, not a primary source of financing.

I suggested in my earlier paper,

Socialized Healthcare 11: Private Health Insurance and HC Vouchers (November 16, 2012), that government involvement in healthcare can be in the form of giving people health vouchers, a flat rate per person per head. So instead of creating new government hospitals and spending huge amount for their maintenance, government can give each household a voucher, and the people, rich and poor alike, can choose which among the various hospitals, clinics, HMOs and other health facilities, can give them the kind of healthcare they need. Different HC services for different people with different budget and different health needs. Those who tend to abuse their body, they over-eat, over-drink, over-sit, over-smoke, must get a more expensive health insurance as their HC needs will be higher than the average person.

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See also:
PhilHealth Watch 9: Physicians talk about PHIC, October 16, 2011
PhilHealth Watch 10: Hospital Bill Deductions, December 29, 2011
PhilHealth Watch 11: Is PHIC an Insurance Company?, June 12, 2012
PhilHealth Watch 12: Assistance to Leptospirosis Patients, September 03, 2012

Socialized Healthcare 9: Grassroots Consultation, Insurance for Catastrophic Diseases, October 15, 2012

Socialized Healthcare 10: Peru Doctors' Strike, Health Financing, October 29, 2012

PhilHealth Watch 11: Is PHIC an Insurance Company?

The Philippine Health Insurance Corporation, PHIC or simply PhilHealth, is a government-owned and controlled corporation (GOCC) created mainly to provide "universal healthcare" for the Filipinos. But the healthcare that it provides and subsidizes since its creation in 1995 is only for "inpatient" or hospital confinement for at least 24 hours. Thus, if a Philhealth member-patient goes to a hospital emergency room (ER) to have a check up say of fever or minor wound, then goes home after, the patient will not get any Philhealth subsidy or ER bill deduction.

Philhealth intends to provide outpatient benefits to all members by around 2016. In some areas I think, Philhealth subsidizes outpatient services but only for a very limited number of patients, sort of an experimental phase.

A fellow free market writer, Benson Te, posted this yesterday in his blog:
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Does your Philhealth Contribution Help the Poor?
June 11, 2012.

There has been this politically correct idea which attempts to rationalize private sector contribution to the Philippine national health universal coverage as having a charity effect of helping the underprivileged or the needy.

Let us examine if this claim is valid.

First what is PhilHealth?

From Wikipedia.org, (bold original)

The Philippine Health Insurance Corporation (PhilHealth) was created in 1995 with the aim of placing a renewed emphasis on achieving universal coverage. It is categorized as a tax-exempt, government-owned and government-controlled corporation (GOCC) of the Philippines, and is attached to the Department of Health. It states its goal as insuring a sustainable national health insurance program for all.

So the essence of Philhealth’s function is supposedly a “national health insurance program”

But does Philhealth’s concept of insurance match with the real definition of insurance?....

Is Philhealth an insurance company?

No it isn’t. There is NO equal sharing of risk and thus is NOT qualified as an insurance company in the conventional terms.

Instead, Philhealth is a health coverage WELFARE program (verbally embellished by the term "insurance") funded mainly by taxpayers and complimented by an employment MANDATE (or as a form of tax on BOTH the employer and the employee).

PhilHealth Watch 6: Bogus claims and robbery

I am re-posting this investigative article from Newsbreak. The gory details of robbery in PhilHealth are discussed here.
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Bogus claims haunt Philhealth

PUBLISHED ON MAY 25, 2011
By EDWIN ESPEJO
Maggie De Pano Fellow

Conniving hospitals and doctors defraud the state-run health insurer

MANILA, Philippines—For many years you’ve been paying your Philhealth dues, and so has your company. But that money may have been misused to finance bankrupt hospitals and fatten doctors’ salaries.

As early as four years ago, a scandal hit the Philippine Health Insurance Corp., which confirmed allegations that some private hospitals and doctors have been defrauding the state-run health insurer.

In her testimony before a 2007 congressional hearing, Dr. Madeleine Valera, Philhealth vice president for health finance policy, said that since 1995, Philhealth had lost as much as P4 billion due to fraudulent claims.

The anecdotes behind these claims are both tragic and true. In Iloilo, one eye doctor claimed to have performed 2, 071 eye surgeries in one year, for a total of P16 million in professional fees that he collected from Philhealth in 2006. When a Philhealth inspection team visited a hospital in Davao City, it caught janitors in hospital beds pretending to be Philhealth-accredited patients.

Today, various estimates show that Philhealth is still losing up to P500 million annually due to bogus claims. This amount can already cover additional 500,000 indigent families under a sponsored program scheme.

The continued abuse of the funds is also behind the limited coverage for new entrants to the labor force, since a new employee will have to contribute for at least nine months within the year of confinement before he or she could be entitled to benefits.
The problem persists because of government’s failure to prosecute any of the players involved in the scam.

While some hospitals, such as the Our Lady of Mercy Specialty Hospital in Bacolod and the General Santos Doctors Hospital in General Santos City, had been fined or suspended, the truth is no one has been jailed for the crime. Weighed down by manpower problems and lack of political will, Philhealth could only implement stop-gap measures to stop the bleeding, such as random inspections and a stricter evaluation of claims.

This special report focuses on the health insurance anomalies in Central Mindanao, covering the provinces of North and South Cotabato, Sarangani and Sultan Kudarat, and some areas in Mindanao.
Do you have other information on fraudulent Philhealth claims in your areas? Click here to send details to Newsbreak

Hospitals’ role

With its billions in funds, now at P69.5 billion, Philhealth is seen as a source of income for many provincial hospitals. In the General Santos Doctors Hospital, at least 20 percent of its estimated P120-million annual budget is derived from Philhealth reimbursements.
The percentage of Philhealth-sourced revenue is higher in accredited private hospitals, since the latter usually don’t set aside a budget for salaries and allowances of its resident doctors. And on the average, doctors claim about one-third of the total hospital bills of Philhealth-accredited patients.
What further motivates unscrupulous hospitals and doctors in padding their bills is the so-called “cost of money,” or the delay in Philhealth reimbursements, which take about 60 days to process.

In 2010, Philhealth released a total of P27.6 billion in benefit payments for a health insurance service that has 22.4 million members. That same year, it collected P26.4 billion in premium contributions.

The billions that Philhealth issued as benefit claims could not all be traced legally. In Central Mindanao, for example, the agency discovered that cheats had employed all tricks in the trade to access the Philhealth fund.

Ramon Aristoza, Philhealth vice president for Central Mindanao, cites an instance when they monitored a drastic rise in hospital confinement in the region. He soon found out that some hospitals were encouraging Philhealth members to confine their dependents in the hospitals as well. There was also a time when hospital confinements during weekends rose. Philhealth eventually learned that doctors had asked their patients to have executive check-ups and get confined during weekends, claiming higher benefits in the process. “As a matter of policy, we do not allow executive check-ups,” Aristoza tells Newsbreak.

Eye surgeries

Philhealth was given the opportunity to address this problem in 2007, when it discovered a scheme that defrauded the agency of a lot of money. Between January 2004 to June 2007, or in a span of 42 months, Philhealth paid 19,145 cataract-related claims in Western Visayas hospitals alone. The claims totaled over P390 million.

The numbers meant that these hospitals performed an eye-popping 15 eye surgeries daily for about four years—non-stop.

In one year alone, 10 doctors from Western Visayas were reported to have made claims amounting to P48,491,030 for eye-related operations.

One of these doctors from Iloilo performed a record-breaking 2,071 operations in one year, and claimed almost P16 million in professional fees in 2006.

“Many have earned millions of pesos from Philhealth,” Dr. Madeleine Valera, Philhealth vice president for health finance policy, told a 2007 congressional probe.
Western Visayas was just the tip of the iceberg. In Mindanao, provincial hospitals ransacked the Philhealth fund through the same scheme.

Philhealth sent a legal team from its central office to conduct a similar investigation on the General Santos Doctors Hospital (GSDH) in General Santos City, after it discovered an unusually high number of cataract operations performed by a single doctor.

Aristoza says cataract operations, along with circumcision and toe nail operations, were among the common medical operation used in making fraudulent claims. He explains that eye surgeries and circumcision are quick and easy, and can be done en masse, especially during provincial medical missions and outreach programs.

These medical missions are however free, but doctors were charging professional fees against Philhealth. The agency has since banned the practice.

Former congressman and now South Cotabato Gov. Arthur Pinggoy, confirmed that some doctors have taken advantage of medical missions to claim professional fees from Philhealth Pinggoy and former congressman Rey Aquino, a medical doctor who is now CEO of Philhealth, led the probe on bogus claims in 2007. Pinggoy chaired the committee on health; his family also owns a hospital in South Cotabato.

In Central Mindanao, one of its 10 accredited eye doctors stood out for the unusual number of claims he filed before Philhealth and those field on his behalf by one hospital. Eye surgeries in the region dramatically rose when Dr. Isaac Villegas was accredited by the General Santos District Hospital but also dramatically dropped when Philhealth started its probe....
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I'm wondering, why do we have to expand a program where past wastes and robbery were not resolved yet, where no one went to jail yet even when caught flat footed, stealing millions of pesos? Next time, another round of thieves with new tricks, schemes and drama will come in. And we will say "no worries, so long as everyone should have PhilHelth cards"?

PhilHealth needs more than just "internal reforms". It should be coerced to reform by removing its monopoly over mandatory membership. If PhilHealth has competitors and membership to it is not mandatory, it will be forced to reform and become more sensitive to member-contributors.

See also
PhilHealth Watch 4: P110 B excess money, November 04, 2010.

Healthcare Competition 7: Moral Hazards in Healthcare Subsidies

To reduce the information imbalance between healthcare providers and the public/patients, one solution is to encourage branding by various service providers. That way, patients can expect the kind of service, the cost and pricing if they will go to company or hospital C rather than company or hospital A, B, D and so on. See my earlier note,  Healthcare Competition 4: Solving Info Assymetry, September 08, 2010.

I read today a good paper in the New Asia Republic (NAR), Is there moral hazard in Healthcare subsidy? by Kelvin Teo. Kelvin discussed the paper by Malcolm Gladwell, “The Moral-Hazard Myth” and he argued against the moral hazard approach to health insurance. Kelvin concluded his long paper with this note,

As for the final verdict over the existence of moral hazard in wholly subsidised preventive healthcare... we cannot rule out the fact that the total subsidy will attract health conscious citizens to consume preventive health services at higher frequencies. For moral hazard in heavily or totally subsidised curative treatment, arguments for and against it is a matter of patient perspective; those who take their health for granted due to subsidies versus those who care about quality of life not to let their health degenerate to the level of organ failure. Thus, it will be premature to consider moral hazard in healthcare subsidy a myth.

There is a long exchange between Kelvin and some readers. One angrydoc for instance, argued that

...based on my personal experience and from talking to my colleagues that patients who do not pay out of their own pockets do consume more healthcare. With subsidised curative healthcare, it doesn’t matter if patients do or do not consciously neglect their health – the burden of curative treatment still falls on the government/tax payers.

To me, the bottomline question is not whether we can or should hold people responsible for their behaviour which affect their health (because in reality we don’t), but why a person’s healthcare cost should be anyone’s but his own responsibility.

I tend to lean on “healthcare is mainly personal (and parental) responsibility, not government responsibility.” Thus, I get the point of angrydoc. The level of moral hazards in healthcare is dependent on how much individuals will pay (in the case of co-payment by government and individuals) in relation to publicly-funded insurance. My friend in Japan told me a few years ago, that in Japan, a hospitalized patient pays only 5 percent (personal, or company or private health insurance) and government pays the 95 percent. So some patients do abuse, staying in the hospital for 1 week or more when their condition would already allow them to go home after 2 or 3 days confinement. Even doctors and private hospitals would be happy with this arrangement as this would mean bigger revenues for them.

One important consideration in bringing back to the individuals the personal responsibility aspect of healthcare, is that in both rich and poorer countries today, “lifestyle-related" or non-communicable diseases (NCD) are now the main killers, not those old sickness like malaria, flu, polio, dengue, etc. So if people get sick later because they tend to over-smoke, over-drink, over-eat, over-sit, etc., why would the rest of taxpayers pay for their treatment later on?

On accidents and predisposed diseases (say prostate and breast cancer), I think all people understand that somehow, sometime, they will get sick or get injured someday. Thus, the need to get a personal or corporate health insurance. Or even a village and small community health insurance.

So my answer to the article's title, “Is there a moral hazard in healthcare (government) subsidy?” is Yes. To reduce if not totally remove that moral hazard problem, remind people that healthcare is first and foremost a personal and parental responsibility, not government responsibility. Then healthy lifestyle, preventive and wellness programs, private health insurance will naturally come out as solutions, not more taxes and more government involvement -- like drug price control policy, busting the patents and IPR of newly-discovered medicines, health insurance monopoly, etc.

When healthcare has been decentralized down to the level of companies, small communities and individuals, a dynamic competition among various healthcare providers, drug manufacturers and retailers, should emerge.
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Here's a related short article that I wrote last February 21, 2011:

Healthcare cost: payment vs. subsidy

Health, like food, education, housing, information, etc. has costs. They cannot just be provided "for free" out of thin air, somebody has to pay for it.

A nice theoretical framework of when a productive person will start receiving health subsidy (from his parents, other family members/friends, government, etc.) and when he should contribute to such subsidy.

(Click the picture to see a larger image) At a young and non-productive age (say, still a student), the person receives subsidy. When he begins working, he is a net contributor to the subsidy pool even if he also receives some healthcare from the system.

When he grows older and becomes less productive, or still productive but chooses to just enjoy his remaining years, he becomes a net recipient of healthcare subsidy again.

Nice and simple model. The "subsidy" here should be taken in its generic or general use, meaning not exclusively referring to "government subsidy" but also to "parental subsidy", "siblings/friends' subsidy", "private health insurance", and so on.

I lifted this from one presentation by Dr. Alvin Caballes, a Filipino physician-economist. He's a friend who also came from UPSE PDE.
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See also:
Healthcare Competition 5: Thailand, September 24, 2010
Healthcare Competition 6: United States, May 05, 2011

PhilHealth Watch 5: Healthcare and Civil Society

Total health expenditures (THE) is composed of spending by the (a) national government (NG), (b) local governments units (LGUs), (c) social health insurance (PhilHealth), (d) corporate or personal health insurance like HMOs, and (e) out of pocket (OOP) spending.

Here is the distribution of THE, 1997 vs, 2005. PhilHealth was created in 1995 after the defunct and heavily corrupted government MediCare went bankrupt.

(Click on the graph to see a larger image) The two charts above show that: (a) OOP spending remained at 47 to 48 percent of THE, (b) NG spending declined from 20 percent in 1997 to 16 percent in 2005, (c) LGUs’ spending also declined from 18 percent to 13 percent over the same period, while (d) Social health insurance rose marginally from 5 percent in 1997 to 11 percent in 2005.

Quick questions:

1. After 10 years of PhilHealth existence by 2005, its share in THE remains a small 11 percent, what does it imply?

2. High OOP spending even after combined government involvements by DOH, LGUs and PhilHealth, this means what -- market failure or government failure?
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Yesterday, there was a meeting by the Coalition for Health Advocacy and Transparency (CHAT) in Quezon City. CHAT is a coalition of health NGOs, research and advocacy NGOs, that believe in more transparency, more accountability in government healthcare policies including drug pricing policies. It is the civil society component of Medicines Transparency Alliance (MeTA) Philippines.

Among the participants yesterday, from left: Mr. John Morales of Botika-Binhi, me, Angelito Mendoza of Ayos na Gamot sa Abot-kayang Presyo (AGAP), and Roberto "Obet" Pagdanganan, MeTA Philippines Chairman. He is also a former Governor of Bulacan, former DAR Secretary, former PITC Chairman.

Gov. Obet talked about the Thailand model of universal health coverage and why it is working, with about 98 percent of the population covered by health insurance. He said that Thailand's Ministry of Health (MOH) and the Social Health Insurance Office give hospitals and health facilities in the provinces a fixed amount of money, xx Baht per year, to take care of the health needs of everyone in that province. The private and government hospitals and clinics give good quality out-patient services to patients, give them free medicines. The hospitals will earn more if patients are not confined and recover at home.

In the Philippines, the hospitals will earn more if patients are confined as they collect both from the patients and/or their private HMOs, and from the government-run PhilHealth. He believes that there are sufficient money and resources to provide universal healthcare for all without huge extra budget and higher mandatory premium for PhilHealth, if the design is appropriate, like the one in Thailand.

Vanni Villafuerte (left most in this picture), provided some philosophical discussions, like CHAT's "theory of change" and the principle of subsidiarity. He said that civil society organizations like CHAT are different from government (like the Department of Health, PhilHealth, local governments, etc.) and also different from industry (pharma companies, foreign and local; private hospitals, drugstores, HMOs, etc.).

I like his discussion. I added that each group has its vested interests. Government agencies' vested interests are to create more regulations, even more taxation of medicines and health regulatory fees. Innovator pharma companies have interests in intellectual property right (IPR) protection of their new drug inventions while some big generic pharma companies (especially local) have interests in early busting if not confiscation of the IPRs of the innovator companies. Ordinary patients and the public have interests in more healthcare choices, in cheaper, good quality healthcare.

The principle of subsidiary, I added, is actually a radical idea. It says that services and functions that can be done more efficiently by the lower social units should not be given to higher social units. For instance, those that can be done by the barangay or village should not be passed on to the city or municipality; those that can be done better by the cities should not be passed on to the province. And those that can be more efficiently done by the provinces should not be passed on to the national government. The principle of subsidiarity will result in really meaningful political decentralization.

But more than decentralization, subsidiarity principle says that functions that can be done better by individuals and their civil society organizations (like CHAT and its member-NGOs) should not be passed on to government, whether local or national. Thus, extending the principle of subsidiarity will result in smaller government and bigger role for civil society groups, individuals and households.

We do not need government, local or national government, for instance, to remind people that heavy smoking is bad for their health. Even if government will confiscate more money from the pockets of those who work hard and take good care of their body, so that government will have more money to treat those who have lung cancer, throat cancer, tuberculosis and other diseases directly related to heavy smoking, overall health outcome will remain bad or poor.

So the role of civil society groups, for me, goes beyond fiscalizing and watching government against corruption and wastes of taxpayers' money. It's more of reminding people, the ordinary citizens, that many "social services" like good healthcare can be more efficiently done by the individuals themselves, like telling people that over-smoking, over-drinking, over-eating, over-sitting, over-fighting, etc. are not good for their body.
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See also PhilHealth Watch 3: Market failure vs. Government failure in health insurance, October 13, 2010