Health Spending 6: DOH's Proposed 2013 Budget

Government healthcare spending is among the biggest items in the national budget. Such spending is not limited to the budget of the (a) Department of Health (DOH) but also to (b) state universities like the PGH under the UP budget, (c) DND and DILG for the AFP and PNP Hospitals, (d) PCSO, PAGCOR which give away ambulances and provide hospitalization coverage to some poor people, (e) other Departments and national government agencies, (f) local governments with their respective city/district/provincial hospitals, (g) charity groups, corporate foundations, company spending, and so on. See my previous discussion here,  Healthcare Competition 9: Deregulate Further the Supply of Healthcare.

That is why I think the estimated national health spending of around 3.8 percent of GDP is understated. I think that ratio refers only to DOH and other national government spending for health. If we include all the above mentioned offices and institutions' spending, it should easily reach 5 percent or higher.

Anway, I attended the DOH budget presentation at the Senate last September 04. Below are some of the powerpoint slides presented by DOH Secretary Enrique Ona. Thanks to Mercy Fabros of WomanHealth who posted the presentation to our CHAT discussion group.

From P42 billion this year to P53 billion next year or a jump of P11 billion in one year. Percentage wise, the DOH along with the DSWD budget have among the highest, if not the highest, growth rate next year.  The Office of the Secretary (OSec) and the HFEP are the biggest items.

See the huge spike in DOH budget, rising by about P9 billion a year on average from 2010 to 2013. Allocation for sponsored program or subsidies for poor households to become PhilHealth members, is the main explanation for this huge jump. This function should have been done by the local government units (LGUs) but many of them  are not doing their job, so the DOH has re-centralized this function. Healthcare is among the services that were devolved and decentralized from the DOH to the LGUs when the Local Government Code (LGC) of 1991 was enacted. But recently, the move has been towards re-centralization.

Health Spending 4: Global Aid on Health, 1990-2011

The main sources of development assistance for health (DAH) is slowly shifting from official foreign aid (bilateral and multilateral) to international NGOs and public-private partnerships. This is a good development.

I saw a nice interactive treemap from the Institute for Health Metrics and Evaluation (IHME) just recently posted, on the global channel of DAH from 1990 to 2011,
http://www.healthmetricsandevaluation.org/tools/data-visualization/development-assistance-health-channel-assistance-global-1990-2011-interacti#/overview/stories

Of the 22 years covered in that interactive data, I chose four years: 1990, 1997, 2004, 2011 (seven years gap) for the images. Below are data for 1990 and 1997.

In 1990, it seemed that about 90 percent or higher, DAH were channeled via official foreign aid bodies, especially through the World Health Organization (WHO) and the governments of France and the US. Seven years after, the World Bank or IBRD and its attached agency International Development Association (IDA), plus the government of Japan, became more prominent.

By 2004, the NGOs and the Global Fund to fight AIDS, TB and Malaria (GFATM), a public-private sectors partnership, showed prominence while the WB-IDA, WHO and US government remained among the major channels and donors.

Last year, the GFATM, the Bill and Melinda Gates Foundation (BMGF), GAVI (Global Alliance for Vaccines and Immunization), another public-private sector alliance, and other NGOs have become really prominent, channelling around one third of the global DAH. I think a substantial amount of the funding for GFATM and GAVI also came from the BMGF.

The official foreign aid channels still dominate, like the WHO, WB, US and UK governments. But we should recognize that not all of such foreign aid is comprised of actual service delivery to poor patients. A substantial amount of US Agency for International Development (USAID) funding for health for instance, is to finance various studies for public health policies. I think many faculty members and researchers of my alma mater, the UP School of Economics, make big money from USAID to do various research projects on healthcare.

The same with UK foreign aid via the Department for International Development (DFID). One DFID project for instance, is the Medicines Transparency Alliance (MeTA), a big multi-sectoral alliance to advance more transparency and accountability in medicines pricing, procurement, dispensation, and other services. There are MeTA projects in seven countries including the Philippines. The health coalition that I belong where I represent MG Thinkers, CHAT, is the civil society partner of MeTA Philippines.

With the fiscal burden of ever-rising public debt by the governments of the industrialized economies like the US, UK, France and Italy, the share of the official foreign aid I think will slowly but steadily decline. Those governments will be stuck in dealing with huge domestic health concerns with their ageing population and rising spending for interest payment. International NGOs and corporate foundations will slowly take the tab.

Health spending will also slowly move from rich country governments' donation to national governments of the poorer countries, national and local, plus various NGOs, corporate healthcare providers, charity organizations, private health insurance and out of pocket (OOP) spending.

What this means is that global healthcare will slowly move from heavy "government responsibility" to more "personal and civil society responsibility." We will watch future data to see if this hypothesis will hold.
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See also:
Health Spending 1: Wastes in US health spending, June 23, 2011
Health Spendng 2: DOH, Public Health Budget, June 18, 2012
Health Spending 3: Obamacare and Huge Tax Hikes, June 30, 2012

Health Spending 3: Obamacare and Huge Tax Hikes

While I have read before that US President Obama's healthcare reform, aka "Obamacare" is a very expensive program that will require expensive taxes, I did not realize the extent of multiple taxes that are included in the law, until I saw this report from the Americans for Tax Reforms (ATR, atr.org).

I am reposting this ATR report and the shocking tax hikes introduced in the law. Never fails -- ambitious government programs are almost always accompanied by costly taxes and fees, or today's borrowings for taxes tomorrow.
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http://atr.org/full-list-obamacare-tax-hikes-a6996?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+AmericansForTaxReformRssFULL+%28Americans+for+Tax+Reform+FULL+CONTENT+RSS%29

Full List of Obamacare Tax Hikes

Obamacare law contains 20 new or higher taxes on American families and small businesses
Taxpayers are reminded that the President’s healthcare law is one of the largest tax increases in American history.

Obamacare contains 20 new or higher taxes on American families and small businesses.
Arranged by their respective effective dates, below is the total list of all $500 billion-plus in tax hikes (over the next ten years) in Obamacare, where to find them in the bill, and how much your taxes are scheduled to go up as of today:

Taxes that took effect in 2010:

1. Excise Tax on Charitable Hospitals (Min$/immediate): $50,000 per hospital if they fail to meet new "community health assessment needs," "financial assistance," and "billing and collection" rules set by HHS. Bill: PPACA; Page: 1,961-1,971

2. Codification of the “economic substance doctrine” (Tax hike of $4.5 billion). This provision allows the IRS to disallow completely-legal tax deductions and other legal tax-minimizing plans just because the IRS deems that the action lacks “substance” and is merely intended to reduce taxes owed. Bill: Reconciliation Act; Page: 108-113

3. “Black liquor” tax hike (Tax hike of $23.6 billion). This is a tax increase on a type of bio-fuel. Bill: Reconciliation Act; Page: 105

4. Tax on Innovator Drug Companies ($22.2 bil/Jan 2010): $2.3 billion annual tax on the industry imposed relative to share of sales made that year. Bill: PPACA; Page: 1,971-1,980

5. Blue Cross/Blue Shield Tax Hike ($0.4 bil/Jan 2010): The special tax deduction in current law for Blue Cross/Blue Shield companies would only be allowed if 85 percent or more of premium revenues are spent on clinical services. Bill: PPACA; Page: 2,004

6. Tax on Indoor Tanning Services ($2.7 billion/July 1, 2010): New 10 percent excise tax on Americans using indoor tanning salons. Bill: PPACA; Page: 2,397-2,399

Taxes that took effect in 2011:

7. Medicine Cabinet Tax ($5 bil/Jan 2011): Americans no longer able to use health savings account (HSA), flexible spending account (FSA), or health reimbursement (HRA) pre-tax dollars to purchase non-prescription, over-the-counter medicines (except insulin). Bill: PPACA; Page: 1,957-1,959

8. HSA Withdrawal Tax Hike ($1.4 bil/Jan 2011): Increases additional tax on non-medical early withdrawals from an HSA from 10 to 20 percent, disadvantaging them relative to IRAs and other tax-advantaged accounts, which remain at 10 percent. Bill: PPACA; Page: 1,959

Tax that took effect in 2012:

9. Employer Reporting of Insurance on W-2 (Min$/Jan 2012): Preamble to taxing health benefits on individual tax returns. Bill: PPACA; Page: 1,957

Health Spendng 2: DOH, Public Health Budget

After posting Fat-Free Econ 13: P2 Trillion of Election Spending and Taxes in our CHAT googlegroups, there were a few discussions among us.

James Auste of the Cancer Warriors Foundation (CWF) suggested that it is okey to engage in spending splurge, so long as "we are investing in life" by prioritizing public health.

If we go back to Table 2 of the article above, this is the priority spending for 2012 (this year), out of the P1.82 trillion total budget:

1. Interest payment of public debt, P333.1 billion.
2. Local government units (LGUs) IRA, P291.6 B
3. DepEd, P228.9 billion
3. DPWH, P125.5 billion
4. DND, P106.9 billion
5. Personnel benefit (bonuses of gobyerno personnel) P101.5 billion
6. DILG, P96.2 billion
7. DA, P54.1 billion
8. DSWD P49.4 billion
9. DOH, P43.3 billion
10. Government corporations, P43.2 billion

I do not know how much of the P43.3 billion DOH budget is alloted to procurement of medicines. But I notice that many LGUs are spending high for local public health.  The Manila City government alone maintains  6 city-owned hospitals, some are more modern than the UP-PGH, like the Santa Ana Hospital, 10 storeys high, fully air-conditioned.

From http://www.manila.gov.ph/manilahospitals.htm, these are:
Photos below, 1st row: Gat Andres Bonifacio Memorial Medical Center, Justice Abad Santos Mother and Child (General) Hospital.
2nd row: Ospital ng Maynila Medical Center, Ospital ng Tondo II,
3rd row: Ospital ng Sampaloc, Santa Ana Hospital.

Other rich municipalities and cities and almost all provinces, have their respective municipal/city hospitals, provincial hospitals.

Health Spending 1: Wastes in US health spending

The Economist in this June 17th 2011 issue produced this interesting chart.

In 2009 alone, some $600 to $850 billion of unnecessary care, fraudulent claims and other forms of wasteful health spending were made. The accompanying brief explanation of the graph says

A patient may see many skilled specialists, none of whom co-ordinate with one another. Payment systems are unfathomably complex and highly variable. Doctors order duplicative or unnecessary tests... All these problems are due to a simple, structural failing: the more services a hospital provides, the more it is paid.

The Business Pundit's US Healthcare vs. the Rest of the World: Part 2 also made these observations below.

That healthcare providers in the US can charge as much as they can, that the high administration cost contributes to high healthcare costs there.

I am just curious why the chart artist/s say that "The US government is less involved in price regulation..." So they are advocating more "price regulations" of healthcare by the US government? Tough luck, I don't believe that. That's a convenient excuse to justify more government intervention in healthcare and other sectors later on.