Climate stupidity 20: Deep cooling, Vietnam flood

Guys, prepare for even deeper and longer global cooling. Click on these graphs to see their larger images.

Graph on the left, sea surface temperature (SST) anomaly for Nino Region 3.4 of equatorial Pacific Ocean, actual anomaly from 2006-2011. Graph on the right is both actual and projections (black dotted line) for Nino 3.4, from mid-October 2011 to July 2012.

There are two bad news here, especially for the peddlers of "more man-made global warming/climate change" stupidity. One, the current La Nina and global cooling will be longer than the 2007-2008 global cooling was only about 1 1/2 years and it was already bad. The current cooling, started in May 2010, might last through end-2012 (or 2 1/2 years) or even longer. And two, the cooling will be even deeper, up to -3 C drop compared to the average temperature.

Upper graph is SST anomaly in Nino 3.4 from 2000-2011 (12 years). See the up-down-up-down cycle of temperature anomaly in the planet's biggest ocean and biggest receiver of solar energy everyday.

Lower graph is from 1950-2011 (62 years). Source of the above graphs are from WUWT's ENSO page. Check that page, ALL data and graphs, zero discussion or interpretation. Make your own interpretation and conclusions. There are other important reference pages in that website, like sea ice (Arctic and Antarctica), solar energy and geomagnetic field indexes, and so on.

Vietnam, Cambodia, Thailand, other neighbors of the Philippines were not spared of the heavy rains and flooding. Rather scary pictures and news reports about the extent of flooding and casualty in Vietnam last month alone.

I have briefly discussed and showed photos of the recent flooding in the Philippines, Typhoon Nesat ("Pedring") in pictures, September 28, 2011. Check also photos of Thailand flooding, October 2011, October 15, 2011

So it is rather idiotic to hear some warming leaders proclaiming that those heavy flooding are "proof of man-made warming and climate change." Warming will cause less rain and more rain?

The above graphs show that people should expect rising rivers, rising lakes, NOT rising ocean. Notorious climate liars like the WWF and Greenpeace keep fooling the public -- and get more money from them.

Update: Just now, I read an article from the NYT today.

Really? Sure? There are less ice in the Arctic so that ships can soon navigate an "ice free" Arctic?

Climate alarmism in media is among the most notorious peddlers of climate stupidy. The New York Times included. See this satellite picture and graph below.

Satellite picture of the Arctic ice as of two days ago, October 16. Wide ice that covers almost the whole of Greenland, portions of Canada, Alaska, Norway, other places.

And how big is this ice as of this week?

About 4.5 million sq. kms., or about 15x the total land area of the Philippines (0.3 million sq.kms.) or about 8x the size of France (0.64 M sq. kms.) or about 6x that of combined area of Germany and Japan. And the ice will keep growing in the coming months.

Hogwash and garbage in climate stupidity is everywhere. Yeah.
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See also:
Climate stupidity 18: Warming causes more storms and less storms, September 26, 2011,

Climate stupidity 19: More severe typhoons are due to global warming, October 07, 2011

PhilHealth Watch 9: Physicians talk about PHIC

Below is one thread in the facebook wall of a physician friend, Dr. E, a month ago. While he allowed me to post this exchange in his wall in my blog, I did not get the permission of his other friends who contributed to the discourse, whom I think are mostly physicians too. So I just show their first name initial. What is important here are the insights and frank discourse among these young doctors. Here they go.
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E: Dahil sa pangunguripot ng PhilHealth sa doctors on their PFs, lalong nadehado ang kawawang Juan.
Nurse: Doc, may referral po sayo si Dr.___. For surgical consult po.
Doc: Saan ba nakaadmit yan? Kung sa PhilHealth Ward yan, hindi ko tatangapin. Pass muna ako...

(Because of PhilHealth stinginess on the professional fee of physicians, the patients are more disadvantaged.
Nurse: Doc, there’s a referral for you from Dr. ____. For surgical consult.
Doc: Where is the patient admitted? If in PhilHealth Ward, I won’t accept, I’ll pass.)

B: I think it is the greed of doctors kaya nadedehado si Juan.

E: but that's in real life...

M: Di naman sa greed, but with unjust compensation, doctors would opt not to operate lalo na kung difficult cases, the new Philhealth scheme doesnt take into account case difficulty. Di ka na properly compensated, mas malaki pa risk sa license mo, pagod ka pa. I dont think this is in the best interest of the patient. It takes forever for Philhealth to pay the MD and hospital, and only an instant to disqualify patients na may minor delinquencies sa continuity ng payment.

B: The new case-mix payment scheme is designed to contain unnecessary costs in patient management. In a purely fee-for-service scheme, there is much room for abuse. In many cases, doctors would increase their fees so they will get a higher compensation, resulting in high co-payment/out-of-pocket payments from patients who pay the balance. What really is "enough" compensation especially for surgeons? how much is "enough". difficult to say as many vary their fees according to the patient's ability to pay, and the doctors financial "needs" as well. Prices of surgical procedures should be standardized, with a ceiling price. bec such things are easily corrupted by greedy doctors.

Still, Philhealth does not force doctors to accept such patients. The direction now is to implement an "all-or-none" policy. Doctors can either accept ALL philhealth patients or NONE at all. What is "just compensation" how much is this?

B: I agree on one thing M, Philhealth's policy in disqualifying patients in need should be reformed. But in a any shared-risk scheme, patients also have the responsibility to contribute. or perhaps, the LGU should implement its indigent program better. We all have to put our act together to achieve universal health care.

E: If PHIC won't pay, then the patients will pay the doctors. As in the case of one surgeon I know, his PF is 25K for chole. Kung magkano lang ibabayad ng Philhealth, madadagdagan ang out-of-pocket ng patient para mabuo ang 25K. Now, kung mas mababa ang PHIC payments sa doctors, sa patient pa din mapapasa ang burden... And that's what happening. That's based on my observation. Imagine sa cases ng CS deliveries...

B: That is why, I believe it should be ALL or NONE. again this brings me to the question, how much is enough?

E: Like Medicine is considered as a science and an art, there's no definite answer to your question, B. Very subjective ang cost ng healthcare. Difficulty of case, the amount of time the doctor will spend on the patient, the risk of having management failure, etc... Iba ang enough sa neurosurgeons sa enough sa family physician... Iba ang enough sa doctor in Manila sa enough sa doctor sa barrios. Madaming factors.

B: It is difficult, but like any other form of expenditure, it should be standardized somehow. How else can we protect the patients from doctors who overcharge? This is NOT impossible. Our brod, Dr. Pagtakhan, parliament of Canada, implemented such standardization. This is necessary in the standpoint of policy and health financing in a national scale. We can not do long term planning if expected costs vary significantly. also, the inherent knowledge asymmetry of patients and doctors, make this problem even worse

E: With our culture, I think even with that new PHIC policy and standardization, patients pa rin ang sasalo ng burden. PHIC will minimize its expenditures, and patient will shoulder more out-of-pocket payments sa PF. Panalo ang PHIC, panalo ang doctors, yun patient ewan ko...

B: The basic premise of standardization is that, there are cases that are easy and those that are difficult, but such will even out. just like in statistics, if you standardized the variables from a given point estimate, the costs and work evens out.
Agree. Doctors always win in terms of patient care. Sadly, it should be the patient. A Philhealth ALL or NONE policy, i believe should be implemented.

D: Your issues with PhilHealth are valid, and we are working to increase the support value paid by PhilHealth to make it more substantial. The case rate payment for the 23 medical and surgical cases, for a start, is meant for the Sponsored Program members (indigents whose premiums are paid by the national government or local government) to be accompanied by no-balance billing in ward admissions in government hospitals. In the case of private hospitals, they can opt to charge additional out of pocket. I'm aware of the issues of the private hospitals, but we can think of it this way: the case rates is an assurance that they will get something from PhilHealth for serving these poor patients who often give promisory notes in the past. The Secretary of Health has commissioned a study to determine the reasonable and fair PF for doctors (as the PF is very variable, even for the same specialty). We are also working on the supply side (meaning improving government hospitals to prepare them for the increasing number of PhiHealth patients.

K: Unless there is an commensurate increase in the health budget, that will not happen. No matter how many studies are conducted, it will boil down to this government's priorities. And I am not at all hopeful.

D: The 2012 health budget has been increased by 30% to P 44 billion from P 33 billion in 2011. Also, the administration has certified as urgent the bill for restructuring the excise taxes for sin products, which, if passed, will give P 50 billion to DOH and PhilHealth on top of what they are receiving now. True, many more things have to be done. Let's give this administration a little more time.

K: I am waiting. But am not holding my breath. And that increase, while appreciated, is not sufficient. Health still doesn't seem to be the priority, just like the previous administrations.

E: Agree with K.

B: Thank you D for your inputs. Such a study on PF is a very good move. I agree, we should give this administration a chance. Such issues are not solved instantly.

K: We all know it's not done instantly. But if it's not prioritized, it'll never get done. At least not in a manner that would be beneficial to the public.

M: Philhealth sucks period. Good thing most of my procedures and operations are not covered by philhealth. For those covered by Philhealth, i usually dont charge these patients at all, my belief is if they had to invoke Philhealth, baka naman talagang nangangailangan. I admire your optimism B, you have a lot to experience pa, perhaps in time, makukuha mo ibig sabihin namin.

B: Agree with K. It is a challenge especially working with a devolved system. we have to find ways to engage the LGU and the doctors.
To M, yes i have much to experience especially in medical practice. But for you, i also recommend seeing things in a more macro perspective. important to have a grasp on how policies are formed and implemented as well as the intricacies of the different building blocks of the health system vis a vis, working within a democratic framework.

B: Really difficult to implement radical reforms in health. it is not enough that health be prioritized by the national government. it takes time to reconstruct and establish systems. For the first time, we have a president that really does prioritize health. but still, madami ang kalaban at hadlang. i agree with D, we should give such initiatives more time.

Nonoy Oplas: Why not liberalize further the HMO industry? Sickly people should have two health insurance, one govt (PHIC as it is mandatory anyway) and one private so when they get hospitalized, they have 2 sources of payment. HMOs also generally give annual check up, which is preventive. Better that patients would have some idea what will hit them later while they are not yet sick.
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E: TRUE TO LIFE SCENARIO 2:

Dahil sa "new" PhilHealth Policy sa doctors on their PFs, lalong nadehado ang kawawang Juan.
Nurse: Doc, may pedia patient po dito sa ER magpapaadmit daw po. Kayo po kilala ng parents kaya kayo na lang daw po doctor nila.
Doc: Saan iaadmit yan? Gusto ko sa semi-private room at least ha. Hindi ako tumatanggap kung sa wards. Kung sa PhilHealth Ward yan, sa ibang doctor na lang nyo ipasa.. Hindi na naman ako mababayaran nyan kahit panggasolina man lang e.

(Because of “new” PhilHalth policy on PF of doctors, patient Juan is more disadvantaged.
Nurse: Doc, there’s a pedia patient here at the ER, the parents know you so they want you to be their physician.
Doc: Where is the patient admitted? I want in a semi-private room at least. I don’t accept patients in Wards. If in PhilHealth Ward, please refer to other doctors. I won’t be paid even for gasoline.)

J: anlaki ng problema ni dr.,ms importante ang mbyaran kaysa mgserbisyo sa bayan:(

E: Yeah. That's the sad reality here. And hoping Philhealth will compensate for the patients, it does not. Or if it does, not enough for most doctors.

P: the sad thing is, Philhealth wants doctors to be benevolent, to give service, all doctors want is a JUST COMPENSATION not an extravagant COMPENSATION but a JUST COMPENSATION. Kung talagang walang pera ang patient at kailangan niya maadmit, many doctors have waived their PF's in the past. some even shell out (we gov't doctors have done this too often naman), pero kung may means ang pt wala namang lukuhan

Case in point (got this discussion from several hospital OMS meetings), Philhealth pays for cataract operation for ONE EYE, if the operation for the other eye will have to be compensated, the pt will have to wait for 90 days for the other eye. OPHTHA says, that is CRUEL practice because the pt will complain (one eye is clear, the other is blurred), Philhealth answers: di operahan niyo na iyong 2 sir, tulong niyo na lang sa pt.......SEE!

Nonoy Oplas: With those additional PHIC members (5.2 M households ba yon?) to be sponsored by DSWD, DOH, etc., more membership means more disappointment. Ako naranasan ko personally, mag-file lang ng reimbursement, 2-3 hrs ang pila. To pay PHIC, they want instant, up to date payment. To claim from PHIC, they want you towait 2-3 months or more, at a low reimbursement.
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See also, Part 7: Deregulate PhilSick, October 9, 2011, and
Part 8: Alternatives to PhilSick Monopoly, October 13, 2011

Thailand flooding, October 2011

The recent flooding in many areas of Thailand, also in Cambodia and Vietnam, was too wide. I myself was surprised by the extent of flooding.

All photos here are from Denverpost.com, http://photos.denverpost.com/mediacenter/2011/10/photos-flooding-in-thailand-has-killed-at-least-224-people/#26

Water everywhere.

Many Buddhist temples were simply inundated with brown and muddy water.

Rescuers and the rescued, people and dogs...

Being submerged is almost similar to your house and other properties being burned.

I am not sure how often Thailand would get this big amount of rainfall, but their experience was similar to Philippine experience during typhoons Ketsana (local name "Ondoy") and Parma (local name "Pepeng") two years ago.

Evacuating houses and factories.

A car manufacturing plant with hundreds of newly-manufactured cars ready for shipment become useless.

Here is one bad news. From the most recent Ensemble forecast of Pacific Ocean's Nino region 3.4, the current La Nina will stay much longer. Projected temperature anomaly by around April 2012 will be almost 3 C colder than normal.

And is projected to stay beyond 2012, until 2013?

In more and more places and countries, nature is becoming more insistent in saying that she has no fever; that tis s not global warming but global cooling.

EFN Asia 9: Panels on Education, Health, Transpo and Telecomm

On the afternoon session of Day 1 during the recent EFN Asia Conference this week, the topic was "Competition in Public Service Delivery".

This session was moderated by Wan Saiful Wan Jan, CEO of IDEAS-Malaysia. The speakers and their main messages were as follows:

1. Part Shah, Center for Civil Society-India, Education. Fund students, not schools. Education voucher system will enable students and their parents/guardians choose from many competing schools who can provide better quality education. Diversity and competition can respond to varying needs of students, encourage excellence, whereas centralized government education system offers uniformity and less competitive environment.

2. Dr. Steven Chow, FPMPA-Malaysia, Healthcare. Healthcare has two aspects, business and social. As business, HC is a commodity given to those who need it; as social, to comfort the sick, never to harm. There is high information asymmetry in healthcare, the HC provider knows better than the patient, so free market cannot be relied on. Government must come in to correct market failure. But there are advantages to competition, which is a good business model. Some aspects of HC can be done via competition, others not.

3. Saumura Tioulong, Sam Ramsay Party - Cambodia, Transport. Airline privatization and competition in Europe where she used to be based resulted in better services, planes arrived on time, less strikes. Cambodia to Malaysia, there are two choices, Air Asia or Malaysian Airline. But Cambodia to Vietnam is monopoly, high price. Free competition does not mean being wild, players have to adhere to rules and regulations. State-owned enterprises and monopolies in Cambodia were turned over to private monopolies, not good.

4. Shaifubahrim Mohd Saleh, PIKOM-Malaysia, Telecomm. 17 sectors to be liberalized by 2012 by the Malaysian government. More players to come in, more outsourcing, more competition. Cost of broadband still very high, up to 20x than other countries; local R&D on-going. Telecomm industry needs further liberalization.

I support Parth's advocacy for school choice. Personally I would like to see all schools should be private, government can provide voucher or fixed amount of money per student per year, at least in the elementary and secondary levels. Parents who want to bring their kids to more expensive schools will have to pay extra. Education is mainly parental/guardian responsibility, not government's.

Healthcare is another aspect where personal and parental responsibility is more paramount than government's. While it is true that there is high information asymmetry between patients and doctors/hospitals, patients and individuals are also the ones who manage their own body, not doctors or hospitals or government. People should realize that if they smoke a lot, or drink a lot, or eat a lot, there will be adverse result in their body whether in the short or long-term.

After the Q%A for this panel, there was a "World Cafe" where participants would move from one table to another, one table represents one topic or sector. Four tables to tackle four topics: education, healthcare, transportation and telecommunication, four sectors that are previously known to be bailiwick of "government provision."

Participants would discuss and answer for themselves, "Should government be the main service provider of _____ sector, or just referee of competition among players?" I was one of the eight table hosts (two hosts and two tables for each sector in order to reduce the participants/moderator ratio). I chose to moderate the discussion on healthcare.

There were four batches of participants then that will come to my table. In order to make my work simpler, I asked them at the onset, "Anyone here who thinks that government should be the main provider of healthcare?", then "Anyone here who thinks that government should totally step back in healthcare and just be a referee to competition among HC providers?"

The result was rather clear. None of the participants from the four batches said Yes to any of the two questions that I asked. Most if not all of them wanted a combined function for both government and market players in healthcare. In particular, they want competition to be left alone in urban and richer areas where they are plenty of healthcare providers and thus, people will have many choices. But they want the government to provide HC in rural and poor areas where private hospitals, clinics, physicians, other HC providers are either few or zero.

Another proposal was that for infectious and communicable diseases, government should be the main provider of HC, like giving people vaccines and flu shots, getting ride of mosquitoes in wide areas, also for diseases of children. But for non-infectious or non-communicable diseases, competition among HC providers should be encouraged.

Many of the participants shared that in their respective countries -- China, India, Malaysia, Thailand, etc. -- the poor usually go to government hospitals and health centers, but the lines are long and facilities are often not adequate.

Parth sat on my table and suggested that one option is for the government to give a conditional cash transfer (CCT) type of direct assistance to the poor: X amount as education voucher, Y amount as healthcare voucher, Z amount as transportation subsidy, and so on. Expanding the voucher system to other sectors and services.

We table hosts of the World Cafe then reported to the plenary the summary of the discussions in our tables. After the summary, many of us went to another room to finalize the Conference Resolution. We discussed and debated the draft paper for nearly two hours and we ended up with this brief but straightforward paper.
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RESOLUTION

Economic Freedom Network Conference 2011

Preamble

Competition is an essential engine for prosperity. To prosper, all nations should encourage and nurture competition. Competition encourages innovation and creativity.

It motivates producers to make the best offers to consumers, therefore creating lower prices, higher quality products and better services.

The Role of Government

The primary role of the government is to enforce the rule of law, provide impartial judiciary, protect property rights and individual freedom.

Competition is the best regulator; therefore, the government should foster competition rather than restrict it.

Competition in Public Service Delivery

The people will benefit more if the government does not monopolize the delivery of public services.

Competition can be introduced and fostered in the major public services such as education, healthcare, transport, communications, and utilities by diversifying the providers through various form of private participation.

Competition, Economic Freedom and Prosperity

Free market economy is necessary for progress. Empirical evidence shows that open economies are more prosperous.

Competition is a key element in a free market economy.
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See also:

EFN Asia 5: MG Thinkers Now with EFN, October 19, 2010

EFN-Asia 6: Conference in Kuala Lumpur, Oct 10-12, October 09, 2011

EFN Asia 7: Conf, Dinner at German Ambassador, KL, October 11, 2011

EFN Asia 8: KL Conference, Day 1, October 12, 2011

Lifestyle Diseases 6: Personal Care against NCDs

One of my friends in facebook, Dr. Erwin Abueva, has been posting a HEALTH INFO series in his wall. I find them useful, tips for personal care against certain diseases, infectious and non-infectious alike. But since most diseases afflicting the people now are lifestyle-related or the non-communicable diseases (NCDs), these tips apply more to NCDs prevention.

* NSAID means non-steroidal anti-inflammatory drug

HEALTH INFO 1: Not all dengue fever patients should be admitted in the hospital. But hydration of patients with intravenous fluids is important in the management of dengue fever.

2. Not all patients who had head trauma require to undergo cranial CT scan. Some of the important considerations in deciding whether to have it done or not are (1) loss of consciousness, (2) vomiting episodes, (3) decrease in sensorium, (4) persistent headache and dizziness, (5) incoherence, (6) blood or clear fluids dripping from nose or ears, (7) convulsions...

3. NSAIDs should not be used for pains associated with Dengue, as these pain relievers may decrease further the ability of the blood to clot.

4. The most common type of headache is related to stress or tension headache. The second most common is migraine headache. Headache secondary to brain tumors is rare. So before thinking of Cranial CT scan, ask yourself many times if it is really necessary...

5. Antibiotics have no role in the management of flu or "trangkaso". Paracetamol for fever and pains, decongestants for clogged nose, and plenty of fluids will be ok for you...

6. If you're a known hypertensive, avoid not only fatty foods but also the salty ones.

7. If you're hypertensive and a cigarette smoker, you have 5x more risk of succumbing to stroke than your friends who are also smokers but with normal BP.

8. If you're blood type is "O" and your wife's blood type is "B", your child's blood type must be either "O" or "B". If its "A", that child is not your offspring (napaltan sa ospital) or that child's father is not you (napindeho ka)!

9. One NSAID advertisement has its tagline "relieves ALL kinds of pain". It is not true and is MISLEADING! For NSAIDs (mefenamic acid, naproxen, ibuprofen, --coxibs, aspirin, meloxicam, diclofenac, etc.) are not used for abdominal pains in general. Instead of relieving, it will worsen the stomach ache and may cause gastritis and GI ulcers.

10. We all have tonsils normally. If your tonsils got inflammed, mostly due to infection, you're likely to experience sorethroat, pain upon swallowing, and usually fever. That is TONSILLITIS. So if you have sorethroat, better say "May tonsillitis yata ako", NOT "may tonsils yata ako"!

11. Inadequate calcium in the body can lead to osteoporosis. So intake of calcium-rich foods such as milk, sardines, cheese, yogurt, soybeans and its products is encouraged. But remember to also have Vitamin D rich diet (egg yolks, saltwater fishes, liver, milk) since calcium is poorly absorbed by our body if without enough Vitamin D.

12. As per guidelines, if you are bitten by a dog or cat, have yourself injected with anti-rabies vaccines immediately. Even if you know that those animals had been vaccinated against rabies, you should still go to a physician for proper advice and management. And DON'T forget to ask for anti-tetanus shots also!

13. No need to have antirabies vaccination if you're bitten by a rat. Only anti-tetanus and antibiotics for your protection.

14. There are many causes of hypertension. It may be due to stress, pain, fatty and high cholesterol diet, kidney disease, other metabolic problems, and many more. But the most common type of hypertension, affecting about more than 90% of hypertensive individuals, has no known clear cause. It tends to be familial and hereditary. That is also called "ESSENTIAL HYPERTENSION". So don't wonder much if your BP is still high even if you're practicing right diet and exercises. Maybe what you have is the "essential" type.

* Hindi mo kasalanan na mahirap ka. Ang kasalanan mo e tamad ka.
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A related note I wrote nearly two years ago:

Health is a Right, Health is Personal Responsibility

(This is my article for "Brigada News", a Pasay city-based tabloid, last February 19, 2010)

The concept of “Health is a basic human right” is popularly supported by many people. Both for its emotional appeal and for some international agreements, like the International Covenant on Economic, Social and Cultural Rights.

A sub-set or sub-topic then are the formulations, “Access to medicines is a basic right”, “Access to hospitals and healthcare is a basic right”, and so on.

Thus, others would extend them further and say, “Education is a basic human right”, “Decent housing is a basic human right”, “Cheap and abundant food is a basic human right”, and so on.

The term “right” implies and connotes entitlement. That is, regardless of the circumstances why one person or household or community has/have become sickly, they should be entitled to decent healthcare to be provided at a low cost if not free by the government, local or national.

This can be a big source of public debate between those who demand entitlement and those who question it. For the latter, for every “right” there is a concomitant “responsibility.” Thus, while people can demand that health care is their basic right, they are also expected to assume certain responsibilities about their bodies and their lifestyles

I personally believe that healthcare is first and foremost, a personal and parental responsibility. People should not over-drink, over-smoke, over-eat, over-fight, over-sit in sedentary lifestyle. People should not live in dirty places and should observe basic personal hygiene like washing hands carefully before eating.

Health inequity results not just because of income and social inequity, but also because of people’s unequal inputs in taking care of their body. A person may be poor but if he does not over-drink and over-smoke and observe personal hygiene in his daily life, he will have a better health outcome than a rich person who over-drinks, over-smokes, over-eats and over-sits. The former, even without a private health insurance, all other things being equal, will less likely develop lifestyle-related diseases like hypertension, high cholesterol and obesity.

These topics are timely as the drug price control policy of the government is now more than six months old, and there is no formal assessment made by the Department of Health yet, on whether it has achieved its goal or not – to make essential but deemed expensive medicines become more affordable to the poor.

In the absence of such formal study and assessment by the DOH, some sectors and industry players – drugstore operators, pharma companies, some NGO leaders – have already produced their own findings: the answer is No. The policy, supposed to help the poor, did not benefit the poor.

The main reason is that there was a relatively healthy competition among pharma companies in the country already, among innovator companies and among generic producers. So while the rich and middle class were looking at a branded amlodipine, for instance, at P44 per tablet, there were cheap amlodipine generics already, sold as low as P8 per tablet. When price control was imposed, the P44 became P22. But the poor did not buy the P22 a tablet, because it is still high compared to what they are buying at P8 a tablet. So the poor did not benefit, the rich and middle class did.

Instead of forcing private companies to give the discounts, the government should force itself to procure essential medicines at no-corruption price and dispense these for free to the really poor, especially children of poor households who have been exposed to dirty environment for several years, who now have weaker lungs and other internal organs. This is where government can possibly put its limited resources – giving essential medicines for free to these patients.

The best form of healthcare is preventive, not curative. People should not abuse their body simply because alcohol, tobacco and fatty foods are more available and more affordable compared to several decades ago. But should they abuse their body, then they should suffer some consequences later.

Meanwhile, the damage to the country’s investment environment as a result of no-time table drug price control policy should be big by now. Many revolutionary drugs, new disease-killer drugs that are available in other countries around the world, may no longer be introduced and sold in the Philippines. The most adversely affected then will be the poor and some middle class patients. The rich, the politicians and government administrators who pushed the price confiscation policy, will have the means and network to buy such drugs from abroad.

That is one example of the “law of unintended consequences.”
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See also
Part 5: NCDs Global Picture, September 30, 2011, and
Part 4: The UN on NCDs, September 25, 2011.

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.

EFN Asia 8: KL Conference, Day 1

This is my article in thelobbyist.biz this morning. It actually covers only the morning session of Day 1 yesterday, I still have to write the afternoon session and post some photos. And now, the conference has unofficially ended, we are still going to the farewell reception in an hour, for the formal closing of the activity. This is an excellent conference, thanks to FNF.
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http://www.thelobbyist.biz/perspectives/less-gorvernment/1195-competition-and-prosperity

Competition and Prosperity

WEDNESDAY, 12 OCTOBER 2011 05:33

WRITTEN BY NONOY OPLAS

Tags: Less Government

Kuala Lumpur -- Competition is the best regulator of business and market players, not government. The more players who compete with each other in producing similar goods and services, the more that they will be forced to provide good quality products at competitive and more affordable prices.

This is the main theme of the 12th Economic Freedom Network (EFN) Asia Conference here in the capital city of Malaysia. Today is the 2nd and last day of the two-days conference with the theme, “Competition, Engine for Prosperity”. The event is sponsored by the Friedrich Naumann Foundation for Liberty (FNF), co-sponsored by two free market-oriented local think tanks, the Institute for Democracy and Economic Affairs (IDEAS) and the Center for Public Policy Studies (CPPS). There was a welcome dinner two nights ago before the start of the conference, hosted by the German Ambassador to Malaysia, Dr. Gunter Guber. I posted photos and stories about it here.

The conference is attended  by more than a hundred participants from many Asian countries especially from China, India, Malaysia, Singapore and Thailand who work in independent, if not free market-oriented think tanks, research institutes and NGOs. Country Directors and regional staff of FNF in Asian countries are also here. Unlike the previous years of the annual EFN Asia conference, only a few of us from the Philippines came here.

Day 1 of the conference yesterday was composed of the opening speeches by FNF Regional Director for Southeast and East Asia, Dr. Rainer Adam, then the head of ASLI, Dr. Michael Yeoh, and the keynote speech of DBM Secretary and top Liberal Party official, Sec. Butch Abad.

The three men expounded the advantages of competition over more government regulations, and the importance of transparency and accountability over secrecy and high bureaucracy. But Sec. Abad, being a high government official in the Philippines, gave more importance to certain government regulations to attain redistribution in society, to protect the marginalized sectors.

The free market system admittedly, will retain if not heighten inequality in society. But this is the natural result since some people are very efficient and very hard working and highly ambitious, while some have little or no ambition in life, who only want to party and drink each day whenever possible. When government intervenes hard to force or pretend to attain social equality, such intervention will naturally result in subsidizing the lazy and irresponsible, while penalizing and over-taxing the efficient and industrious guys.

Anyway, after the opening speeches, the morning session was very interesting. Five speakers from five different countries spoke on just one topic: “What Should be the Role of Government?” The speakers were (a) Prof. Jurgen Morlok, the Chairman of the Board of Trustees of FNF; (b) Battsetseg Shagdar from EBI think tank, Mongolia; (c) Dr. Arianto Patunru from LPEM, Indonesia; (d) Prof. Sheng Hong of Unirule Institute, China, and (e) Barun Mitra of Liberty Institute, India.

My assignment in participating in this EFN Asia Conference was to be a host or moderator in two discussions, including this one. I was lucky to take that role as I thought that ALL the five speakers mentioned really made excellent presentations yesterday.

Jurgen Morlok talked about promulgating the rule of law as the main function of government; to set the rules of the game, to be a referee of competing players, no more, no less. I think this is a bulls-eye statement which I totally agree with.

Baagi Shagdar talked about the pathways of Mongolian society from authoritarianism to democracy the pains and hurdles along the road, and the need for more citizen information and participation in governance.

Aco Patunru opened his presentation with important quotes from (a) Murray Rothbard (government should ensure that rules are equally applied to players, leave the market as competition will regulate the market itself); (b) Ronald Coase (government role is limited to enforce property rights); and  (c)Friedrich Hayek (government should ensure that competition goes on, set the rules and regulations for competition to prosper).

Sheng Hong discussed the recent Unirule research paper, “The Nature Performance and the Reform of State-Owned Enterprises (SOEs) in China. There are many surprising results, well at least for me, from that study. Like SOEs’ average profit from 2001-2009 was 8.1 percent vs. private enterprises’ 12.9 percent. But SOEs enjoy certain privileges that are not available to private companies, like low interest rate, low or zero rental fee, fiscal subsi and royalties. If these perks are removed, the average return on equity of SOEs from 2001-2009 goes down to -6.3 percent, a net loss.

Barun Mitra opened his presentation with a quote from Ayn Rand, “Civilization is the progress towards a society of privacy…” Then he discussed how India benefited from liberalization and competition in various sectors: automobile and land transporation, airline, telecommunication, etc., and the declining role and authority of public sector units (PSUs).

FNF has this good discussion set up that maximizes audience interaction with all speakers which I have not seen in any big forum in Manila. After the presentation by the five speakers in the ballroom, there was no Q&A. Instead, participants were divided into five separate meeting rooms, and the five speakers will be moving into those five rooms to answer questions for 15 minutes. Since I personally know three of the five speakers (Barun since 2004, Aco since 2005, Baagi since 2008), as well as some of the participants, it was relatively easy for me to facilitate the small group Q&A.

If there were no instant questions from the audience as soon as the speaker has entered the room, I have to ask the first question; if the speaker has already left after consuming the 15-18 (max) minutes allotted and the next speaker has not come yet, I asked the participants to continue the exchanges among themselves, to ensure there are no dull or idle moments. These were learning moments for me too as discussion host.

Today’s session will feature the official release of The Economic Freedom of the World (EFW) Report 2011, an annual study done by the Fraser Institute in Canada, then a talk from the Office of the Prime Minister of Malaysia, then a panel discussion on Competition Policy and Environment, a luncheon talk.

I am thankful to the FNF for giving me a travel grant to attend this conference, for giving me the opportunity to be one of the discussion hosts in two activities yesterday (morning and afternoon).

Competition is not a goal in itself. It is a means to a goal – to expand economic freedom and individual liberty. Even if the 2nd day of the conference is still not over (I wrote and submitted this article before breakfast), I can positively say that the conference is really educational and highly successful.
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See also:
EFN Asia 4: Migration and Freedom, Jakarta Conference, October 09, 2010

EFN Asia 5: MG Thinkers Now with EFN, October 19, 2010

EFN-Asia 6: Conference in Kuala Lumpur, Oct 10-12, October 09, 2011

EFN Asia 7: Conf, Dinner at German Ambassador, KL, October 11, 2011

EFN Asia 7: Conf, Dinner at German Ambassador, KL

Here at the Royal Chulan Hotel, Kuala Lumpur, the venue of the 12th Economic Freedom Network (EFN) Asia Conference sponsored by the Friedrich Naumann Foundation for Liberty (FNF), a German liberal political foundation. 

Last night, the German Ambassador to Malaysia, Dr. Gunter Guber, hosted a dinner for the participants of the 12th EFN Asia Conference. His residence is not far from our hotel. German time, we were in his place at 6pm sharp, and he personally greeted at the door all arriving participants.

There were lots of German beer (I like the most that one from Munchen), soda, and wine for the initial cocktails. Then the formal program. A program with no microphone, the host himself, the Ambassador (speaking in the pictures) is also the MC, cool.

Many officials of FNF South and East Asia (India, Pakistan, Indonesia, Malaysia, Philippines, Thailand, etc.) were there.

My digicam suffered a low bat, and the photos were blurred, agh! Anyway in these photos, top, with Barun Mitra of Liberty Institute, and Fred McMahon of Fraser Institute, Camada, which conducts the Economic Freedom of the World (EFW) Annual Reports.

Below, with Siggi Herzog, former FNF Philippines country director, now regional director for South Asia, and Mr. You of the Japanese for Tax Reforms. I miss his buddy, Hiroshi.


Below, with Asian friends: Fu Weigang from Shanghai, Peter Wong from Lion Rock Institute-HK, Bibek Debroy from India, Wan Saiful Wan Jan from Malaysia, others.

From top left clockwise: Rainer Adam (center), FNF regional director for south east Asia, Siggi Herzog (center), Wan Saiful (right), and Jules Maaten (left).

My digicam's battery finally went kaput later in the night. I shall wait for photos from other friends.

Oopss, my photo with good friends in SEAsia -- Luthfi Assyukane of Freedom Institute, Indonesia, Wan Saiful, Muhammad Thamrin of FNF Indonesia.

Today, the 2-days conference will start. I will be one of the hosts for the discussions both in the morning and afternoon sessions. But at least I'm not going to present a prepared paper :-).
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Meanwhile, I am posting here my article in the lobbyist.biz last June 17 this year as this is related to my posting yesterday. This piece is particularly applicable to the Philippine government. I think many governments did not put the restrictions on foreign investments in their constitution. They usually do it via legislation, which is easier to revise or abrogate, than via Constitutional change.

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 http://www.thelobbyist.biz/perspectives/less-gorvernment/967-when-government-creates-monopolies

When Government Creates Monopolies

FRIDAY, 17 JUNE 2011 02:10

WRITTEN BY NONOY OPLAS

Tags: Less Government

Government is the main creator of monopolies in the economy, via the Constitution, legislative franchising, Executive regulations and local government laws and regulations.

Here are examples of monopolies and oligopolies created by the government. 

1. The Constitution

On profession monopoly, it says, “The practice of all professions in the Philippines shall be limited to Filipino citizens, save in cases prescribed by law.” Filipino nurses, doctors, engineers, accountants, etc. can practice their profession in America, Europe and many other countries, but foreign doctors, nurses, accountants, etc. cannot practice here without some legal machinations.

For many sectors and industries, foreign ownership is limited to a maximum of 40 percent equity. So even if foreign capital and technology are the only viable players to expand competition, they are limited or not allowed to come in. The Constitution is also explicit in declaring, “Congress shall enact measures that will encourage the formation and operation of enterprises whose capital is wholly owned by Filipinos.”

2. Legislative franchising

Many public utilities have to get a legislative franchise, a law granting a franchise or sole provider of certain services for certain areas. Electricity providers, telecom companies, etc. have to get a legislative franchise. Given the horse trading culture in Congress, it is not far out that the bigger the franchise and monopoly power given to a private corporation, the bigger the risk that corruption and/extortion can take place.

3. Executive regulations

The Department of Transportation and Communications (DoTC) is among the biggest agencies to have huge power to approve or disapprove new players. In airlines through the Civil Aeronautics Board (CAB), in shipping lines through the Maritime Industry Authority (MARINA), and in bus and taxi lines through the Land Transportation Franchising Regulatory Board (LTFRB).

While there may be five local airlines (PAL, PAL Express, Cebu Pacific, Zest Air, SEA Air), not all of them compete on all routes. Thus, for some destinations, there may be only one or two airline/s covering the area. In inter-island shipping like RORO (roll on, roll off), there are certain areas that are monopolized by a particular shipping company. The same with buses. There are dozens of provincial bus companies from Luzon to Mindanao, but in certain destinations, there is/are only one or two bus companies that cover the route.

Jeepney monopoly of certain routes is another example. Take the Ayala route. Bus passengers coming from the south (Parañaque, Las Piñas, Laguna, etc.) and going to Ayala have only one cheap transportation option, the jeepneys plying the Ayala-Washington route. Some of the ugliest and dilapidated jeepneys in the country are in Ayala Avenue, the premier financial center of the country. 
The jeepney operators have no incentive to improve their units since ordinary passengers have no choice anyway.

4. Local governments

Granting of franchise for tricycles belong to the city or municipal governments, not the LTFRB. Once tricycles dominate the route, the drivers and operators do not want the jeepneys or air-con vans to enter their turf. Ordinary passengers have to endure the discomfort and congestion inside a small tricycle as there are no alternatives except to take the taxi.

There are other legislative and executive agencies’ regulations that tend to limit competition in the economy.

Now, the President has issued a new Executive Order (EO) to control anti-competition and break monopolies and cartels. See this news report in Business Mirror, Aquino issues antimonopoly, anticartel EO. The report states:

President Aquino has designated the Department of Justice (DOJ) as the “Competition Authority” in charge of cases involving competition issues to help deter and break up monopolies and cartels in the country to ensure a level playing field.

In issuing Executive Order (EO) 45, dated June 9, 2011, the President said, “There is a need to promote competition and level the playing field in the market.”

The DOJ as the Competition Authority will investigate cases involving violations of competition laws and the prosecution of violators “to prevent, restrain and punish monopolization, cartels and combinations in restraint of trade.”

If the barrier to the entry of more competition is the Constitution or the Legislative franchising, what can the DoJ do? Lobby for early charter change?

A good example of an industry duopoly is the telecommunications sector. Before it was an oligopoly (Smart, Globe and Sun) but after the Smart takeover of Sun Cellular early this year, it has become a duopoly, and it is not good for the Filipinos.

The main barrier to foreign entry in the local telecom industry is the Constitution. Since foreign equity in public utilities like telecom is limited to 40 percent, interested foreign players will have a hard time looking for that local business group that can provide the 60 percent equity ownership, considering the huge capitalization required.

Another disadvantage of this set up is that the DOJ is given additional work which is far from its original mandate of protecting the citizens’ right to life, right to private property. By expecting the DoJ to do more business regulations function, its time and resources to promote property rights and promulgate the rule of law will be reduced and limited.

The only positive effect of this proposal perhaps is that the creation of another bureaucracy, the Fair Trade Commission (FTC), will become less likely.

Observing and asserting “anti-competitive, anti-cartel” behavior of a firm is tricky and subject to arbitrary political intervention and harassment.

When your price is lower than that of your competitors, you can be accused of predatory pricing. When your price is the same as your competitors, you can be accused of  price cartelization. And when your price is higher than your competitors, you can be accused of price gouging. 
Whichever pricing you take, the government can invoke “anti-competition practice” if it wants to.

The President should not proceed with its new EO, nor should it push through the creation of an FTC. Government should reduce and simplify the rules and requirements for business, reduce the taxes too. This way, more companies will come in resulting in more competition in more sectors and sub-sectors of the economy.

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See also:

EFN Asia 3: Conference in Jakarta, October 06, 2010
EFN Asia 4: Migration and Freedom, Jakarta Conference, October 09, 2010
EFN Asia 5: MG Thinkers Now with EFN, October 19, 2010

EFN-Asia 6: Conference in Kuala Lumpur, Oct 10-12, October 09, 2011