Health expenses continue to grow every year. It is estimated that this expense will grow at an average of 8 percent year-on-year. As of 2017, total health expenditure in the Philippines was estimated at P684 billion with P373 billion of it covered through out-of-pocket, meaning uninsured. It is projected that by 2020, the Philippines will be Southeast Asia’s second-largest pharmaceutical market with revenues estimated at $10.8 billion. In terms of specific illnesses, the treatment costs continue to grow. As of 2018, the cost for cancer treatment could total P5.66 million; for stroke, the cost could be P2.93 million; and for myocardial infarction, it could be P1.92 million.
Of the 2017 total health expenditure, 20 percent of it was covered by the national and local government, 17 percent was covered by social health insurance agencies (mainly the Philippine Health Insurance Corp. [PhilHealth] and to a much smaller extent the Employees Compensation Commission), 5 percent was covered by Health Maintenance Organizations (HMOs), 2 percent by private health insurance, 2 percent by others, and an astounding and shocking bulk of 56.3 percent shouldered by the patients themselves or as out-of-pocket expenditures.In comparison, Indonesia has 47 percent, Thailand has 12 percent and Vietnam has 37 percent OOP expenses.The impact of both social health insurance, as well as private health insurance on Filipino households is thus minimal.
Out-of-pocket expenses
The bulk of
health expenditure is covered by the patient himself as out-of-pocket expenses.This reliance on out-of-pocket expenditures pushes Filipino households into
poverty.It has been estimated that every year, 1.5 million families are
pushed to poverty because of health-care expenditures.It was found that
in 2012, half of out-of-pocket spending went to medical products (drugs and
medicines), of which almost two-thirds went to pharmaceutical products and
almost three-tenths went to supplements. This high level of OOP expenses though
can be reduced by increasing the share of social health insurance. Countries
with successful health financing strategies have lower levels of OOP, to as low
as 15 percent to 30 percent. High levels of OOP is seen as regressive as
families are forced to skimp on education and other important spending. Indeed,
a catastrophic health expenditure can be tragic for a family. P4,000 per month
in health-care expenses is considered as catastrophic for single income
families. It has been observed that “poor households with chronic sick members
are most vulnerable to catastrophic health expenditure.”
Industry players
Health insurance is generally provided by only three players: a) the PhilHealth together with the national and local governments through subsidies, as the sole public health insurance provider, b) HMOs, and c) the life and general insurance companies providing private health care insurance.
HMOs
HMOs provide members with access to their network of health-care providers, such as doctors, dentists, hospitals, and clinics, through prepaid health products for a monthly, quarterly, semiannual or annual fee. HMO plans have typically a one-year coverage, renewable every year, with a maximum benefit limit (MBL).
The HMOs cover around 4 million Filipinos as members, around 90 percent of them as members in corporate plans. The bulk of HMO business is in corporate or group plans. This means that only those gainfully employed are covered and on a voluntary basis. It is characterized as “cashless,” meaning payments are made directly to the hospitals and doctors.
Nonetheless, HMO coverage is very limited in amount with an average cover of P150,000 MBL. Indeed, it is not at all sufficient to cover the expense of a regular treatment for major conditions such as, say, a stroke, which will cost around P1.8 million, an acute heart attack at P978,000, a breast cancer at P430,000 and a lung cancer at P2.7 million. Having an HMO is, thus, seen as not being enough. To illustrate, the treatment for a kidney dialysis could cost around P1,000,000 (as of 2018). The PhilHealth limit would be at P10,000 while an HMO limit could be at P200,000. Thus, leaving a shortfall of around P800,000.
Public health-care insurance
Republic Act 7875, otherwise known as “The National Health Insurance Act of 1995,” created the PhilHealth to implement the National Health Insurance Program of the Philippines. PhilHealth, a government-owned and -controlled corporation was created on February 5, 1995, to implement universal health coverage. Universal coverage means all Filipinos will be covered for almost every conceivable medical procedure. PhilHealth subsidizes a variety of treatments, including inpatient care and nonemergency surgeries, although it does not cover all medical treatments and costs.
Premium contributions are shared by the employee and the employer, the amount of which is determined using a table of contributions. Contributions are also derived from the government. After deducting half of the premium requirement from the employees’ monthly salary, total premiums are remitted by the employer to PhilHealth. PhilHealth membership increased from over 22.4 million in 2010 to almost 40.6 million in 2015. Lifetime members and senior citizens combined have the second highest coverage rate at 75 percent. This is mainly due to the mandatory coverage of senior citizens starting in 2014.
With a population of 105 million, as of 2017, PhilHealth boasts of a 92 percent coverage. In 2013, 69 percent of PhilHealth funding came from the premium payments of its members, while 31 percent came from premiums paid by sponsored program members. Contributions in 2013 totaled P55 billion. PhilHealth basically purchases medical services from various health providers and pharmacists, and pays for these according to an agreed upon provider payment systems.
No balance billing policy
IN 2010, PhilHealth introduced the No Balance Billing Policy through PhilHealth Board Resolution 1441, Series of 2010, for the most common medical and surgical conditions in the country. PhilHealth issued Circular 011-2011 on August 5, 2011.The NBB policy meant “that no other fees or expenses shall be charged or paid for by the patient-member above and beyond the packaged rates.”
This means that PhilHealth “covers a fixed amount per case and all charges in excess of that amount are to be shouldered by the member or private health insurance, if available.” Consequently, if one has HMO or health insurance coverage, its coverage will only be that in excess of PhilHealth limits. The goal is to ensure zero out-of-pocket payments. In effect, it makes medical treatment entirely free for the beneficiaries.
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Dennis B. Funa is the current insurance commissioner. Funa was appointed by President Duterte as the new insurance commissioner in December 2016. E-mail: dennisfuna@yahoo.com.