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How We Might Spend Our Way to Better Health

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Title: How We Might Spend Our Way to Better Health


1
How We Might Spend Our Way to Better Health
  • National Conference on Health
  • Mario Taguiwalo
  • April 29, 2008

2
Micro Views to Health Financing
  • Patient how to pay for costs of care I need?
  • Provider how to get paid for costs of care I
    provide?
  • Public health manager how to get funding for
    interventions I know are required?
  • How these health financing questions are answered
    determine health status of individuals and
    communities

3
How financing improves health
  • Individuals and communities can improve their
    health with right use of right goods and services
    at right time (quality care is desired real
    outcome of provider-beneficiary interaction)
  • Health financing helps individuals and
    communities improve their health by paying right
    cost of capacity and providing right goods and
    services used right at right time (money outcome
    of interaction satisfies both provider and
    beneficiary evidence of health benefit generated)

4
Two sides of financing
  • Sources how financing for health is raised,
    where it comes from (government, employers,
    insurance, households)
  • Uses how financing for health is used, where
    money goes (hospitals, drugs, professional fees,
    administration)
  • Dedicated funds DOH and PHIC
  • General funds GAA, LGU, employer, households

5
Source and use often go together
  • Capital equity, grant or loan for service
    capacity (e.g. government hospital, private
    hospital, private education and training of
    provider)
  • Operating budget subsidy (e.g. government budget
    for administration/public providers)
  • Out-of-pocket payments (e.g. household payment
    for drugs, hospital care, professional fees)
  • Health benefit payments (e.g. reimbursement for
    hospital, PF, drugs capitation payment for OPB)

6
Features of some source-use combinations
  • Operating budget subsidies clear planning
    intent, provider certainty, assures availability
    vs inflexibility, less incentive for
    responsiveness, mismatches in supply and demand
  • OOPP consumer exchange, no payment-no service,
    provider responsiveness, client preferences vs
    provider uncertainty, beneficiary uncertainty
  • Health benefit payment mimics one or other
    wiser buyer than govt or individual

7
How financing affects health care
  • Creates, locates and distributes provider
    capacity (capital financing, service financing)
  • Sustains, motivates and influences provider
    effort and practice (use and service financing)
  • Determines range, quality and prices of
    accessible services (use and service financing)
  • Affects patients and populations use of
    available services (use and service financing)

8
Philippine financing for health
  • 2005 cost to use service capacities and actual
    goods and services provided to individuals and
    communities is financed by following sources
  • Out-of-pocket payment (incl prvt insurance, HMOs,
    employers) -59 of total cost
  • Philhealth benefit payment-11 of total cost
  • NG budget (DOH ODA) 16 of total cost
  • LGU budgets 13 of total cost

9
What is right about our health financing regime?
  • Able to financially sustain an extensive service
    capacity meeting many health needs
  • Many patients able to secure care satisfactory to
    them at financing burden that is not usually
    oppressive
  • Overall health status continues to improve maybe
    not at highest levels for our income but also not
    at lowest for same category.

10
What is wrong about our health financing regime?
  • Service capacity not meeting growing needs
    technical range and quality, geographic spread,
    quantity slow technical diffusion from center to
    periphery (not spending enough to grow capacity)
  • Persistent shortfalls in disease control and
    public health protection (not spending on right
    things)
  • Dangerous variations in provider performance (not
    compensating providers based on results)
  • Incidence of wasteful spending without evidence
    of health benefit (spending on wrong things)

11
Findings by Herrin and Racelis
  • Public subsidy to hospitals and health centers is
    pro-poor more of the poor use these facilities.
    Health centers more pro-poor than public
    hospitals.
  • Observed effect on number of people who become
    poor or reduction of income below poverty line
    due to out-of-pocket payments for health is small
    (less than 1) Maybe because poor use free care
    or maybe poor do not use care at all

12
Most important damages of current health financing
  • Under-spending on disease control and public
    health protection crucial to all (rich or poor,
    city or rural, educated or not) only source is
    tax spending on public health (DOH and LGUs)
  • Under-use of quality health care by poor and near
    poor due to financial burdens/barriers associated
    with reasonable provider costs only available
    mechanism is Philhealth benefit spending

13
Momentum against reform
  • Individuals and communities just try to get the
    best that they can get from present system no
    incentive for anyone to reform system for own
    transient and specific benefit
  • Providers more receptive to health financing
    reform (health financing is health provider
    income) but moral hazard of self-interested
    reform
  • LGUs also more receptive to health financing
    reform (health financing is a major cost to LGUs)

14
Why financing reform is needed
  • Sick individuals unable to get right care at
    right time (under-financing of essential personal
    care)
  • Communities unable to secure benefits of
    cost-effective public health interventions
    (under-financing of essential public health)
  • People getting worse from wrong or bad care
    (financing with adverse health outcomes)
  • People becoming poor from non-use of care due to
    high costs (financing with poverty outcomes)

15
Challenge of health financing reform
  • Dominant OOPP by users to providers default
    financing unless system weaned from this source,
    difficult to move to socialized financing best
    for health
  • Government spending in health DOH budget has to
    work better with LGU budgets, plus grow with
    population needs
  • Philhealth and NHIP larger NHIP, more diverse
    enrollees, new benefits on stream, effects on
    supply, quality, prices or user burden

16
Simple reform strategy
  • Reduce dominance of OOPP by increased size and
    effectiveness of two separate but coordinated
    public spending streams
  • Health budgets of DOH and LGUs
  • Health benefit spending of Philhealth
  • Strengthen authority and capacity of DOH to
    provide technical and policy direction to
    national health financing reform

17
Part 1 DOH and LGU Spending for Health
  • Consolidate DOH and ODA for health sector reform
    harmonize spending policies on commodities and
    supplies, on equipment and capital goods, on
    training and technical assistance
  • Set budget priorities for LGU health spending
    what services for whom should be financed, choice
    using financing to buy or provide services
  • Create legal framework for area-wide health
    provider organizations (DOH hospitals, LGU
    hospitals, LGU health centers operating together)

18
DOH and LGU spending for public health capacity
  • Use DOH and ODA block of funds more purposeful
    way focused, linked to performance for public
    health outcomes, leveraged for local reforms
  • Influence LGU provision and spending for health
    to assure basic public health protection, enable
    poor to access essential care, keep local health
    systems functioning efficiently for all

19
Part 2 NHIP as leverage fund for health sector
reform
  • NHIP benefit payment as dedicated stream of
    future income to health providers options for
    backing capital investments in health care
    capacity in targeted areas
  • NHIP benefit payment as co-payment of patient OOP
    burden options for containing total OOP burden
  • NHIP benefit payment as privilege for providers
    to supplement their revenues options for
    inducing more efficient health sector
    arrangements

20
Some facts about NHIP
  • Current fund balance of P69.334 B (end 2007)
    more than enough to cover next two years
    expenditures (at P42.523 B based on RA 7875 at
    P56.7 B based on reserve limit)
  • Universal coverage defined as 85 of population
    enrolled expected to be reached in 2009
  • Total benefit spending in 2006 P17.2 B (more
    than 80 on inpatient benefits) total benefit
    spending less than actual collection since 1998

21
Philhealth planning benefit reforms
  • Need for collection targets as well as spending
    targets within an actuarial framework
  • Within this framework, set of policy goals for
    priority benefits for development and roll out
  • Priority benefits for development guided by
    national health care financing direction set by
    DOH
  • Critical for Philhealth benefit to link with
    DOH-LGU spending directions to maximize total
    effect of public spending on other sources of
    funding

22
Some possibilities to consider
  • Stabilize universal coverage by tax-based payment
    of premium for all families not in formal sector
    mandate LGUs to pay for portion (via IRA
    intercept) and allow them to recover their
    subsidies via local revenues
  • Set up special upgraded benefit programs for
    universal coverage localities, including
    sub-national (local) variations in NHIP benefits
    based on equivalent premium costs
  • Develop health service performance contracts with
    LGUs area-wide provider enterprises

23
Further possibilities
  • Multi-year guaranteed service payment for certain
    categories of services from certain providers to
    back-up capital spending
  • Bulk purchase of services for use by
    beneficiaries with set co-payments (zero or
    pre-set minimum)
  • Organize and contract pre-designated providers
    for retirees and old age beneficiaries based on a
    stream of services required by these clients

24
Yet other possibilities
  • Beneficiary advisory boards to PHIC regional
    offices
  • Performance-based hierarchy of provider
    accreditation linked to wider access to higher
    level benefit payments
  • Benefit development investment fund to pay for
    costs of testing and developing new benefits
    according to policy purposes

25
Still other possibilities
  • Target total annual benefit pay-out linked to
    attainment of certain measurable policy goals
    reduction of OOPP burden, improvement of health
    sector efficiency, expansion of access to quality
    care
  • Management performance tied to attainment of
    reform goals beyond achieving enrollment,
    collection and payment levels

26
Ideas for legislation (1)
  • Plan for reducing out-of-pocket costs in
    financing high levels of use of maternal, newborn
    and child care and nutrition services necessary
    to attain MDG 4 and 5 by 2015 that mandates DOH
    budget, LGU budgets and Philhealth benefits to
    combine and coordinate their spending

27
Ideas for legislation (2)
  • Plan for financing a basic set of health care
    services for the poor by targeting those
    beneficiaries enrolled as indigents with
    Philhealth and then mandating that DOH and LGU
    budgets provide for necessary co-financing (in
    addition to the Philhealth benefit) so that these
    beneficiaries do not have to pay for using a
    basic set of health services

28
Ideas for legislation (3)
  • New legal framework for establishing and
    operating area-wide health provider
    organizations non-profit public-private
    cooperation combines hospitals, clinics and
    community-based providers under one enterprise
    DOH facilities, LGU facilities and private
    entities can be part of one organization
    oversight by DOH and LGUs

29
Ideas for legislation (4)
  • New expanded authority of DOH to direct and
    influence health care financing reform, possibly
    with budgetary mechanisms that use its annual
    budget to affect changes in the health care
    financing system, such as a capital financing
    mechanism standards setting in budget levels and
    priorities of LGU spending for health policy
    setting for Philhealth benefit spending
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