Title: How We Might Spend Our Way to Better Health
1How We Might Spend Our Way to Better Health
- National Conference on Health
- Mario Taguiwalo
- April 29, 2008
2Micro 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
3How 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)
4Two 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
5Source 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)
6Features 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
7How 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)
8Philippine 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
9What 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.
10What 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)
11Findings 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
12Most 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
13Momentum 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)
14Why 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)
15Challenge 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
16Simple 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
17Part 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)
18DOH 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
19Part 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
20Some 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
21Philhealth 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
22Some 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
23Further 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
24Yet 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
25Still 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
26Ideas 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
27Ideas 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
28Ideas 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
29Ideas 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