Health Financing

Health Financing

Studying Philippine Healthcare Expenditure

What is Finance?

Traditionally defined as finding a way to pay for something.

Therefore, when we talk about health financing, we talk about finding a way to secure money to pay for the goods and services that will maintain and/or improve our health.

HOW DO WE PAY FOR OUR HEALTH BILL?

Health financing is the answer to our basic question!

It is important to remember that different countries follow different health financing

schemes.

Philippines: private and out-of-pocket

United States of America: private and by insurance and managed care (or Health Maintenance Organizations)

United Kingdom and Canada: socialized (government)

Health Financing

Is crucial to a country’s efforts in making healthcare accessible to most, if not all.

Thus, an understanding and appreciation of such is mandated in

the study of Health Economics.

Philippine Healthcare ExpendituresThe Philippines’ total healthcare expenditure represents all money being spent for all health goods and services – both public and private.

It has constantly increased over the past ten years.

It was php 35.9 Billion in 1991; about php 87.9 Billion in 1997; then php 115.4 Billion in 2002. There followed a big jump to php 136 Billion in 2003. This represents an average 15 percent increase in expenditures per year.

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The World Health Organization (WHO) recommends developing

countries to spend about 5 percent of its Gross National Product (GNP)

for healthcare.

At our best, we spent only 3.44 percent of our GNP for healthcare

in 1997, after this, there was a steady decline until 2002, when we spent only 2.77 percent of our GNP

for healthcare.

A rebound to 2.9 percent was seen in 2003.

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Compared to other countries in Asia, the Philippines is underspending for health.

South Korea and New Zealand spend above the WHO recommended rate of 5 percent

Hong Kong is very near the recommended rate.

While the Philippines and Thailand are lagging behind, the Philippines had one of the lowest

percentage spent for health at about 3.20 percent in 2001.

About 76 percent of all Philippine health expenditures are being used for

personal health.

Personal health goods and services are those goods and services which

manifest effects only on the person utilizing healthcare. Surgeries,

hospitalization, rehabilitative health, dental services all fall under this.

Public health spending represents about 10 to 12 percent of total health

spending.

Public health programs are endeavors which will have effects on many

sectors of a population. Immunization, anti-smoking campaign, pollution control, maternal and child health

programs all fall under this.

About 12 percent is being spent for other activities

These would be training programs, research, medical technology

projects, etc.

Pie chart

Even the Department of Health devotes most of its expenditures for personal

health.

This represents all the expenditures borne by the DOH mostly for patients seeking

healthcare services in DOH-retained hospitals.

This was more than Php 20 Billion in 2003.

On the other hand, as of 2003 about php 16 Billion or 34 percent of government

health expenditures were spent for public health programs.

A little more than php 10 Billion or 22 percent of government expenditures were

spent for “other” purposes.

Between 2002 to 2003 there was a 28 percent increase in government health

spending for health purposes

YEARAMOUNT (in billion pesos) PERCENT SHARE

PERSONAL PUBLIC OTHERS TOTAL PERSONAL PUBLIC OTHERS

2002 15.8 12.1 8.4 36.3 43.6 33.2 23.1

2003 20.2 16.0 10.3 46.5 43.5 34.3 22.2

2002 - 2003

27.7 32.4 23.0 28.2

Government Health Expenditure by Use of Funds

Source: National Statistical Coordination Board 2003 Report

Health Expenditures By Source Of Funds

More than half of about 58 percent of the total health spending in the country

is paid for by private sources.

These are all health expenses paid by private individuals, companies and

private insurance to hospitals, clinics, and other healthcare facilities mainly for

personal health.

The government is the next highest spender for health.

The government has a spending which represents about 35 percent of total health spending in the

country. While this spending is being used mainly for

personal health, a big chuck of such is being used for public health programs.

The Philippine social insurance system (Medicare-Philhealth) paid for about 10.0 percent of the

country’s health bill in 2003. This was 11 Billion.