The Philippines is committed to move towards Universal Health Coverage (UHC) to assure that all Filipinos obtain the quality health services they need, without being impoverished by the cost of health care services. To accomplish that, the Philippine Health Agenda for 2016 – 2022 sets the ambitious reform plan with the aim of assuring financial risk protection and good health outcomes for the population. Moreover, the Department of Health (DOH) has declared to offer to the population a guaranteed minimum benefit package, and to subsidize PhilHealth premiums of all indigents and informal sector workers through taxes. The DOH aims to achieve UHC by 2022 and has prioritized its Health Financing Directions 2017 – 2022 to guarantee universal access to comprehensive care at the primary care level and continuity of care through referral.
The Philippine health spending is rather low as compared to the countries of similar income. Total health expenditure per capita is $135 and total health spending as share of Gross Domestic Product (GDP) is 4.7% in 2014. Government expenditure on health as a share of GDP has settled at 2010 level (1.6%) in 2014. In 2015, government health expenditure as share of total government expenditure was about 10% of which about half is financed through budget and the other half through health insurance scheme.
Private spending plays a dominant role in the Philippines’ health financing, consisting mostly of out-of-pocket expenditures which accounts for 56% of total health spending in 2014. The introduction of the National Health Insurance Program in 1995 through the Philippine Health Insurance Corporation (PhilHealth) aims to tackle this problem but challenges still remain.
When moving towards UHC, policy objectives for better financial protection, cost containment, efficiency, quality of care, and prevention of fraud have become more important. By strengthening the strategic purchasing role and by developing robust provider payment systems, the DOH and PhilHealth can take substantial steps in improving these key policy areas. With cost of hospital services accounting for one of the largest shares in total health expenditure, improving hospital payment mechanisms is pivotal. The major provider payment reform by PhilHealth was implemented in 2012 with the aim of increasing efficiency by shifting from fee-for-service to case based payments for the hospitals. Initially, 23 Case Rates of selected medical and surgical procedures were introduced and three years later these 23 case rates were expanded to All Case Rates (ACR).
The Philippines envisions options for a provider payment reform that will help it achieve UHC. For this, PhilHealth is considering a comprehensive set of provider payment reforms, including hospital global budgeting and Diagnosis Related Groups (DRGs), and primary health care capitation to promote integrated care (through service delivery network), and efficiency to achieve better health outcomes and financial protection in moving towards UHC. Several earlier attempts to move to DRG-based payment system have not been succeeeded. The Philippine DRG was developed (2009/10) with technical support from the United Nations University in Malaysia and piloted in 19 volunteering hospitals. The attempt to move towards DRGs was revived in 2012 until 2013 when preparations to evaluate Australian AR-DRGv6 were made but was put on hold because of the implementation of the All Case Rates. Therefore, it is critical to learn from these previous experiences in the Philippines to be better prepared for the next phase of reforms.