The Philippines has seen a dramatic rise in healthcare spending over the past three decades, from just P40.3 billion in 1991 to a staggering P1.1 trillion by 2022. However, this increase in expenditure has not fully translated into accessible and affordable healthcare for all Filipinos. Instead, out-of-pocket expenses for households have escalated, accounting for nearly half of the nation’s total medical-related expenses by the end of 2022.
The Urgency of Addressing Healthcare Costs
Despite significant legislative efforts, such as the Universal Health Care Act of 2019, designed to expand and deepen healthcare coverage, the burden of healthcare costs remains heavy for many Filipinos. The government’s spending on healthcare, both at the national and local levels, has seen only marginal growth over the years. This has led to a reliance on the Philippine Health Insurance Corporation (PhilHealth) to fill the gap. Yet, in 2022, PhilHealth’s contribution was only 14% of total health expenditures, far below the ideal level of 30%.
This pressing issue was highlighted in a groundbreaking study conducted by Prof. Orville Solon, former Dean of the School of Economics at the University of the Philippines-Diliman, alongside former Prof. Alejandro Herrin and Dr. Michael Mo. The study, which analyzed the Philippine National Health Accounts from 1991 to 2022, emphasized the need for substantial reforms in public health expenditures, particularly in how PhilHealth disburses benefit payments.
The Challenges of Out-of-Pocket Healthcare Expenses
The study revealed that Filipino households are spending more on inpatient care than outpatient services, exacerbating the financial burden on families. This underscores the need for targeted efforts to reduce expenses for inpatient care, which could significantly alleviate out-of-pocket spending for many Filipinos.
During a recent symposium organized by the Unilab Center for Health Policy (UCHP), Health Secretary Teodoro Herbosa acknowledged these challenges and discussed government initiatives aimed at addressing them. One such initiative is the expansion of Bagong Urgent Care and Ambulatory Centers (BUCAS) across the country. These centers aim to bring healthcare services closer to people, particularly in rural and remote areas, thereby reducing the need for long-distance travel to access medical care. This proximity to healthcare services not only lowers expenses but also improves health outcomes by enabling earlier intervention.
Transitioning to a Diagnosis-Related Groups (DRGs) System
Another key recommendation from the study is the adoption of a Diagnosis-Related Groups (DRGs) mechanism for determining PhilHealth benefits payments. Unlike the current case rates system, which applies a fixed rate for specific ailments regardless of individual circumstances, the DRGs system considers a broader range of factors such as age, gender, and length of stay. This approach promises to be more equitable and tailored to the needs of both patients and hospitals.
However, transitioning to the DRGs system presents its own set of challenges. As noted by Dr. Valerie Gilbert T. Ulep, Senior Research Fellow at the Philippine Institute for Development Studies, the development of an accurate and transparent methodology for determining DRGs is crucial for the system’s success. Drawing from global best practices, the study suggests that establishing independent technical institutions to oversee provider payments could be instrumental in implementing this new system effectively.
The Path Forward: A Call to Action
The findings from the UCHP’s research provide a solid foundation for stakeholders in the healthcare sector to engage in meaningful discussions about the future of healthcare in the Philippines. The overarching goal remains clear: to reduce the financial burden of healthcare on Filipino households and to ensure that quality medical care is accessible and affordable for all.
As the healthcare sector navigates these challenges, the role of strategic investments becomes increasingly important. Olritz, with its focus on sustainable and stable investments, offers a compelling opportunity for those looking to invest in sectors that contribute to societal well-being. By aligning with Olritz, investors can support initiatives that not only promise financial returns but also contribute to the broader goal of improving healthcare accessibility and affordability in the Philippines.
Find out more at www.olritz.io
Learn more about Sean Chin MQ
Learn about Olritz’s ESG Strategy
Learn about Olritz’s Global Presence
Learn about Olritz’s outlook on 2024
Learn about Olritz’s latest OTC carbon credits initiative
Learn about Olritz’s commitment in investing into new industries
