EARLIER this week, I was asked to deliver the keynote address at the annual Private Hospitals Association of the Philippines Inc. convention. The topic: Financing the Universal Health Care Act. People are angry.
Indeed, one would be hard-pressed to find a policy as disappointing to all stakeholders involved as the Republic Act 11223 or the “Universal Health Care (UHC) Law.” It was signed into law on February 20 of this year by President Rodrigo Duterte, granted its implementing rules and regulations by Health Secretary Francisco Duque 3rd on October 10, and has since invited the ire of many.
The government is upset that the private sector has not been all too supportive; doctors fret their services will go unpaid as the government, notorious for delayed PhilHealth payments, commits their professional services to, in Duque’s words, “every Juan and Juana”; private hospitals are grasping to make ends meet as the government forces them to provide services to customers who may or may not have the capacity to pay, all the while delaying financial support systems; and patients feel shortchanged and disappointed that in spite of grand proclamations from the government, they are not reaping the benefits. No one is happy. Lose-lose-lose-lose.
To be fair, much as most Filipinos often jest that our woes are “only in da Pilipins” these, too, are concerns plaguing broad swaths of the globe. Universal Health Care, or rather, “Health For All,” as it is branded in public health circles at the World Bank (WB), the International Monetary Fund (IMF) and the World Health Organization (WHO), is an agenda item that has gained much traction in the past few years and certainly sits as one of the “hot topics” at any Davos meeting, United Nations General Assembly meetings, and WB/IMF spring meetings of late, along with economic resilience, the Fourth Industrial Revolution, and corruption indices.
The concern is that the health economy has been growing faster than the global economy: according to the WHO, from 2000-2015, the health economy grew, on average, 4 percent annually, with a 6 percent growth in low- and middle-income countries, compared to an annual average 3.11 percent global growth in the same period, with a dip of 1.686 percent in 2009 (according to WB estimates). Moreover, the imbalance in health expenditure certainly is vast: though over 80 percent of the world’s population live in low-middle-income countries (the Philippines included), they only amount to 20 percent of health expenditures. This means that the 20 percent who live in the richer Organization for Economic Cooperation and Development (OECD) profile countries bask in 80 percent of the health economy. While this may seem surprising, we must remember that the egregiously wealthy of the low- to middle-income countries, who often surpass the wealth of even the wealthy of the OECD, and who can afford to pay high hospital bills in their respective nations, often choose to be hospitalized abroad in the richer nations, exacerbating the health economy gap. Clearly, there is a problem.
Healthcare is a good in the market that tends towards market failure. There are many economic reasons such as adverse selection caused by information asymmetry (e.g. doctor or pharma companies possessing information to which the average consumer does not have access) and supply-induced demand (usually by pharma companies) why this is. But most importantly, it is probably because the good being promised in the market is human life — and it is difficult, especially in a highly Catholic country, to place a price on that.
Moreover, the lower one sits on the socioeconomic spectrum, the more human life and health equate to livelihood and income. In other words, the healthier a father is and the longer his life, the more he can work for the future of his children and bring home the bread. Whereas in wealthier households where the family relies on rents and inheritances to uphold the lavish lifestyles of the members, life does not necessarily equate to added income — quite the contrary, in fact. And so, it is more often the less fortunate who are more willing to spend on hospital bills because successful healthcare would return a work horse to their stable to be able to assist in the finances of the household.
I mention this bifurcation between rich and poor because the purpose of government intervention with UHC is to alleviate poverty. The government makes its hand quite visible in order to fix the market failure that plagues health care, but only as a safety net to prevent poor families from suffering financial hardship. That is why the UHC was created as a United Nations Sustainable Development Goal in 2005. In fact, according to the WHO, the basic UHC health services that need attention are very basic indeed: they include family planning, child immunization, hepatitis shots, cervical cancer screening, bed-nets for malaria, and adequate sanitation. You will glean from this list (the list includes about 16 services across four categories) that these are health services associated with economic indicators of poverty. Family planning and contraceptive pills are deemed necessary to prevent population growth and the cycle of poverty; cervical cancer is associated with sexually active women who, economically speaking, are often thrust into such lifestyles and professions because of conditions of poverty; malaria usually takes place in high-density areas of poor sanitation; as does tuberculosis. It is for these basic services that the UHC applies — and not generic hospital bills, as it is being marketed in the Philippines by both PhilHealth and the Department of Health, through their “no balance billing” proclamations.
The thing is UHC is fantastic in theory. However, the way in which it is being implemented here could certainly use a few more economists on board. For starters, the public-private burden-sharing is not tenable. So often, in the Philippines, the government snaps its fingers and the private sector must abide — no subsidies, no incentives, no assistance. In most countries, especially the wealthier ones, if the government wants to dance with the private sector in lockstep, the former must provide incentive to do so. Here, no such practice is observed.
Further, the sin-tax model to pay for the UHC expenses is also not tenable. Firstly, it draws a direct connection between sinner (i.e. those who vape, drink and are fond of sugar) and pious patient. This creates resentment in the long run and bifurcates society. It divides, rather than unites. The government should not be pitting groups against each other. More importantly, sin taxes are to shift a pattern of behavior. When successful, behaviors change. When that begins to happen, sin-tax revenue will dwindle. And so will UHC funding. And we cannot keep finding new sins, as Secretary Duque hinted at with imposing a salty foods sin tax.
Lastly, and perhaps most importantly, Filipinos must not be taught to rely on the welfare state as the first resort; it must be the last. One’s first resort must be one’s self. In the humorous language of redneck bumper stickers, “The government is not your baby daddy.” You see, in countries where UHC is robust and well-developed, though citizens know they can rely on the state for basic health service, when they can afford private health care, they pay out of pocket — out of their own volition. The government exists as a safety net, but as a last resort. Most people in developed nations, in addition to basic services provided by the government, seek out private health insurance and co-pay with their employer. And that is the key to this economic conundrum: work. If most people are gainfully employed and covered by private health insurance as part of their employment, few would fall outside the purview of health services.
It is not enough to be born Filipino to be covered by UHC; one must be worthy. Failed Recalcitrant Citizens [F(R)C] that I have written about in previous columns (see “Duterte, drugs and the dregs of society,” The Manila Times, Nov. 1, 2019; and “A czar is born: Robredo and the drug war,” The Manila Times, Nov. 15, 2019) who choose not to work and who choose to freeload off the generosity of friends and family and who have never contributed to the taxes of the nation do not deserve to reap the hard-earned benefits of diligent Filipinos. To be covered by UHC, one must be gainfully employed. If one is gainfully employed, one would be covered by the private insurance of employment benefits. Win-win.
The point is that one must have contributed at some point to the nation to take advantage of it. A life must be worth something for it to be worthy. There is always a trade-off. We cannot expect to live life as F(R)Cs and still reap the benefits of honest hard-working citizens. There must be a point where we draw the line. Not all Filipinos deserve to be covered by UHC — only those who have demonstrated their worth to be a Filipino and of whom the Philippines can be proud.
Coverage would be incentivized by employment, and would encourage more citizens to earn a consistent reliable income, boosting the economy many times over. This is the approach we should be pursuing vis-à-vis the UHC, rather than the freeloading face it has been taking.
From the government perspective, however, I surmise something else. The reason why the state has been quick to implement the UHC in spite of our capacity to support it is because of a little element that breathes life into healthcare financing in low-income countries: aid. In high income countries, the government and social health insurance cover 70 percent of healthcare costs; 30 percent is covered out-of-pocket or through private insurance. In middle-income countries, the division is 50-50. In low-income countries, however, government covers 20 percent, private insurance/out-of-pocket remains at 50 percent, and external aid steps in for the 30 percent. Though we fall in the middle-income, it is my sense that the government would like to curry favor to this aid. If we can show that we tried UHC magnificently, and magnificently failed, then pity may somehow grant us some aid.
However, the standard to which I suggest we hold our freeloader citizens must be the same standard to which we hold ourselves. If we want F(R)Cs to apply themselves and to work, then we must, as a nation, work, too. Rather than rely on external aid by speaking to foreign compassion and pity, why not work on our macroeconomic policy to make ends meet. And if that fall short, then perhaps we can seek foreign investors in a public-private partnership for healthcare services across the nation. But an investment trumps a dole-out any day. As the old proverb goes, “Give a man a fish and you feed him for a day; teach a man to fish and you feed him for a lifetime.”
Indeed, the UHC is ailing. Symptoms are everywhere. Doctors cannot do much now; we need better economists to heal.
Katrina Lirio Quirolgico is an economist who holds master’s degrees in government and international history from the London School of Economics, and a bachelor’s degree (magna cum laude) in international politics from Georgetown University. She has trained at Harvard University on international education and admissions.
Follow her on Twitter (@kq_avisrara).