Group 2 POG Reporting - Philippines Health Expenditure PDF

PPT LINK: https://www.canva.com/design/DAGUBQtB0-4/fmtTHCu7C2X62RsbKCWYWQ/edit?utm _content=DAGUBQtB0-4&utm_campaign=designshare&utm_medium=link2&utm_source =sharebutton Dordas: (INTRO) Picture a world where healthcare is available to everyone, no matter their background. To make this a reality, go...

PPT LINK: https://www.canva.com/design/DAGUBQtB0-4/fmtTHCu7C2X62RsbKCWYWQ/edit?utm _content=DAGUBQtB0-4&utm_campaign=designshare&utm_medium=link2&utm_source =sharebutton Dordas: (INTRO) Picture a world where healthcare is available to everyone, no matter their background. To make this a reality, government funding is essential—it’s what keeps hospitals open, medicines available, and care accessible. Without it, universal health care would be just a dream. Let’s explore why money in the government is key to making health care for all possible. Dordas: Good day, everyone! We are from Group 2 and we are here to report on the following topics: health expenditure, sources of revenue, financial flow and universal health care in the Philippines. Karylle: To start, what is Health expenditure? According to Edejer et al. (2008), the definition of health expenditure is - it is the consumption of resources with the primary objective of promoting, restoring, and maintaining health. This means health expenditure is the use of resources like money, supplies, and personnel for the people’s health. Chrissy: In the Philippines, the total health expenditure in the country amounted to Php. 1. 20 trillion in 2022 or 5.5% of the Gross Domestic Product (GDP) at current prices and was lower by 1.4% from Php. 1.22 trillion in 2021. Side Info (Part of Presentation) : Gross Domestic Product (GDP) is the total value of all goods and services produced in a country within a specific time period, usually in a year. (Not part): Health expenditure and GDP are closely linked because the amount a country spends on healthcare is often measured as a percentage of its GDP. This shows how much of a country’s economic resources are being dedicated to promoting, maintaining, and restoring people's health. Keisha: The final consumption of health goods and services by households, the government, and other institutions or CHE (Current Health Expenditure) totaled Php. 1.12 trillion in 2022. Keisha: Increased healthcare spending was especially noticeable between 2020 and 2021, when the COVID-19 pandemic struck, as Filipinos purchased more important health products and medicines to better protect themselves against the virus (Statista, 2024). Kyoko: The health capital formation expenditure where Health investments or the demand by health providers for capital goods reached ₱ 79.0 billion in 2022, higher by 0.2% than the ₱ 78.8 billion recorded in 2021 which is used for infrastructure, machinery and equipments, intellectual property and products. Karylle: Disease Group - Noncommunicable Diseases (NCDs) had the highest share in CHE in 2022, amounting to ₱ 449.2 billion or 40.0%. NCDs include neoplasms (cancer), cardiovascular and respiratory diseases, diabetes, mental and behavioral disorders, and other. While infectious and parasitic diseases came in second with ₱ 205.7 billion or 18.3% share, while spending on reproductive health, including for maternal conditions, amounted to ₱ 132.5 or 11.8% share. Health spending related to nutritional deficiencies such as stunting, obesity and micronutrient deficiency was also significant at ₱ 122.6 billion or 10.9% of the total CHE (Current Health Expenditure). Chrissy: Also, In 2023, according to the Philippine Statistics Authority, the country’s total health expenditure, at current prices, amounted to PhP 1.44 trillion and health spending went up to PhP 11,083 in 2023 indicating a significant increase in health expenditures compared to 2022. Keisha: Furthermore, the Philippine Statistics Authority also indicates that among the health care financing schemes in 2023, the household out-of-pocket payments had the highest contribution. It had 44.4 percent share to the total Current Health Expenditure, while the Government schemes and compulsory contributory health care financing schemes had 42.6 percent share. And lastly, 1.30 percent share was contributed by Voluntary health care payment schemes. About 60% of Filipinos have health insurance, leading to high out-of-pocket costs. (Not part) Voluntary health care payment schemes: health insurance or health coverage systems that people or organizations opt into willingly, as opposed to being automatically enrolled through a government or mandatory system. They are designed to help individuals or groups cover the costs of medical care, but participation is not required by law. Chrissy: According to Sarah Tan, Moody’s Analytics economist, she mentioned that out-of-pocket expenses make up the largest portion of total health spending in the Philippines. This is partly because many Filipinos don’t have private health insurance, with only about three in five being insured, and government spending on healthcare has been relatively low. Chrissy: "However, we expect the government's role in healthcare to grow as they are working to increase their support," she added. Chrissy: She also pointed out that the Asian Development Bank approved a $450 million loan last December to help the government expand its healthcare reforms under the Build Universal Health Care Program. (Desiderio, 2024) Heart: Now, Let us move on to Sources of Revenue. Heart: Revenue are cash inflows collected to support government spending without increasing liabilities. They include both tax and non-tax collections. Heart: A tax is a mandatory payment required by law for public purposes. Major collecting agencies are the Bureau of Internal Revenue (BIR) and the Bureau of Customs (BOC). Karylle: There are three ways on how the national budget is financed through the following fund sources; 1. Revenues from both tax and non-tax sources There are major classes of tax revenue and these are: 1. Income and Profits: Taxes on income earned by individuals, partnerships, and corporations and usually lasts for one year. 2. Property: Taxes on wealth or property ownership and transfers. 3. Domestic Goods and Services: Taxes on locally produced goods and services. 4. International Trade: Taxes on imports, customs duties, and trade-related transactions. 5. Other Sources: Such as motor vehicle taxes, immigration tax forest charges. 6. The Sin Tax Law is under the category of excise taxes within the taxes on domestic goods and services. Keisha: Non-tax sources, on the other hand, is the collections from the government that do not involve taxes such as fees for services rendered, fines, and penalties. For example, passport application fees or licensing fees. 2. Borrowing from both domestic and foreign sources Heart: Borrowings is the funds obtained through loans from domestic and foreign sources to finance activities and projects. Domestic Borrowings: Funds sourced within the country, usually through treasury bills, notes, and bonds.  Side info: (Not part) Treasury bills are short-term, low-risk financial instruments that provide investors with a safe place to park their cash while earning a return. They are an essential tool for governments to manage their finances and for investors seeking stability and liquidity in their investment portfolios Foreign Borrowings: Funds obtained from international financial institutions or by issuing government securities in global markets. Side info:(Not Part) Reasons for Government Borrowing: 1. To finance national government deficits. 2. To obtain foreign exchange. 3. To secure financing on more favorable terms. 4. To leverage benefits like technology transfer. 5. To align resource timing with project needs. Keisha: 3. Withdrawals from available cash balances This is the use of funds that the government already has on hand, in its existing cash reserves or balances to finance current expenditures and cover budget loss. Lliana: Another topic to be discussed is the financial flow in the health sector of the Philippines. Here is the graph. Public Sector: National Government - Receives funds from taxes, borrowings, and foreign assistance. - Flows into the DOH, PhilHealth, and local government units (LGUS). Department of Health - Acts as the steward of the health sector, distributing resources to regional offices and hospitals. - Operates hospitals and clinics and provides funding for public health programs. PhilHealth - Generates revenue from investments and insurance premiums paid by households and private companies. - Provides reimbursements for services in public and private healthcare facilities. Local Government (Provinces, Municipalities, Barangays)  - Fund healthcare through internal revenue allotments (IRAS), local taxes and fees. - Manage local hospitals, rural health units, and barangay health stations. Jef: Private Sector: Private Hospitals, Clinics, MDs - Receive payments directly from patients or through PhilHealth, private health insurance, and health maintenance organizations (HMOs). HMOs and Private Health Insurance Companies - Help cover healthcare costs for members by paying private providers and contributing to PhilHealth. Out of Pocket Payments: - When insurance coverage is not fully applied, people pay out of pocket for services at both public and private health facilities. Lliana: Here is another similar source showing the financial flow in the Philippine health system. Sources of Funds: Taxes: Collected by the government and allocated through the national budget. Premiums: Paid by people/employers to PhilHealth and private health insurance companies. Local Taxes: Collected by local government units (LGUs) from local sources. Government Funding: National budget flows to the Department of Health (DOH) and Centers for Health Development (regional offices). DOH funds specialty hospitals, regional hospitals, and provincial/district hospitals for tertiary, secondary, and primary care services. LGUs receive budget from national tax allocation and fund rural health units and barangay health stations (primary care). PhilHealth Contributions: Provides premium subsidies for indigents. Pays provider payments to government and accredited private hospitals/clinics. Private Health Sector: Private health insurance and Health Maintenance Organizations (HMOs) provide insurance payments to private hospitals, clinics, and pharmacies. Patient Payments: Direct out-of-pocket payments for fees and charges supplement health financing from the public and private sectors. Chrissy: Lastly, all of these funds from the government flow into one of their many goals: the Universal Health Care project. Jef: According to the World Health Organization (2023), The universal health coverage (UHC) ensures that everyone has access to essential health services without financial hardship. It includes every aspect of important health services, including prevention, treatment, rehabilitation, palliative care, and health promotion. Despite progress between 2000 and 2015, recent advancements have slowed. 4.5 billion people are currently not fully covered, and 2 billion face financial hardship due to healthcare costs. The COVID-19 pandemic worsened these issues, disrupting services in 92% of countries. Chrissy: In the Philippines, The Universal Health Care (UHC) Bill was signed into law (Republic Act No. 11223) by President Rodrigo Duterte on February 20, 2019. This law automatically enrolls all Filipino citizens in the National Health Insurance Program and mandates an additional health care system. With this, people will be provided with access to the entire range of health care services or treatments they need without spending too much money, which will protect them from financial hardship. Katrina: In conclusion, making universal health care a reality in the Philippines depends largely on how effectively the government manages its funding and resources. Health expenditure is essential for keeping everyone healthy, but many Filipinos still struggle with high out-of-pocket costs because they don’t have private insurance. It’s important to understand where government revenue comes from—both tax and non-tax sources—since this directly impacts the national budget. Additionally, borrowing strategies highlight the need for financial flow to support health care initiatives. With the passing of the Universal Health Care Bill, there’s a clear commitment to ensuring that all citizens have access to the health services they need. Ultimately, by prioritizing health care as a basic right and investing in the necessary infrastructure, we can create a healthier and more equitable society for everyone.  1.) IRAS This is the Internal Revenue Allotments that local government units use to fund healthcare in their locality. It is the annual share of local governments out of the funds from the national internal revenue taxes. The Bureau of Internal Revenue (BIR) estimated that the national internal revenue tax collections from three years ago amount to about 40% of the actual collection of national internal revenue taxes. To calculate the IRAS, the following are under the National Internal Revenue Taxes as basis for the computation of the IRAS; 1. Income tax 2. Estate tax and donor’s tax 3. Value-added tax 4. Other percentage taxes 5. Taxes imposed by special laws, such as travel tax The percentage of the total IRAS that barangays receive is 20% of the total IRAS which is divided among each one of the 41, 882 barangays based on population (60%) and equal sharing (40%). For example: If the barangay has a population of not less than 100, the share should not be less than P80,000 per annum. The amount shall be chargeable against the 20% share of the barangays from the total IRA, and the balance to be allocated on the basis of the formula. Below is an illustrative example of how the IRAS is computed, as per the Department of Budget and Management. Hence, the IRA share of a barangay is the sum of the following: - Share based on equal sharing and share based on population Local government units receive their IRAS every year but the amount is calculated based on the national tax collection from three years prior. This help stabilize budgeting by using a fixed figure rather than the fluctuating current year’s collections. Also, the census of the population used as basis for computing the IRAS share of the barangay is updated every 5 years by the NSO. Department of Budget and Management. (n.d.-b). Sources of Income of The Barangay. https://www.dbm.gov.ph/wp-content/uploads/2012/03/BB-2.pdf 2.) UHC Bill - The UHC Act is a result of two years of political and technical work and decades of progress. Parliamentarians and health stakeholders have been working together to pass a UHC bill, but due to the Philippines going through a 50-year process of health reform under various names, the process was delayed. The UHC Act also went through extensive consultations and technical refinements before its passage to ensure that the legislation was comprehensive and practical. World Health Organization. (2019, March 14). UHC Act in the Philippines: a new dawn for health care. https://www.who.int/philippines/news/feature-stories/detail/uhc-act-in-t he-philippines-a-new-dawn-for-health-care