Public and Private

Health Spending

Bienvenido “Nonoy” Oplas, Jr.

Minimal Government Thinkers Inc.

Paper #3 presented at Dr. Alvin Ang’s

graduate class on Public Finance

Ateneo de Manila University, Quezon City

28 January 2015

Killer Diseases, World The Economist Daily Chart, Sept. 28, 2011

Estimated death from AIDS, million

The Economist, June 03, 2011

Killer Diseases, Philippines

Source: National Statistics Office,

http://www.census.gov.ph/data/sec

tordata/sr11564tx.html

Death per

100,000 popn.

1997 2000 2005

1. Diseases of

the heart

69.8 79.1 90.4

2. Malignant

neoplasms

(cancer)

37.5 47.7 48.9

3. Tuberculosis,

all forms

32.2 36.1 31.2

4. Diabetes

Melitus

9.4 14.1 21.6

5. Transport

accidents

9.9 2.4 9.1

• If some people will over-eat, over-

sit, over-smoke, or over-drink, and

have diff. types of NCDs, should the

rest of society pay heavily for their

treatment, incl. drug subsidies?

• Distinction bet. personal/parental

responsibility and government

responsibility in healthcare

Health care resources (per 1,000 population)

ADB, Key

Indicators

for Asia

and the

Pacific

2014

PH has

more

physicians

per 1,000

people

than

Thailand,

Indonesia,

Myanmar,

Cambodia,

Laos.

PH Government Health Facilities and Resources (they are many actually, not “not enough” as often heard)

National Government

1. Department of Health (DOH), DOH hospital

2. PhilHealth subsidies to poor patients in private hospitals

3. UP, Philippine General Hospital

4. DND, AFP hospital, Veterans hospital

5. DILG, PNP hospital

6. Other state universities' hospitals

7. PCSO, PAGCOR donations for health

8. SSS, GSIS, etc. health spending

Local Governments

9. Provincial, District, City hospitals

10. Provincial, City, Municipal health centers

International Agencies

11. WHO, WB, ADB, other multilaterals’ health portfolio

12. USAID, JICA, KOICA, CIDA, EU, etc. bilateral grants

As of 2013:

• DOH hospitals 60

• LGU hospitals 584

• Rural health units

(RHUs) 1,285,

• Barangay health

stations (BHS) 962.

Right, PH govt. Universal

healthcare (UHC) vision

Below right, estimated

distribution of total health

expenditures (THE) in PH

Below left, DOH budget

converted to US$

Wastes and corruption of

course, happen in many

government agencies,

national and local.

This explains why govt

spending on medicines is

“high”. A P10/tablet retail

price, instead of becoming P5

due to bulk purchase,

becomes P20 or P50 or

P150/tablet due to price-

padding and robbery.

"Even test tube brushes, which cost around P10-P20 perhaps, cost P350!

Gloves which cost P120-P150 pesos are priced P550 in that receipt. Amoxicillin

syrup which costs P15-P20 is priced P115,"

"All patients who need medicines as per my prescription have to go to his

(mayor's) office to get the medicines themselves... Even this much jacked-up

medicines are used as political tools,… I hope I can also see they are getting

the right medicines. Those who dispense the drugs are waiters of the mayor

with no health background.”.

The Role of Medicine Innovation (and why IPR busting policies should be avoided as much as

possible)

Drug Innovation and Consumers

Before generic drugs, innovator drugs are invented first, and it is a long and

costly process. R&D for one safe and efficacious drug takes 10-12 years,

and on ave., only 1 out of 8,000 compounds reach approval for use.

Patent expiry and generic drugs

Patients benefit from (a) drug innovation even at initially higher price, then (b)

generic drugs at lower price. Chart source: PHAP

As new medicines and treatment vs infectious diseases

come on stream, people are living longer, healthier

Life expectancy

from birth (years)

ADB, Key

Indicators 2014

* PH, 1990-2000, life

expectancy rose by 1.6

yrs,; 2000-2012,rose by

1.8 yrs. At this rate, by

2015, Filipinos on ave.

can expect to live

around 69.2 yrs.

Government reforms for a competitive healthcare

• Reduce taxes on medicines and healthcare. import tax 1-

5% + VAT 12% + local government taxes.

• Encourage, invite more players in pharma (innovators

and generics), drugstores, hospitals. Competition from

more players is often the best insurance to bring down

prices and improve products and services quality.

• Focus on fighting substandard, fake medicines, in

partnership with civil society. Protect the public via quality

control, not drug price control,

• Do not re-centralize healtcare, allow decentralization and

competition among LGUs, among private health

insurance, drugstores, hospitals, pharma.