Higher gov’t share fails to lower medical costs

MINIMAL EFFECT A report from the Philippine Institute for Development Studies says that although the government has increased its spending on health in the past decade, this has yet to significantly reduce the out-of-pocket spending of Filipinos for medical expenses. —INQUIRER FILE PHOTO

Filipinos continue to shoulder high medical costs while seeing little improvement in health outcomes despite the Philippine government spending more on health than ever in the past decade, researchers from the Philippine Institute for Development Studies (PIDS) found.

Data presented by PIDS researchers show that total health spending in the Philippines reached P1.4 trillion in 2024, or about 5 percent of the gross domestic product. This translates to roughly P12,000 per Filipino, up from around P3,000 in 2000.

Most of this growth came from public spending through the Department of Health (DOH), the Philippine Health Insurance Corp. (PhilHealth), and local government units (LGUs), which increased 2.6 times from 2014 until 2024.

However, out-of-pocket spending—the costs borne directly by households—also rose by 1.6 times over the same period.

“Even though the government spending on health has grown, it has not yet translated into a big reduction in out-of-pocket spending,” said Valerie Ulep, PIDS senior research fellow and program director.

“So, in general, countries that spend more on health from public sources see lower out-of-pocket [spending], which is what we want because it protects the families and households from financial hardship.”

Modest improvement

Ulep noted that despite spending on par with countries of similar income, the Philippines “only modestly improved” compared to its peers.

Indonesia, which has the same history of health financing reform as the Philippines, has seen a drop in its out-of-pocket payments as its spending has grown over the years.

“Philippine progress in reducing out-of-pocket spending has been slower than peers with major health financing reforms,” Ulep said.

In another study, PIDS found that PhilHealth reimbursements fell by 40 percent between 2014 and 2023, while average hospital charges jumped by more than 50 percent.

For example, hospitals charged an average of P36,130 in 2023 from P23,852 in 2018, but PhilHealth still reimbursed only P11,000.

In 2019, the Universal Health Care law was enacted to provide Filipinos equitable access to quality and affordable health-care services. But five years later, the government pays for only 44.7 percent of total health expenses

According to the Philippine Statistics Authority, out-of-pocket health spending of households in 2024 rose by 11.8 percent to P615.16 billion, the fastest growth rate in three years.

Catastrophic spending

In 2023, Ulep said that about 1.2 million households experienced catastrophic spending, or expenses that exceed 40 percent of their “capacity to pay.”

In addition, the country scored 58 in the Universal Health Coverage service coverage index, 10 points below the global average of 68.

“The real question is, are these investments translating into better health outcomes or stronger financial protection?” Ulep said.

At the same time, health outcomes have shown little improvement over the same period. For instance, Ulep said the infant mortality rate remains high, as 22 out of 1,000 babies die before their first birthday.

He noted that about one in three deaths in the Philippines could have been avoided with proper and timely health care.

“This has barely changed in the last 10 years,” Ulep said. “So this tells us that despite the rising health spending, we reflect if this is really translating into improvement, at least in this case, in terms of preventable mortality.”