Case Study: Achieving Universal Health Coverage in the Philippines
By Hao Yi Tan
1. Universal Health Coverage
The World Health Organization (WHO) defines UHC as “all people have access to the full range of quality health services they need, when and where they need them, without financial hardship. It covers the full continuum of essential health services, from health promotion to prevention, treatment, rehabilitation and palliative care”.(1)
2. Universal Health Coverage in the Philippines
2.1 Key Milestones
The Philippines, like many developing nations, strives to achieve UHC. In the Philippines, health is a basic human right guaranteed by its 1987 constitution, declaring that “the State shall protect and promote the right to health of the people”.(2) The government adopted a decentralized health governance in 1991, and later introduced a social health insurance program named “PhilHealth” in 1995. Over the years, the country has undertaken various health sector reforms in the direction of UHC. However, in 2010, UHC became an official priority of the health sector under the Kalusugan Pankalahatan program (meaning UHC in Tagalog). Overall, these efforts culminated in the enactment of the Universal Health Care Act (UHCA), signed into law on 20 February 2019.(3)
2.2 Universal Health Care Act (UHCA)
Under the UHCA, all Filipinos are covered by the national health insurance that is administered by the Philippine Health Insurance Corp. (aka PhilHealth). Filipinos are automatically enrolled in PhilHealth’s program, categorized as either direct contributors (those who pay health premiums) or indirect contributors (whose premiums are government-subsidized). Members currently contribute 2.75% of their income, shared by employers and employees. However, this will increase to 5% by 2025 to cover the costs of the new law. Late employer contributions face 3% interest monthly, as well as fines for noncompliance. The system ensures access to various healthcare services with zero copayments for basic accommodations and fixed copayments for non-basic care in public hospitals. The law also aims to consolidate the currently fragmented health systems, incentivizing health facilities based on performance, and mandating transparency in pricing and data reporting across public and private healthcare sectors, with monitoring mechanisms for progress assessment.(4) The implementation of UHCA was meant to be initiated by January 2020, but was significantly delayed by the onset of the global COVID-19 pandemic.(5) Currently, the implementation is still underway.
3. Health Financing
Financing of the Philippine health system comes from three main sources. Firstly, the government plays a significant role in funding both at the national and local government levels. National funds come from general taxation, while local governments receive budgets to support health facilities within their jurisdictions. Additionally, earmarked taxes on alcohol and tobacco have also significantly contributed to government health funding.(6) The Department of Health (DOH) funds regional and apex hospitals, while Local Government Units (LGUs) fund primary and secondary level care.
Secondly, the health financing is also a key player, administered by the aforementioned social health insurance (SHI) PhilHealth. PhilHealth collects premiums from members and uses them to pay for covered medical services. PhilHealth functions as the first contributor to healthcare expenses for both the public and the private sector, covering a predetermined sum for medical costs. Any expenses exceeding this sum must be paid for by alternative funding sources like out-of-pocket (OOP) household payments or private insurance providers.(7)
Thirdly therefore, OOP spending is still a significant source of financing in the Philippines2. The WHO reports that as of 2021, 44.61% of Philippine health expenditure is financed by OOP spending.(8)
Less significantly, other private spending including private health insurance plans and philanthropic contributions that go towards healthcare. The benefits packages offered by private entities are primarily complementary to PhilHealth insurance, as they are structured based on PhilHealth's existing packages.(7)
4. Healthcare Organization and Major Players
The Philippines adopts a decentralized approach to healthcare organization. The DOH sets national policies and standards, while LGUs manage public health facilities and programs within their areas.
4.1 Public Healthcare and the Role of the Government
The DOH functions as the primary national authority in healthcare, offering national policy directives, strategic plans, regulatory oversight, health standards, and specialized tertiary-level hospital services. It also provides leadership, technical aid, capacity-building, and fosters collaboration with various national government bodies, LGUs, and private organizations to enforce health policies. The LGUs, comprising provincial, city, and municipal governments, are tasked with overseeing and executing local health initiatives and services. A local health board, led by the local chief executive (governor or mayor), acts as an advisory committee to guide local health systems, supported by representatives from the DOH Regional Health Office or the Development Management Officer within the DOH Provincial Health Team.(2)
The DOH oversees the government-owned corporate hospitals, specialty and regional hospitals, whereas military hospitals are managed by the Department of National Defense. At the grassroots level, provincial governments are responsible for the administration and operation of district and provincial hospitals, while municipal governments deliver primary healthcare services, including preventive and promotional health initiatives and other public health programs, through rural health units, health centers, and barangay health stations. Highly urbanized and independent cities offer a comprehensive range of hospital services along with primary care services.
Uniquely, the Autonomous Region in Muslim Mindanao (ARMM), established through Republic Act No. 6734 and amended by Republic Act No. 9054, operates as a separate subnational entity with its own Department of Health accountable to the ARMM Regional Governor.(9) This regional DOH division directly manages provincial, city, and municipal health offices, as well as provincial and district hospitals within the autonomous region.(2)
The Insurance Commission (IC), operating within the Department of Finance, oversees and manages the activities of private insurance firms, encompassing health insurance, pre-need companies, and mutual benefit associations.(10) Starting from 2015, health maintenance organizations (HMOs) also fall under the regulatory purview of the IC. PhilHealth, however, operates independently and is governed by a Board of Directors led by the Secretary of Health. The DOH is responsible for the licensing of hospitals, laboratories, and other healthcare facilities via the Health Facilities and Service Regulatory Bureau (HFSRB), as well as health product regulation through the Food and Drug Administration (FDA). Notably, any healthcare facility accredited by DOH Regional Offices receives automatic accreditation from PhilHealth.(2)
4.2 Private Healthcare and the Role of the Market
The private market in Philippines is made up of a diverse array of healthcare providers, including hospitals, clinics, ambulatory surgical centers, and diagnostic laboratories. Notably, a significant majority of hospitals, clinics and infirmaries in the country (64.6%), belong to the private sector.(11) They consist of a wide spectrum ranging from small single-specialty facilities to expansive multi-specialty hospitals equipped with advanced technology. In addition, there are more than 3000 private pharmacies countrywide.(12) A notable trend in recent years is the emergence of large hospital groups, consolidating resources and enhancing infrastructure across various regions of the Philippines.(13)
In the private sector (both for-profit and non-profit healthcare providers), there is a predominant market orientation, with different entities competing with each other for market dominance. Though PhilHealth does reimburse accredited private providers, the higher fees often necessitate OOP payment or supplementary private health insurance. The private sector in the Philippines plays a substantial role and competes by delivering higher service and clinical quality healthcare services, offering specialized care, faster service, and enhanced amenities compared to the public sector.
Additionally, Health Maintenance Organizations (HMOs) have gained popularity, especially among those covered by employer-sponsored health plans, as they provide access to a network of private healthcare providers for a fixed monthly fee.(14) Additionally, private health insurance plans are available, albeit less commonly, to help individuals cover costs associated with hospitalization and other medical treatments.
Access to private healthcare services can vary significantly depending on geographical location. Urban areas generally boast a higher concentration of well-equipped private hospitals, offering a wide array of specialized services. In contrast, rural areas often have limited access to both private and public healthcare.(15) However, public services generally cover rural areas more compared to private.
4.3 Role of External Donor Funding and Programs
The Philippines has also been a significant recipient of foreign donor aid for the purpose of building up their health system. Most notably, the United States alone has provided about $582 million to the Philippines over the past 2 decades.(16) USAID has played a significant role in the supporting of development of service delivery networks. This was done through several projects such as the Private Sector Mobilization of Family Health 2 (PRISM2), LuzonHealth, MindanaoHealth and VisayasHealth projects.(17,18)
5. UHC Challenges in the Philippines
5.1 Health System Fragmentation
One of the most significant obstacles in achieving UHC in the Philippines is the fragmentation within the healthcare system.(19) This fragmentation manifests in various ways, including disorganized governance structures, fragmented financing mechanisms, and episodic service delivery with poor continuity of care. For instance, the provision of maternal and child health services often receives funding from multiple sources such as the DOH, PhilHealth, LGU). While this might seem beneficial, it often leads to confusion, inefficiencies, and sometimes duplication of efforts. On the other hand, non-communicable diseases (NCDs) often do not receive adequate funding or prioritization, exacerbating health inequities.
Moreover, the absence of a structured referral system further complicates the issue, especially for the growing number of patients with complex chronic conditions.(20) Without clear guidelines and pathways for patient referrals, individuals may face challenges navigating the healthcare system effectively. This lack of coordination can result in increased healthcare costs, delays in treatment, and poorer health outcomes for patients.
5.2 Implementation Challenges of PhilHealth
The implementation of the national health insurance program presents another significant hurdle. PhilHealth faces several issues, including inequitable membership contribution rates and an inadequate benefit package that does not always align with the evolving healthcare needs of the population.(21,22,23) As a result, certain healthcare services or treatments may not be covered adequately or at all, leading to significant OOP expenses for patients. These OOP payments are not informal payments, but additional billing (also known as balanced-billing) to cover the cost difference between what the providers charges and what PhilHealth pays. These OOP spending is shown to be driven mostly by the cost of medicines, which accounts for up to 76% of total health spending in the poorer population groups.(2) The Philippines has the most expensive pharmaceutical prices among the Association of Southeast Asian Nations (ASEAN) due to limited domestic production and high import prices relative to international standard for both generic and branded pharmaceuticals.(7)
This coverage gap often forces individuals, especially those experiencing severe health issues, to resort to OOP payments when healthcare costs exceed the benefit ceiling offered by PhilHealth. Consequently, this financial burden can deter people from seeking timely and appropriate healthcare, leading to negative health outcomes and perpetuating health disparities.
Furthermore, the Philippines has a sizeable informal sector (about 18.5 million individuals)24 consisting of individuals who work in agriculture, fishermen, and other micro-entrepreneurs (e.g., street hawkers). The presence of this sector makes it difficult for PhilHealth to adequately implement the collection of health contributions, and therefore might undermine input into the risk pool of funds.
5.3 Catastrophic Health Expenditure (CHE)
Catastrophic Health Expenditure (CHE) is therefore also a significant issue in the Philippines due to the PhilHealth benefit cap and high OOP payments. The incidence of CHE is much higher in inpatient care compared to outpatient care, with a 30.3% of households experiencing CHE with the 10% threshold (greater than 10% of six-month household total expenditure) or 14.9% for the 25% threshold.(7) Public facilities have been found to charge lower OOP payments for both inpatient and outpatient care, likely through other public subsidies provided to patients.
5.4 Human Resources
Though the Philippines trains a high number of healthcare workers with good quality education, a significant number of them immigrate to other countries to work. The Philippines is known as the world’s largest supplier of foreign nurses because of this, and results in a “brain drain” and shortage back home.(25,26) This is likely due to a less competitive salary in the Philippines compared to Western countries, and a less desirable work-life balance.(27) This affects the ability of the country to achieve UHC because its current healthcare workforce is unable to grow at a desirable rate, limiting service expansion and allowing for delivery of care especially in geographically rural areas.
5.5 Health Infrastructure
Furthermore, public hospitals are often in dire need of facility upkeep to maintain their operations. Public hospitals have limited resources at their disposal. Physical facilities can have construction defects, lack of electricity, poorly located or improper maintenance of premises and equipment. (28,29)
5.6 Political Structure
Politics also play a significant role in shaping healthcare policies and implementations in the Philippines. Politicians often use promises of improved health coverage during election campaigns to gain favor with voters.(30) However, these promises may not always translate into meaningful actions or sustainable healthcare reforms. The inconsistency in political priorities can undermine previous efforts towards achieving UHC and erode public trust in healthcare institutions.
5.7 External Funding
Moreover, the reliance on external funding sources for healthcare programs poses challenges to long-term sustainability and autonomy. While donor-funded programs can provide much-needed resources, they may not always align with the country's national health priorities. This lack of control over funding sources can complicate health finance planning and limit the government's ability to address systemic healthcare challenges effectively. Furthermore, the presence of vertical programs with narrowly defined scopes can interfere with the overall integration of the health system, resulting in worse healthcare fragmentation overall.
6. Status of UHC in the Philippines
The Philippines has made significant strides towards achieving UHC with the passage of the UHCA in 2019. Under the new law, Filipinos technically have 100% coverage under PhilHealth. Furthermore, current health expenditure as a proportion of GDP is 5.61% in 2021, which is in line with the recommended WHO target of 5%.(31) PhilHealth also regularly reviews how it can expand which interventions it pays for and is careful to maintain its economic sustainability.(32) These are all major steps in the right direction, but the country still has important gaps to cover because universal coverage does not automatically equate to adequate access to healthcare, nor the quality of the healthcare received.
As mentioned before, PhilHealth provides relatively shallow and insufficient coverage that causes providers to charge OOP payments from patients. Though the share of OOP spending on current health expenditure has improved from 52.4% in 2014 to 44.7% in 2022, this still means that individuals seeking care are still at risk of having catastrophic health expenditures.
On top of financing, service delivery must also be considered. The WHO UHC Service Coverage Index (which looks at the coverage of essential health services) gives the Philippines a score of 58/100 in 2021.(33) Though the Philippines has made dramatic improvements from 36/100 in 2000 to present, this is far below the Western Pacific region score of 79 and the Worldwide score of 68. Beyond basic care packages, the country also needs to build up its advanced medical capabilities such as countrywide surgical capacity and amount of advanced medical equipment. For example, the Philippines only has one-third of radiotherapy machines necessary for its corresponding cancer burden.(32)
Finally, urban-rural disparities are a challenge in the Philippines, and a barrier to true UHC. The rural and poor are much less likely to be able to access the care that they need due to the lack of service coverage in those areas, and inability to travel out to urban centers with abundant health facilities.
As such, we can conclude that the Philippines is on its way towards UHC, but still falls short on depth of coverage by PhilHealth, service coverage and urban-rural disparity.
7. Reform Proposals
Expansion of PhilHealth Coverage: To ensure comprehensive and adequate coverage, continuous review and expansion of benefit packages by PhilHealth and other healthcare financing mechanisms are imperative. As previously mentioned, PhilHealth benefit caps are too low, causing high OOP expenditure for many individuals, driving up healthcare costs, and CHE rates. This can be financed directly by increasing the amount of SHI contributions by the general population, or increasing government funding for PhilHealth. Another way to allow for increase of PhilHealth reimbursements would be to lower overall healthcare costs. This is such that for those that need it, PhilHealth has the money to pay a larger share of their healthcare bill. One of the most effective strategies for this is emphasis on good quality and widespread preventive care, such as screening and early initiation of treatment for chronic issues such as diabetes, hypertension and even mental health. Studies have repeatedly shown that good preventive care leads to lower healthcare costs because many diseases amenable to screening are far less costly to treat in early stages compared to late stages.(34) Following this line of reasoning, Singapore – a fellow ASEAN country – launched their newest reform in July 2023 called “HealthierSG”, which amongst other things, focuses heavily on preventive and primary care for the purpose of pushing down overall healthcare costs.(35) Some of these changes are already underway in the Philippines, but as the world collectively realizes the increasing benefits of preventive measures, the government must consider regular assessments and adjustments based on evolving healthcare needs and advancements as they expand towards UHC.
Formation of a Health Technology Assessment (HTA) Agency: Another possible reform would be to set up a HTA agency for the Philippines. Since PhilHealth is a nationwide SHI, it would need to be extremely careful in what they choose to fund or what they include in their benefit package. The Philippines does not yet have an HTA agency, akin to National Institute for Health and Care Excellence (NICE) in the United Kingdom or the Agency for Care Effectiveness (ACE) in Singapore. These agencies are crucial if a country wants to make strategic purchasing decisions, or decide if medical technologies or pharmaceuticals are worth investing in. Though it is true that other countries can rely on assessments done by NICE or ACE and extrapolate for their own purposes, they will not be able to do studies or needs-analyses that enable custom solutions for the country’s specific needs and are cost effective. Notably, this will take a lot of technical expertise and require a large amount of funding. However, such a large and likely locally prestigious agency could help to provide jobs which retain talent in the country instead of allowing for “brain drain” out of the country.
Augmenting Primary Healthcare with Telemedicine and Health Information Technology: Investing substantially in primary healthcare services, including community-based care and preventive interventions, is crucial for improving population health outcomes. By bolstering primary healthcare infrastructure and workforce capacity, the burden on tertiary care facilities can be alleviated, leading to more efficient resource allocation and eventual cost savings. As such, a potential improvement would be to lean in heavily to the use of telemedicine and health information technology (IT) to bolster and extend the capabilities of primary care, especially in rural areas. As mentioned before, rural areas in the Philippines do not often have access to more advanced care. However, a significant number of specialist care is amenable to telehealth use, where specialists from urban tertiary hospitals can run specialist teleconsultations to support primary care physicians for non-surgical issues like dermatology, internal medicine, or infectious diseases. Many countries already do this, but a fully integrated and established model that the Philippines can follow is one developed by Intermountain Health in the United States. Intermountain is a large health system based in Utah with many tertiary hospitals supporting their rural primary care clinics in this exact way.(36) This prevents the need for patients to travel long distances, and allows the specialists to remain in the cities to practice but still be able to serve rural areas. This model might work well for the Philippines, which is formed out of many distant islands and have many rural populations. Understandably, this would involve significant investment in local infrastructure like internet coverage and telehealth enabled devices, but would benefit the population hugely as well.
8. Conclusion
Overall, the Philippines has enormous potential to reach their goal of UHC. While challenges such as funding and infrastructure remain, ongoing efforts and policy implementations are crucial in realizing the vision of a healthier and more resilient nation.
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