HEALTH SECTOR EXPENDITURE FRAMEWORK…. A Multi-year Spending Plan for the Department of Health * * Dr. Rosario G. Manasan Senior Research Fellow Philippine Institute for Development Studies Consultant FOR DISCUSSION PURPOSES ONLY

Outline of presentation  Objective of the study  Patterns and trends in NG spending on health  Estimates of resource gaps in the context of DOH budget reforms  Alternative HSEF scenarios

 To develop a policy-based multi-year expenditure estimates for the health sector or a health sector expenditure framework (HSEF) in support of the F1 Objective

Patterns/ trends in NG spending (1) National government spending on health deteriorating since 1999

Spending patterns and trends (3)

Directions of budget reforms Need to increase or secure allocations for public health; justified because of public good nature of public health Need to “liberate funds” by increasing cost recovery and reducing subsidies to retained hospitals and regulatory agencies Need to secure nat’l subsidies for premium to indigent program of PHIC to ensure sustainability of retained hospitals

Budget for DOH regulatory services

 With greater cost recovery from the DOH’s regulatory services, there is scope for reallocating resources away from regulatory bureaus of the department. Sustainable revenue generation of regulatory agencies depends on their credibility to set standards, verify/ enforce compliance. For this to happen, critical investments to build capability in these agencies needed. Budget for DOH regulatory services (2)

Sharp drop in real per capita DOH spending on public health in is most worrisome trend. Devolution of public health with implementation of Local Govt Code oftentimes used to justify this trend. National government continues to have a role in public health Public good nature of public health Estimates of cost of devolved health functions netted out of DOH budget in 1993 does not include PhP 1 billion for public health commodities retained in DOH budget Budget for service delivery – public health

Budget for service delivery – public health (8)

Budget for service delivery – public health (9)

Budget for service delivery – public health (10)

Budget for service delivery – public health (11)  F1 proposal: DOH should rationalize the way it allocates centrally procured and financed commodities to LGUs by using an appropriate balance between need and performance, backed by service obligations or contracts.  The distribution of public health commodities must be made in tandem with other public health instruments like technical assistance, training, health information and promotion.

A major concern for the PHIC is to secure funding for the indigent program. The DOH has to make sure that the national subsidy requirements arising from the 5-year province-wide health systems development initiatives are fully funded. Budget for social insurance

Budget for governance

FAPs – typically viewed as a facility providing extra support to the the DOH. Because FAPs can only be accommodated by crowding out other items in the DOH budget, FAPs need to be guided strategically towards supporting F1 implementation. Budget for governance (2)

Alternative HSEF scenarios Health budget ceiling pegged at 2006 levels Case 1a. Reallocation from hospitals and regulatory bureaus equal to 5% of MOOE in 2007 and 10% MOOE in ; Order of priority – FAPs and public health; no additional allocation for premium subsidies for health insurance of indigents

Budget ceiling pegged at 2006 levels Case 1b. Reallocation from hospitals and regulatory bureaus equal to 5% of MOOE in 2007 and 10% MOOE in ; Order of priority – public health and FAPs; no additional allocation for premium subsidies for health insurance of indigents Alternative HSEF Scenarios (3)

Alternative HSEF Scenarios (5) Budget allowed to grow Case 2a: Reallocation from retained hospitals equal to 5% of MOOE in 2007 and 10% of MOOE in ; full coverage for FAPs; increased support for public health so as to reduce gap initially by 50% in 2007, 65% in 2008 and 100% in ; increased support for subsidies to indigent premium from 25% of gap in 2008; 50% of gap in

Case 2b: Reallocation from retained hospitals equal to 5% of MOOE in 2007 and 10% of MOOE in ; full coverage for FAPs; increased support for public health so as to reduce gap by 100% in ; increased support for subsidies to indigent premium initially from 50% of gap in 2008 and by 100% of gap in Alternative HSEF Scenarios (7)