A new dawn of health care for every Filipino

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Marvin L. Madrigalejo

Taxwise Or Otherwise

“Health is wealth” is the quintessential slogan that captures the wisdom behind health care. After months of intensive and careful deliberation in both Legislative Houses, the dream measure of the government was finally signed into law with the vision of providing quality, accessible and affordable health care for Filipinos.

On 20 Feb. 20, Republic Act No. 11223, also known as the Universal Health Care (UHC) Act, was signed with the intent of instituting universal health care for all Filipinos, prescribing reforms in the health care system, and appropriating needed funds for its programs.

As promising as it seems, the UHC law will entail substantial investment spending for medical professionals and workers, medical equipment and instruments, infrastructure and of course medicine. Let’s take a closer look at some of the salient provisions of the new health care law.

PROGRAM MEMBERSHIP
Under the new law, every Filipino citizen shall be included automatically in the National Health Insurance Program (NHIP) as members. Membership consists of two types: direct contributors and indirect contributors.

Direct contributors are required to pay progressive premium rates from 2.75%, for those whose income ranges from the fixed-base of ?10,000 up to an income ceiling of ?50,000 on its initial year of implementation. The premium rates shall be progressively increased in the succeeding years at a maximum projected premium rate of 5% by year 2025 for members with income ceiling of ?100,000. The schedule of projected premium contributions from 2020 onwards are as follows:

Health Care Rates




Nonetheless, failure to pay premium contributions will not prevent members from enjoying benefits. Employers in this case shall be required to pay all missed contributions with penalty interest of at least 3%, compounded monthly. On the other hand, self-employed individuals, which include migrant workers and professional individual practitioners, will be required to pay a maximum of 1.5% penalty interest for missing premium contributions.

The exact premium sharing of both the employee and employer for employed individuals has yet to be determined through the Implementing Rules and Regulation (IRR) of the Act.

Direct contributors who will pay premium contributions are to automatically enjoy additional benefits provided by PhilHealth.

On the other hand, indirect contributors which include indigents, senior citizens and persons with disabilities, will be eligible for the basic health benefit package and are to be covered by the premium subsidy included in the General Appropriations Act (GAA) under the Department of Budget and Management (DBM), the amount of which shall be released to PhilHealth.

HUMAN RESOURCES
The Department of Health (DoH) is tasked to formulate and implement a National Health Human Resource Master Plan that will provide policies and strategies for the recruitment and retention of a sufficient health workforce. Notably, the law specifically included provisions on the return service agreement which requires all graduates of health-related courses who benefitted from scholarship programs funded by the government to serve for a minimum of three years in priority designated areas. The challenge is for the government to come up with a competitive compensation package to entice and retain medical professionals in the program.

APPROPRIATIONS
The effective implementation of the new law will highly depend on the funds that will used in the program. This means that the state must ensure that it has enough funding to provide every Juan dela Cruz his medical benefits regardless of whether the membership is contributory or non-contributory.

Under the law, the government is to obtain the funds for the implementation of the UHC Act from the following sources:

(a) Total incremental sin tax collections as provided for in Republic Act No. 10351 or the Sin Tax Reform Law;

(b) Philippine Amusement Gaming Corp. (PAGCOR), which would be 50% of its income share for the National Government;

(c) Philippine Charity Sweepstakes Office (PCSO) which is to provide 40% of its Charity Fund, net of documentary stamp tax and its mandatory contributions;

(d) Premium contributions of members;

(e) DoH through its annual appropriations as included in the GAA ; and

(f) PhilHealth through its national government subsidy.

There is a funding requirement of P257 billion for the initial implementation, but only a P217 billion allocation was approved by Congress.

With this shortfall, the government has to seek additional funds to augment the budget deficit of P40 billion. Furthermore, the government must take additional measures in sourcing funds to sustain the program in the long-term, especially when the population continues to grow and is expected to reach 110 million by 2020 according to census-based population projection of the Philippine Statistics Authority (PSA). One such initiative sought by the Department of Finance (DoF) is to further increase excise tax on alcohol products and cigarettes by supporting the Sin Tax Reform Proposal that forms part of Package 2 Plus of the TRAIN law.

IMPLEMENTING RULES AND REGULATIONS (IRR)
To efficiently implement the new law, the DoH and PhilHealth must come up with an IRR within 180 days upon the effectivity of the Act, through multi-sectoral consultations with other related government agencies, civil society, and other concerned groups. The Act took effect on March 8, or 15 days after its publication in the Official Gazette.

While the passage of the UHC law provides a ray of hope for Filipinos especially for the less fortunate, it will be a challenge for both the government and members to ensure successful implementation of the program. In this case, there is truth in the adage “An ounce of prevention is worth a pound of cure” — both literally and figuratively.

The views or opinions expressed in this article are solely those of the author and do not necessarily represent those of Isla Lipana & Co. The content is for general information purposes only, and should not be used as a substitute for specific advice.

 

Marvin L. Madrigalejo is a Senior Manager with the Client Accounting Services group of Isla Lipana & Co., the Philippine member firm of the PwC network.

+63 (2) 845-2728

marvin.l.madrigalejo@ph.pwc.com