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Healthcare spending up by 18.5% on pandemic-related expenses

PHILSTAR

Healthcare spending grew by 18.5% in 2021 to P1.09 trillion, with most of the spending from the government as it addressed the coronavirus disease 2019 (COVID-19) pandemic, an analyst said.

Preliminary data from the Philippine Statistics Authority (PSA) showed that the 2021 rise in total current health expenditure (CHE) was higher than the revised 12.8% in 2020.

Meanwhile, gross health capital formation (HK) expenditure decreased by 19.6% to P71.15 billion in 2021, from the revised P88.54 billion in 2020.

Total health expenditure (THE), the sum of both CHE and HK, reached P1.16 trillion in 2021, up from P1.01 trillion a year ago — the highest in 19 years or since the 26% recorded in 2002, backcasted data from the statistics authority showed.

Government schemes and compulsory contributory healthcare financing schemes contributed half or 50.3% of total CHE or P546.64 billion, up from 45.9% last year or P421.43 billion.

Household out-of-pocket payment (OOP) followed with 41.5% share, lower compared with the 45% share in 2020.

In absolute figures, household OOP amounted to P451 billion in 2021, up by P38.03 billion from P412.97 billion in 2020.

Voluntary healthcare payment, meanwhile, came in third, contributing 8.2% to the total CHE, down from the revised 9% in 2020.

This is equal to P89.35 billion of the total expenditure, up by P6.60 billion from P82.75 billion in 2020.

Each Filipino spent P9,839.23 for health-related expenses in 2021 — a 17% increase from P8,511.52 per capita expenditure in 2020.

This is the highest recorded in three years or since the 21% growth recorded in 2018.

UnionBank of the Philippines, Inc., Chief Economist Ruben Carlo O. Asuncion said in a Viber message that the surge in healthcare spending was due to Filipinos realizing that “health is wealth” because of the pandemic.

“The pandemic’s impact on healthcare systems and healthcare in general is clear. [The] government went out to protect the health of their people. Whether the efforts were enough or wanting, the numbers obviously show what the government has done in previous years,” Mr. Asuncion added, as government spending related to health increased more, surpassing household OOP during the pandemic in 2020 and 2021.

Among health providers, hospitals received the majority of CHE with 41.7% of total share, down from 43.8% in 2020. This is equivalent to P453.23 billion in 2021, up P51.61 billion from P401.62 billion in 2020.

This is followed by retailers and other providers of medical goods with 26.2% (P284.70 billion in 2021 from P260.74 billion in 2020), and providers of health care system administration and financing with 14.8% (P160.44 billion from P88.85 billion).

In 2020, lockdowns and healthcare protocols were put in place to address the rising number of COVID-19 cases in the country, which strained the healthcare sector.

THE share to GDP rose 6% year on year in 2021, up from 5.6% in 2020, and 4.6% from 2019.

Mr. Asuncion said that this was due to the pandemic as well.

“We know that diseases other than COVID have been sadly sidelined — like dengue and others. One concern also for me was the vaccinations of children that were lacking as noted recently by the WHO (World Health Organization) … I suspect that preventive measures against future pandemics were also the reason,” he said.

According to the 2021 people’s enacted budget, P1.67 trillion was used in the social services sector which included programs for health, education, social welfare, and housing, and others. This is equivalent to 37% of the total budget in 2021.

However, prices of commodities have recently surged as a result of external tensions and supply constraints that could affect the priorities of the government this year.

Inflation rose to 6.9% year on year in September, matching the pace of September and October 2018, and was the highest since the 7.2% print of February 2009.

Inflationary pressures also weakened the peso which logged its lowest record last Oct. 13 closing at P59 versus the greenback.

Healthcare spending this year, according to Mr. Asuncion, will be influenced by the priorities of the public given the pressure in costs of goods and services.

“I think it is clear in the minds of people what to prioritize, while we are still technically in a pandemic. Nevertheless, people are also easy to forget and tend to be lax eventually. But, important to note … that rising inflation may also impact healthcare personal and public spending as well in a negative way. Priorities can easily change especially in a very uncertain environment,” he said.

To address inflation, the government has raised rates by 225 basis points since May.

While the economic situation is pressing, Mr. Asuncion said that education and health should not be overlooked.

“For me, both education and health are humungous priorities. People need [to be] educated well and healthy to contribute to economic growth. If people are secure and see their value and place in the economy, robust economic growth and equitable development are eventual consequences,” he said. — Bernadette Therese M. Gadon

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