[OPINION] The Philippines is spending more on health, but getting less

Over the last decade, government spending on health has nearly doubled. But this dramatic rise in public investment has neither translated into lower out-of-pocket costs for Filipino families, nor delivered the improvements in health outcomes that universal health care (UHC) promised.

When the country passed the landmark UHC Act in 2019, it committed to giving every Filipino access to essential health services without financial hardship. Five years later, progress has been made, new programs launched, and more benefits introduced, but the big picture remains troubling. Many still face catastrophic health expenses that drive families into poverty. Others forego care because it remains too expensive or too difficult to access. And even when patients do enter the system, the quality they receive is suboptimal. These realities force us to confront a difficult but necessary question: Are we moving closer to UHC’s goals, or simply spending more without getting better results?

This question was at the core of UHC in Numbers, a forum hosted by the Health Economics and Finance Program of the Philippine Institute for Development Studies (PIDS) last November 20. Our analysis of multiple national datasets revealed a striking pattern. Government health spending has doubled from 2014 to 2024 even after adjusting for inflation and population growth. Yet over the same period, we saw limited improvement in infant mortality, life expectancy, or preventable deaths.

The regional comparison is even more sobering. In the past 10 years, the annual growth rate of government health spending per capita in the Philippines was 11%, one of the fastest in Southeast Asia. But our improvements in outcomes were among the weakest. The Philippines’ annual decline in infant mortality rate was less than 1%, while most neighboring countries like Singapore, Thailand, Cambodia, Vietnam, Laos, and Indonesia experienced higher improvement in outcomes, despite their far lower spending growth. We see the same pattern for life expectancy and mortality from preventable causes.

Out-of-pocket or OOP spending, what families pay directly for health care, also did not fall as expected. From 2014 to 2024, OOP spending per capita increased by 1.6 times, even after adjusting for inflation and population growth. While the share of OOP in total health spending declined modestly, from 50% in 2014 to 44% in 2024, this reduction is far below what one would expect given the scale of public investment.

Indonesia offers a useful comparison. More than decade ago, Indonesia had roughly the same OOP share as the Philippines, hovering around 50%. But after implementing comprehensive health financing reforms, Indonesia brought its OOP share down to about 30% today. This is what effective financial protection looks like when reforms are aligned, sustained, and implemented at scale. So why is higher government spending not producing better results as it should be?

First, progress in primary care has been slow. For years, investments have leaned toward inpatient care rather than prevention and outpatient services. Nearly 30% of catastrophic spending comes from outpatient medicines alone. The new primary care and drug benefits of the Philippine Health Insurance Corporation (PhilHealth), YAKAP and GAMOT, offer strong potential to ease this burden. The future impact of these programs, launched this year under the bold leadership of Dr. Edwin Mercado, will depend on efficient delivery systems and making sure that the right patients receive the right medicines consistently.

Second, financial protection through PhilHealth remains incomplete. Recent expansion such as zero balance billing in Department of Health hospitals and higher case rates are meaningful steps, but they still leave many patients in local government-run and private hospitals without adequate protection. These reforms must be matched with stronger purchasing systems. Without consolidated financing and the ability to negotiate fair prices, reimbursements may rise without expanding access. PhilHealth’s commitment to shift toward diagnosis-related groups is promising because it modernizes how hospitals are paid and better reflects the complexity of care.

Third, quality of care continues to hold back outcomes. In a survey of facilities and health providers conducted by PIDS, where we used clinical vignettes to rigorously assess diagnostic and treatment quality, we found lower-than-expected score levels. This is why PhilHealth’s plan to move from paying for volume to paying for performance or outcomes is so critical. Modern health systems reward outcomes, not just services delivered. Linking payment to quality is essential if we expect public spending to translate into real improvements in health.

As we enter the next stage of development, we must continue to mobilize the health resources befitting a country nearing upper middle-income status. But more spending must go hand in hand with accountability for results. Better outcomes and stronger financial protection, not just bigger budgets, should define the future of UHC. If we focus on these, the country can finally deliver the health system Filipinos deserve. – Rappler.com

Valerie Gilbert Ulep, PhD, is a senior research fellow and program director of the Health Economics and Finance Program of the Philippine Institute for Development Studies.