Sustainable Health Financing: The Philippine Experience

Transcription

1 2015/SFOM/S/016 Session: 4 Sustainable Health Financing: The Philippine Experience Purpose: Information Submitted by: Philippines Special Senior Finance Officials Meeting Clark, Philippines January 2015

2 Sustainable Health Financing: The Philippine Experience MARIA EDITA Z. TAN Assistant Secretary, Department of Finance Republic of the Philippines Outline of Presentation I. Background II. Sneak Preview of Wins of Philippine Sin Tax Reform III.Concluding Remarks 1

3 BACKGROUND Fiscal space and sustainability is a constant refrain in APEC finance ministers discussion. Fiscal space a necessary requirement for financial resiliency. Financing of health, education and other social services is a key concern of APEC sectoral ministers. Strong political commitment for addressing health issues, including Universal Health Care (UHC) in the APEC region. Need for a whole of government approach, where appropriate. Finance Ministers process need to work closely with their sectoral counterparts. Sources of Fiscal Space for Public Health Conducive macroeconomic and fiscal conditions economic growth and increases in government revenue Re-prioritization of health in the government budget Health sectorspecific resources such as earmarked taxes Development assistance health sector-specific grants, foreign aid or loans Efficiency gains through better use of existing funding 4 2

4 Republic Act No An Act Restructuring the Excise Tax on Alcohol and Tobacco Products (RA 10351) (Signed into Law - Dec. 19, 2012) Landmark Legislation under the Aquino Administration. Primarily a health measure with revenue implications. Fundamentally a good governance measure with positive impact on both public health and fiscal health. Republic Act No Incremental revenues earmarked for health Section 8 (C): After deducting the allocations under Republic Act Nos and 8240, Eighty percent (80%) for: National Health Insurance Program Attainment of the Millennium Development Goals Health awareness programs Twenty percent (20%): Medical assistance Health enhancement facilities program 3

5 RATIONALE FOR REFORM Help finance Universal Health Care (UHC). Address public health issues relating to alcohol and tobacco consumption. Simplify the current excise tax system on alcohol and tobacco products and fix long standing, structural weaknesses: Remove price/brand classification freeze. Level the playing field. Reduce number of tiers. Make tax system more buoyant by indexing tax rates to inflation REFORMED TAX STRUCTURE FOR CIGARETTES Excise Tax Rates of Cigarettes In Philippine Pesos Tier 1 Tier Prior to Reform 2012 Tier Tier Tier *Tier *Tier 4 no production After the Reform Tier Unitary PhP30.00 Tier

6 25.00 REFORMED TAX STRUCTURE FOR FERMENTED LIQUOR Excise Tax Rates of Fermented Liquor Prior to Reform 2012 NRP or Less NRP more than Less than Php Php Php After the Reform More than Php Brewed and sold at microbreweries and micro brew pubs NRP < Unitary NRP > WINS OF THE SIN TAX REFORM Credits to: Manix Abrera, GMA News Online 5

7 WIN FOR FISCAL HEALTH Share of tobacco and alcohol excise collections to GDP in 2013 highest since WIN FOR FISCAL HEALTH MOODY S Baa3 Positive Investment Grade (Oct. 3, 2013) FITCH RATINGS Upgraded to BBB- /Stable from BBB+; Investment Grade (March 27, 2013) Affirmation (March 25, 2014) STANDARD & POOR S JAPAN CREDIT RATING AGENCY (JCRA) Upgraded to BBB-/Stable from BB+/Stable; Investment Grade (May 2, 2013) Upgraded to BBB /Stable from BBB- /Stable; Investment Grade (May 8, 2014) Upgraded to BBB /Stable from BBB- /Positive; Investment Grade (May 7, 2013) Affirmation (May 30, 2014) RATING & INVESTMENT (R&I) INFORMATION, INC. Upgraded to BBB /Stable from BBB- /Positive; Investment Grade (July 9, 2014) 6

8 WIN FOR PUBLIC HEALTH Increased funding for Department of Health 2014 budget up 57% over 2013 levels, from Php 53.3 billion to Php 83.7 billion. Bulk of this will be used to finance Philhealth premiums. WIN FOR THE POOR National Government Allocation for Health Insurance Premiums for the Poor In Billion Pesos 7

9 WIN FOR THE YOUNG AND THE POOR Results of the Smoking Prevalence Study of Dr. Antonio Dans based on National Nutrition Health Survey 2013 data: Prevalence of smoking among adult Filipinos went down from 31.0% in 2008 to 25.4% in There are 3.2 million less smokers in the country because of the Sin Tax Law. The drop is partly from people who stopped smoking. It is mostly from people who avoid starting to smoke. Approximately 32,000 deaths were averted. Health benefits were greatest in price sensitive populations the poor, rural folk, the very old, and the very young. WIN FOR TOBACCO FARMERS Significant increase in earmarks for tobacco growing regions. In Million Pesos 12,000 10,000 Total Earmarks 10,695 8,000 6,000 5,251 5,849 5,640 4,000 3,839 3,998 2,

10 WIN FOR UHC Sustainable Financing for Health from Alcohol and Tobacco Excise Tax CONCLUDING REMARKS Reforming tobacco and alcohol taxation can be a sustainable financing source for Universal Health Care. Political support at highest levels is key. Constructive engagement with various stakeholders, including civil society. Importance of whole of government approach constructively engaged other ministries such as Health, Trade, Agriculture as well as Budget and Management. 9

11 CONCLUDING REMARKS More collaboration between APEC Finance Ministers process and their sectoral counterparts in the sustainable financing of health, education and other social services. We can start with the Health Ministers because of political commitment to health among APEC Leaders. An APEC Dialogue on Sustainable Health Financing (Education and other Social Services can be included) can be an avenue for sharing experiences and best practices. CONCLUDING REMARKS Help sectoral ministers understand the mindset of Finance Ministry officials to achieve common objectives. Predictable revenues are important to them. How to balance the financing demands from various sectors, i.e. education, health, infrastructure etc. UHC can be a bottomless pit, thus the need for cost effectiveness and efficiency measures. Looks at value for money. Generally against earmarking as preference is One Fund concept which allows flexibility. 10

12 THANK YOU! 11