Securing the Wins of the Philippine Sin Tax Reform JEREMIAS N. PAUL, JR. Undersecretary, Department of Finance Republic of the Philippines
OUTLINE OF PRESENTATION I. Background II. Wins of Sin Tax Reform III.Expenditure Indicators IV.Concluding Remarks
PH BELOW LMIC AVERAGE 60.0 Public Health Expenditure, as % of Total Health Expenditure, 2012 50.0 51.2 i n 40.0 42.6 39.8 39.6 37.7 LMIC Average- 38.3 P e r c e n t 30.0 20.0 33.1 31.4 10.0 0.0 Lao PDR Vietnam Sri Lanka Indonesia Philippines India Pakistan Source: World Development Indicators
REPUBLIC ACT NO. 10351 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.
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.
REPUBLIC ACT NO. 10351 Incremental revenues earmarked for health Section 8 (C): After deducting the allocations under Republic Act Nos. 7171 and 8240, Eighty percent (80%) for: National Health Insurance Program (NHIP) Attainment of the Millennium Development Goals (MDGs) Health awareness programs (HAP) Twenty percent (20%): Medical assistance (MAP) Health enhancement facilities program (HEFP)
WIN FOR FISCAL HEALTH Share of tobacco and alcohol excise collections to GDP in 2013 highest since 2000.
WIN FOR PUBLIC HEALTH Increased funding for Department of Health 2014 budget up 57% over 2013 levels, from Php 53.3 billion ($ 1.26 B) to Php 83.7 ($1.90 B) billion. Bulk of this will be used to finance Philhealth premiums. 90 80 70 60 50 40 30 20 10 0 31.8 24.6 DOH Budget (In B PhP) 42.2 $ 1.0 B 53.3 $ 1.26 B $ 0.73 B $ 0.54 B 2010 2011 2012 2013 2014 83.7 $ 1.90 B
WIN FOR PUBLIC HEALTH 90.00 80.00 70.00 60.00 50.00 40.00 30.00 20.00 10.00 0.00 $1 ~ Php 44.3103 NATIONAL GOVERNMENT HEALTH BUDGET In Billion Pesos Total Budget PhilHealth MDG & Others Health Facilities Enhancement Program FY 2013 GAA (Baseline budget w/o Sin Tax) FY 2014 GAA Medical Assistance Program and Health Enhancement Facilities Program
WIN FOR THE POOR National Government Allocation for Health Insurance Premiums for the Poor $ 0.8 B $ 0.3 B $ 0.3 B In Billion Pesos
WIN FOR UHC Sustainable Financing for Health from Alcohol and Tobacco Excise Tax $ 1.30 B $ 1.15 B $ 1.02 B $ 0.82 B
2014 DOH BUDGET UTILIZATION Universal Health Care: National Health Insurance Program Indicator Monitored 2013 Accomplishment (Baseline) 2014 Target/ Accomplishment (as of) Budget Utilization as of August 2014 ACCOMPLISHMENT Coverage rate of the Poor (Quintile 1 & 2) 5.3 M Principal members and 15.9 Dependents (A total of 21.2 Members) 14.7 M Principal Members and 30.53 M Dependents (A total of 45.23 M members) 100 % Source: DOH Sin Tax Law Incremental Revenue for Health Annual Report
2014 DOH BUDGET UTILIZATION Health Awareness: Health Promotion Indicator Monitored 2013 Accomplishment (Baseline) 2014 Target/ Accomplishment (as of) Budget Utilization as of August 2014 TARGET Prevalence of smoking among Filipino adults aged 20 years old and above 31 % 25.4% 30 % Source: DOH Sin Tax Law Incremental Revenue for Health Annual Report
2014 DOH BUDGET UTILIZATION Attainment of Health-related MDGs: Expanded Program on Immunization Indicator Monitored 2013 Accomplishment (Baseline) 2014 Target/ Accomplishment (as of) Budget Utilization as of August 2014 TARGET Percentage of fully immunized child 2.683 M Children (aged 1 year old) (89%) -2.731 M Children (90%) -Provide Pneumococcal vaccination to 300 T infants -Provide Rotavirus vaccination to 2.4 M infants (72%) 72 % Source: DOH Sin Tax Law Incremental Revenue for Health Annual Report
2014 DOH BUDGET UTILIZATION Access to Quality Health Services: Deployment of Human Resources for Health Indicator Monitored 2013 Accomplishment (Baseline) 2014 Target/ Accomplishment (as of) Budget Utilization as of August 2014 Number of Doctors, Registered Nurses, Rural Health Midwives, Community Health Teams (CHT) Deployed Doctors: 276 Nurses: 21,930 Midwives: 2,738 CHTs: 48,519 teams (222,128 members) ACCOMPLISHMENT Doctors: 319 Nurses: 11,202 Midwives: 2,700 CHTs: 44,735 teams (212,388 members) 52 % Source: DOH Sin Tax Law Incremental Revenue for Health Annual Report
2014 DOH BUDGET UTILIZATION Medical Assistance Program Indicator Monitored 2013 Accomplishment (Baseline) 2014 Target/ Accomplishment (as of) Budget Utilization as of August 2014 ACCOMPLISHMENT Number of patients served - 25,136 patients 51 % Source: DOH Sin Tax Law Incremental Revenue for Health Annual Report
2014 DOH BUDGET UTILIZATION Hospital Operations Utilization of funds allocated 10 % Special Hospitals, Medical Centers, strategically placed nationwide and serve as end referral centers Infectious Diseases Prevention program for HIV/STI, Prevention and treatment activities for Dengue 65% Fund Utilization Elimination of Diseases such as Malaria, Schistosomiasis, Leprosy and Filariasis Malaria morbidity 2.0/100,000 Malaria mortality -.004/100,000 Prevalence of Schistosomiasis - <1% Filariasis 26 disease free provinces 84% fund utilization Source: DOH Sin Tax Law Incremental Revenue for Health Annual Report
OPERATIONAL GUIDELINES ON UTILIZATION AS REQUIRED IN THE SIN TAX IMPLEMENTING RULES AND REGULATIONS Universal Health Care Medium-Term Expenditure Program List of projects and programs for UHC Guidelines for the identification and qualification of funding support and monitoring of fund utilization With expenditure tracking system Guidelines and standards for monitoring and evaluating the effectivity of Service Delivery Networks Guidelines for the deployment of physicians graduating from residency training programs in government hospitals Guidelines for the assessment and monitoring of clinical competencies to ensure that all skilled health professionals meet the standards for service delivery Evidence-based Human Resources for Health Master Plan with guidelines for determining, attaining, and retaining the ideal number of skilled health professionals and other allied health professionals Performance monitoring measures such as the Benefit Delivery Rate approach, among others to measure UHC implementation and improve access to and availment of health services
CONCLUDING REMARKS Aim high for health. Sintax reform has generated substantial resources for UHC in the Philippines. Reforming tobacco and alcohol taxation is a sustainable financing source for UHC. Need to spend wisely. Importance of comprehensive, holistic approach under a medium term expenditure framework. No room for complacency. Continued vigilance necessary to ensure effective implementation of reforms.
CONCLUDING REMARKS Understand the mindset of Finance Ministry officials. 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.
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