# **1. Introduction**

Health systems are not just about improving health, but also about ensuring that people are protected from the financial consequences of illness, and especially the financial consequences of having to obtain medical care. One widely-used definition of universal health coverage (UHC) is, therefore, “a situation where all people who need health services (prevention, promotion, treatment, rehabilitation, and palliative) receive them _without undue financial hardship”_ (WHO 2010). A recent WHO/World Bank Group proposal is that by 2030 everyone should have 100 percent financial protection from out-of-pocket payments (WHO/World Bank Group 2014).

In the Philippines, financial protection has been identified as a central pillar of universal health coverage. The Department of Health’s 2011-2016 _Kalusugan Pangkalahatan_ (literally “universal health care”) strategy includes “financial risk protection through expansion of the National Health Insurance Program (NHIP) enrollment and benefit delivery” as one of its three “strategic thrusts” for UHC, along with improved access to quality hospitals and health care facilities, and the attainment of the health-related MDGs.

Using fives waves of the Family Income and Expenditure Survey (FIES), two waves of the National Demographic Health Survey (NDHS), and one Family Health Survey (FHS) between 2000 and 2012, this paper aims to assess the progress of the Philippines in reaching its UHC goal of financial risk protection, as measured by estimates of health insurance coverage, out-of-pocket spending, catastrophic payments and impoverishing health expenditures. It also seeks to explain the reasons for the trends and patterns observed and suggests a set of measures that could be taken to make further progress.

# **2. Recent policy developments**

The Government of the Philippines has followed through on its strategic commitment to financial risk protection with a number of policies that seek to reduce out-of-pocket spending on health.

Most prominent among these has been the expansion of the National Health Insurance Program (NHIP), administered by the Philippine Health Insurance Corporation (PhilHealth). To complement the existing health insurance for civil servants and the mandatory coverage for the formally employed, as well as local government subsidies for health insurance enrollment, national government-subsidized health insurance was introduced in 1996 for poor people in select poor provinces and expanded in 1998 to also cover additional poor people in more affluent provinces and cities. In 2010, following PhilHealth’s adoption of the Department of Social Welfare and Development’s National Household Targeting System for Poverty Reduction (NHTS-PR) as the sole means of identifying the nationally-sponsored poor, subsidized coverage was extended to a total 5.2 million poor families (PHIC 2010). Simultaneously, local governments continued to partially subsidize the health insurance of families that they deemed poor and vulnerable, with a 50% matching subsidy from the national government. Then, in 2014, following the landmark 2012 tobacco and alcohol excise tax increase (also known as the Sin Tax Law) which earmarked the majority of revenues for the health insurance premiums of the poor, coverage was further expanded to a total of 14.7 million poor families (2013 Amendment to the National Health Insurance Act of 1995 (RA 10606))<sup>1</sup> .

> 1 The additional families are composed of (i) higher income households further up the NHTS-PR list, i.e. the nearpoor, and (ii) individuals who were not previously covered by PhilHealth even though they were part of poor households (as defined by the NHTS-PR) where the principal member and dependents were covered by PhilHealth.

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