STUDIES on health decentralization released by state think tank Philippine Institute for Development Studies found major issues in the policy’s design and implementation.
One study examined the effect of health devolution on hospital inpatient services in 54 provinces, their component cities and municipalities. Results showed a decline in the level of hospital inpatient services between 2006 and 2013 due to the inadequate budget of local government units (LGUs) for maintaining and upgrading devolved health facilities.
Under the Local Government Code, health services are devolved to LGUs, giving them greater responsibility to provide health services to their constituents and to operate and maintain health facilities such as district hospitals and rural health units. Health devolution was supposed to increase LGU spending on healthcare delivery services to achieve better health outcomes. However, this has not been the case in most LGUs. The share of health spending in the internal revenue allotment (IRA) of many LGUs is insufficient to finance devolved hospitals, pay the salaries of health workers, and procure hospital beds and other supplies.
Given their limited funds, LGUs tend to spend less on hospitals and rely more on the national government’s financial assistance such as the Health Facilities Enhancement Program (HFEP) of the Department of the Health. HFEP is intended to “upgrade barangay health stations, rural health units, government hospitals and health facilities in provinces” and “provide trainings to health professionals with the end in view of improving access to quality health care.”
Moreover, DOH subsidizes vertical programs such as the Expanded Program in Immunization, the control of infectious or communicable diseases, and the deployment of human resources for health in the LGUs. All of these are allowed under Section 17(f) of the Code. However, increasing the share of DOH spending at the provincial level certainly diminishes the health expenditure decentralization ratio, and in practical terms, it weakens health devolution. Such provision encourages the existence of a two-track delivery system, which creates confusion, weakens accountability between levels of government, and promotes inefficiencies in the health system.
Another study assessed the effect of fiscal decentralization on the efficiency of local government health spending. The mismatch between local governments’ fiscal capacity and devolved functions, the fragmentation of the health system, and the unclear expenditure assignments between the national and local levels have led to inefficiencies in the delivery of health services in LGUs.
What should be done? The studies recommended amendments to the taxing powers of provinces. Provinces have weak taxing power but at the same time, they have the immense responsibility of maintaining and operating provincial hospitals, which is associated with huge financial requirement.
Another is to revise the IRA distribution formula to address the long-standing issue of mismatch between the cost of devolved health facilities (especially hospitals) and available resources in LGUs.
The need for LGUs to have sound financial resource bases or the capacity to generate revenues to sustain the health needs of their constituents is also important.
