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RH Law Means Money, Money, Money Plus Corruption

January 12, 2013

Wise men say the best way to spot corruption is to follow the money. This principle applies to both private and public sectors, particularly to government programs and instrumentalities that handle moneyed transactions and provide ‘public’ services.

Philippine's healthcare future looks bleak...

Philippine’s healthcare future looks bleak…

Ordinary people, particularly doctors and employers, who supported the recently passed Reproductive Health Law, otherwise known as Republic Act No. 10354 or the “Responsible Parenthood and Reproductive Health Act of 2012″, seemed to have buried their heads in the sand, as they simply ignored or refused to understand the impact of the alleged pro-women, pro-poor legislation on their rights and future as well as on the country’s economy as a whole.

History has taught us that most, if not all, welfare laws (translation: laws that promise to provide goods and services to the general public) produced negative consequences and failed to meet their intended social goals. In economics, there’s this term called the law of unintended consequences, which postulates that even the best-intentioned laws or political measures can produce undesirable effects that its proponents neither foresee nor desire.

For instance, when legislators passed the Philhealth law (R.A. No. 7875), the desired political intention was “to make essential goods, health and other social services available to all the people at affordable cost.” However, current facts, statistics and trends show that more and more Filipinos have poor access to health services due to our worsening economic condition that causes more poverty and joblessness. This is the reason why President Noynoy Aquino is determined to achieve his universal healthcare program to make health services, once and for all, accessible to the country’s poor.

But is that Yellow healthcare agenda metaphysically, economically possible? Can the current regime solve the country’s healthcare-access crisis by simply passing laws?

After all healthcare requires money and the people still need to have a stable source of income to be able to ‘easily’ access it. I don’t think the government’s patch-up Conditional Transfer Program (CCT), which gives an average of P1,400 per indigent family that must meet certain conditions, is a form of stable source of income. The government raised the CCT budget P44 billion this year from P39.5 billion last year. Perhaps it’s fun to be poor in the Philippines.

Like any other welfare measures enacted and funded in the past, Philhealth, which empowers the government to implement a single-payer healthcare system, was plagued by irregularities and corruption a few years following its implementation.

Former Senator Ernesto Maceda exposed one form of “corruption at Philhealth” that involves a syndicate in connivance with some PhilHealth officials that “diverted about P130 million in premium payments made by a major BDO company.”

In his letter  of clarification to Maceda, Atty. Genesis Adarlo, Philhealth corporate secretary, did not deny the existence of corruption at Philhealth and instead clarified that “the premium payment diversion scheme is plain old stealing perpetrated by private individuals who conspired with a handful of suspected employees of PhilHealth during the term of the Arroyo administration and the leadership of former Pres. Rey B. Aquino.”

Payment diversion schemes usually exist in public programs that allow public-private partnership. These government programs may differ in terms of their nature and services, but they show almost the same the methods of thievery and fraud.

Philhealth also invites corruption at the local government level. Under the law, local government units “partially” subsidize contributions for indigent members”. This makes Philhealth money very much accessible to and manageable by local politicians. Where there’s public money, there’s corruption. Take for example this story that exposes how a local mayor in Mindanao used Philhealth money to buy votes or probably to enrich himself.

As we all know, there are many types of corruption in the public sector. Public money may be directly stolen by corrupt politicians or used to bribe voters during election season. In other words, Philhealth money can be  easily used by politicians to pad their wallets or to keep themselves in political power. This healthcare law thus perpetuates a cycle of corruption that not merely costs this country billions of taxpayers’ money but also corrupts the entire political system as well as people’s minds. The real danger of Philhealth, or any welfare measure, lies in the fact that it perpetuates a culture of ‘palamunin’ or welfare mentality, which is the real root cause of crookedness in the government sector.

The practice of using Philhealth to buy people’s votes is no longer a secret. It’s a very rampant, effective scheme employed by incumbent politicians to defeat their opponents. This is perhaps the reason why politicos in power are addicted to welfare programs: to keep their local plantation nourished with public money. Welfare programs that allegedly combat poverty have become a very lucrative business idea in modern-day politics. The more the number of poor people identified by National Household Targeting System for Poverty Reduction (NHTS-PR) the better and merrier. More poor Filipinos mean higher poverty-targeting budget. And more public budget means more money to steal.

What many political pundits in these parts fail to understand is that corruption is just the symptom of our socio-political psyche. It is the effect, not the cause, of our ‘collective’ welfare mentality and culture. Unfortunately, our politicians have been so focused on addressing merely the ‘effect’ by adopting more poverty-perpetuating and corruption-riddled welfare programs. This is actually what the Keynesian economists do to combat fiscal crisis– they print more debt-generating money to stimulate the economy, at least in theory. But in practice, printing of tons of inflationary paper money dilutes the money supply and harms the savings of ordinary individuals. This is why welfarists are psychologically Keynesians, or vice versa. At least they don’t have to be self-confessed Marxists.

Without a doubt the RH law is going to be another failed version of the Philhealth law. Just give it a few years to see how this measure would help destroy the economy and cause social ills like brain drain, graft and fraud practices, higher budget deficit, among others.

Let’s try to dissect some provisions of the RH measure to understand how it would use– or waste– public money. The word ‘money’ is actually written all over the face of the law. However, there are several ways for the law to fund or deliver health services to its intended beneficiaries. They are as follows:

  • Use of public money and services;
  • Use of employer’s money;
  • Use of healthcare providers’ (doctors) mandatory pro bono services (translation: time, money and efforts) and other services.

Here, let’s just focus on the first (public money and services).

Section 6 of the RH law states:

Health Care Facilities. – Each LGU, upon its determination of the necessity based on well-supported data provided by its local health office shall endeavor to establish or upgrade hospitals and facilities with adequate and qualified personnel, equipment and supplies to be able to provide emergency obstetric and newborn care: Provided, That people in geographically isolated or highly populated and depressed areas shall have the same level of access and shall not be neglected by providing other means such as home visits or mobile health care clinics as needed: Provided, further, That the national government shall provide additional and necessary funding and other necessary assistance for the effective implementation of this provision.”

This section seeks to turn local government units into entrepreneurial entities engaged in providing healthcare. What that provision implies is that local government politicians are not just your little town (or province) CEO and LOLmakers (lawmakers)l; they’re also medical entrepreneurs, as they possess the political power to create new hospitals and/or maintain existing ones. They can also hire nurses and other health personnel.

Just ignore the phrase “upon its determination of the necessity based on well-supported data” because the maker of data, the local health office, is just under the power or command– or perhaps a lackey or asungot— of the local CEO.

So, if one little town mayor felt like he needed to boost his popularity rating to ensure his reelection, he could just order the local health office to produce a report with all its supporting data and other effects to justify the creation of a local hospital or clinic. One doesn’t have to be an imaginative thinker to picture out how that ‘RH hospital project’ would be carried out from start to finish. To be sure, the local mayor would use his own building firm or get a bribe-giving contractor to finish the project, and then hire political supporters to man the newly established hospital. When a law turns politicians into political entrepreneurs, expect politics-plus-corruption to work its way through every ‘entrepreneurial’ local government project.

One might ask: ‘But the law says ‘Provided, further, That the national government shall provide additional and necessary funding…'”

The answer is: there will be national government funding because the President himself said he will prioritize his universal healthcare program. This means that the little town CEO need not worry about financial backing. The national government will provide it. It may need to add taxes (like sin tax) and raise taxes, and borrow money, which it already did. The Aquino administration borrowed another P852.7 billion last year to finance its programs and expenses.

Section 7 states:

“Access to Family Planning. – All accredited public health facilities shall provide a full range of modern family planning methods, which shall also include medical consultations, supplies and necessary and reasonable procedures for poor and marginalized couples having infertility issues who desire to have children: Provided, That family planning services shall likewise be extended by private health facilities to paying patients with the option to grant free care and services to indigents, except in the case of non-maternity specialty hospitals and hospitals owned and operated by a religious group, but they have the option to provide such full range of modern family planning methods: Provided, further, That these hospitals shall immediately refer the person seeking such care and services to another health facility which is conveniently accessible: Provided, finally, That the person is not in an emergency condition or serious case as defined in Republic Act No. 8344.”

That provision simply explains how the law involves public money: every public service requires public money. It mandates all accredited public health facilities to provide not only RH information, but also “medical consultations, supplies and necessary and reasonable procedures for poor and marginalized couples.” To provide medical consultations, public health centers may be compelled to hire more doctors and nurses. That means additional figure in the government’s budget pie. More medical supplies require more public money.

Always remember that medical services are not paper works or something that the government can just create by simply passing laws. These services require appropriate personnel (doctors, nurses, etc.) Furthermore, healthcare providers are not creatures of law; they are not made. They are people or citizens like us who had to study medicine and pass the medical licensure examinations before becoming part of the government’s healthcare program and statistics.

However, the sad reality in the country’s medical sector is that more and more doctors are determined to leave the country. The biggest obstacle that stands between the President’s universal healthcare plan and its success is medical brain drain. Too bad the government cannot legislate new doctors into existence. But there’s one legally coercive way to remedy brain drain: some of our desperate and uber-patriotic lawmakers may propose a new measure restricting Filipino doctors’ right to travel. This type of anti-doctor measure was imposed in Cuba to prevent its doctors from fleeing the socialist country.

Section 9 provides:

The Philippine National Drug Formulary System and Family Planning Supplies. – The National Drug Formulary shall include hormonal contraceptives, intrauterine devices, injectables and other safe, legal, non-abortifacient and effective family planning products and supplies.”

Will that cost taxpayers millions or billions of tax pesos? Where will they purchase those RH products? Will they conduct bidding? Again, to spot possible cracks of corruption, just follow the money.

Section 12 provides:

“PhilHealth Benefits for Serious .and Life-Threatening Reproductive Health Conditions. – All serious and life-threatening reproductive health conditions such as HIV and AIDS, breast and reproductive tract cancers, and obstetric complications, and menopausal and post-menopausal-related conditions shall be given the maximum benefits, including the provision of Anti-Retroviral Medicines (ARVs), as provided in the guidelines set by the Philippine Health Insurance Corporation (PHIC).”

That requires the use of public money.

Section 13 states:

Mobile Health Care Service. – The national or the local government may provide each provincial, city, municipal and district hospital with a Mobile Health Care Service (MHCS) in the form of a van or other means of transportation appropriate to its terrain, taking into consideration the health care needs of each LGU. The MHCS shall deliver health care goods and services to its constituents, more particularly to the poor and needy, as well as disseminate knowledge and information on reproductive health. The MHCS shall be operated by skilled health providers and adequately equipped with a wide range of health care materials and information dissemination devices and equipment, the latter including, but not limited to, a television set for audio-visual presentations. All MHCS shall be operated by LGUs of provinces and highly urbanized cities.

That provision describes how LGUs would operate mobile health care service and spend public money. Under the law, LGUs may purchase vans to be used as MHCS. The purpose is to bring health services to the poor living in remote areas. Of course, these mobile services need to have healthcare personnel. LGUs may use its existing health personnel or hire new ones. LGUs also need to purchase health facilities, including TV sets for audio-visual presentations.

To ensure that local politicians acquire RH knowledge and management skills, the law provides, under Section 16, that “the DOH shall be responsible for disseminating information and providing training programs to the LGUs.” The entire law actually sounds like we’re having a healthcare system or industry totally or partially run by politicians and government-appointed medical czars.

Section 18 mandates that “cities and municipalities shall endeavor that barriers to reproductive health services for PWDs are obliterated by the following”:

  2. Adapting examination tables and other laboratory procedures to the needs and conditions of PWDs;
  3. Increasing access to information and communication materials on sexual and reproductive health in braille, large print, simple language, sign language and pictures;
  4. Providing continuing education and inclusion of rights of PWDs among health care providers; and

While the DOH allegedly tries to ensure medical competence and compliance with standard medical procedures and practices, the law actually turns politicians into little medical bosses, with the power to establish and maintain hospitals, clinics and facilities, hire doctors and health personnel, fund and operate mobile health services, provide RH-related education, among others.

That particular provision, in conjunction with other related provisions, shows the vast amount of healthcare powers given to politicians. They’re not merely authorized to put up new hospitals and hire medical personnel just like private investors do; they’re also empowered to run or manage healthcare system in their respective political territories. This means that your local politician is not just your political boss; he’s also your medical administrator.

The question is: Do LGUs have the entrepreneurial skills, medical knowledge and managerial competence to run and manage hospitals and clinics? It’s alarming how some people (who voted for LOLmakers who pass welfare, stupid laws) have so much faith in the very questionable capabilities of LGUs to run things. They can’t even send honest, numerically correct financial reports to the Commission on Audit (COA).

Section 20 talks about the partnership between our medical czars and little CEOs– the DOH and LGUs– in initiating and sustaining “a heightened nationwide multimedia-campaign to raise the level of public awareness on the protection and promotion of reproductive health and rights.”

The selected provisions mentioned above actually show a gloomy prognosis for this country’s partially state-controlled medical system. The future looks bleak for our medical industry. With coercive and intrusive measures imposed on both public and private healthcare providers– measures that were often supported by some gullible doctors and nurses– I strongly believe that there would be a stronger wave of medical brain drain in the near future.

Now, some people who supported the law might use one form of cognitive bias called ‘post-purchase rationalization’ to justify their support or pro-RH law stance. They might say: “Well, it’s people’s money. Might as well use it to help the poor.” Others might say: “I don’t might paying more taxes to help the poor.”

But the point is not whether we should help the poor or the needy, but whether that is the only way to help them. Can we not help them privately? Or: Can we not think of a better economic system– a system that doesn’t use legal force and too much taxation– to help the poor? I believe that the best solution is to open our country to private investors and allow foreign doctors and professionals to be part of our team by first revising our protectionist Charter.

Unknown to many, the healthcare sector is one of the most monopolized industries in the country, just like the media and education sectors.

On the other hand, there are two possible reasons why healthcare are expensive in the Philippines:

  1. Poverty and unemployment. Poverty and low-income levels make high or relatively high healthcare costs expensive and inaccessible to poor or even middle-income Filipinos;
  2. Lack of competition due to protectionism and Filipino-only healthcare monopoly.

Currently what we have is a public-private medical duopoly.That is, there are only two competing market players in the country’s medical industry: the government-run medical sector mandated by the Philippine Health Insurance Corporation and the private sector.

The country’s healthcare market is composed of a total of 1,921 hospitals, 719 of which are public (excluding local health clinics) while 1,202 are private. This means that nearly a thousand of publicly-owned and run hospitals are competing with the private sector. Yet with the RH law and the President’s universal healthcare program, it seems that there would be more public hospitals and clinics in the future. Other factors that increase healthcare costs include regulations, compliance issues, taxes, among others.

Healthcare is just like any other consumer products available in the market. Its price is determined by market forces. Its practitioners– just like any professionals or specialists in other industries– are engaged in the provision of products and services. It is subject to the principles of market competition, laws of supply and demand and other reality-based economic laws. If this government is serious enough to make health services accessible, affordable and of better quality, then, the solution is not to legislate healthcare, but to adopt and implement proper free market reforms and practical economic policies and principles. That is, by encouraging and guaranteeing free market competition and allowing foreign investors and foreign talents (doctors, nurses, and other healthcare professionals) to be part of our Team. But this remains a pipe dream without revising first our protectionist, semi-socialist Charter.

Free market healthcare is actually what Singapore has been trying to establish over the past years to lower healthcare costs and to improve the quality of healthcare services. Unlike the Philippines, Singapore is open to foreign doctors and professionals. In fact, this tiny yet highly progressive city-state, which is the second freest economy in the world, has been actively attracting foreign healthcare professionals. Singapore is now becoming a global medical tourism destination because of its quality healthcare, efficient and exceptionally trained doctors and lower costs.

Thus, the only proper way to make healthcare accessible to the poor is to adopt a free market healthcare system by allowing foreign competition, dismantling cost-producing regulations and restrictions, lowering taxes, and making business and hospitals easier to open and manage in the country. That is, we need a healthcare system through voluntary, uncoerced trade and charity. The more the market players (hospitals and healthcare providers) in the country’s healthcare industry the higher the level of competition. The economics of reality shows that a higher degree of market competition benefits the poor through charity and lower prices of healthcare services.

However, mere dismantling of protectionism is not enough to guarantee positive economic benefits and returns. The government has to repeal destructive regulations that add unnecessary costs to business and make it more difficult to trade. It also has to abolish certain taxes, lower tax rates and adopt a flat-tax rate system.

The real panacea for poverty, which is the real reason why more Filipinos have poor access to healthcare, is not more government intrusion or intervention, but less government with the right principle and economic setup. Also, the real fix for corruption is not political sloganeering (e.g., tuwid na daan or straight path) or toothless anti-corruption laws or policies, but a downsized government that focuses only on its proper functions: to protect rights, settle disputes and defend the nation against internal power-grab and invasion.

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