LGU health spending rises but efficiency questioned — study

Local Government Units (LGUs) continue to allocate significant portions of their local health budgets for devolved health programs and services, but they need clearer guidance, technical support, and stronger intergovernmental coordination from relevant national government agencies to ensure the funds are being spent efficiently, as envisioned under the Universal Health Care Law.

This was the key finding of a new study led by principal researcher Dr. Maria Eufemia C. Yap, senior research fellow at the Ateneo School of Government, presented at the Quezon City Journalists Forum on Tuesday.

Yap said the research reviewed the budget practices of four LGUs—Quezon City, the Province of Antique, the Municipality of Belison (Antique), and the Municipality of Odiongan (Romblon)—with a fifth case in Isabela City, Basilan underway, in collaboration with the Department of Budget and Management (DBM).

The study, Maximizing Local Government Fiscal Performance of Health Budget, examined the full cycle of local budgeting from preparation, authorization, and execution up to review, covering 2022 to mid-2025. It revealed that LGU health spending is on the rise. During this period, the health budget of the LGUs in the study increased by as much as 5 percent.

Despite the devolution of health to LGUs, municipalities remain heavily reliant on the National Tax Allocation (NTA), with 74 percent to 95 percent of their budgets coming from the national government, compared to just 23 percent to 36 percent for provinces and highly urbanized cities.

“In many areas, large shares of health budgets go to salaries of health personnel, leaving limited resources for actual health operations and programs. In addition, the budget may be utilized mostly to fund Personnel Services instead of Operational Expenses,” Yap explained.

Yap added that LGUs face a complex maze of overlapping requirements: Annual Investment Plans, Annual Operational Plans, Annual Procurement Plans, and Local Investment Plans for Health—all on different schedules.

“So while funding is available, these documentary requirements and the delays and confusion they create are seen as barriers to timely release and utilization of funds for health spending,” she said.

Call for alignment and accountability

“This misalignment, along with budget directives that do not always reflect local realities, often results in plans that fail to meet emerging health needs. Weak monitoring and local council dynamics further complicate timely budget approvals and accountability,” Yap stressed.

“The study supports the efforts of DBM to cascade and effectively capacitate LGUs’ Public Financial Management (PFM) competency. Promoting financial accountability and aligning national and local priorities will ensure that resources for health are not just spent, but are truly felt by the people,” she added.

The study was commissioned by the Unilab Center for Health Policy (UCHP), the think tank of pharmaceutical and healthcare leader Unilab, Inc., and was presented at the 2nd UCHP Symposium entitled Investing in Health: Policy Forum on LGU Health Budget and PhilHealth Benefit Design, with Budget Secretary Amenah Pangandaman as keynote speaker.

UCHP Program Director John Basa noted that the findings underscore the urgent need for government agencies such as the DBM, the Department of Finance’s Bureau of Local Government Finance, the Department of the Interior and Local Government, and the Department of Health to extend stronger technical support and more precise policy guidance to local governments.

“With improved systems and alignment, LGUs can transform their health budgets from routine expenditures into powerful investments that directly improve the well-being of their constituents,” he said.

Another UCHP study

This year, UCHP commissioned another university-led study to spark discussions on expanding the Philippine Health Insurance Corporation’s (PhilHealth) services to include supplemental insurance coverage for its members, as mandated by the Universal Health Care (UHC) Law.

The research, conducted by the University of the Philippines under Dr. Hilton Lam and Dr. Michael Tee, noted that while PhilHealth has made significant progress in expanding outpatient and inpatient benefits, there is still a need to establish a clear framework for optional supplemental benefits that could be offered to members through additional contributions.

Global lessons on voluntary health insurance

Other countries, such as Indonesia, Myanmar, Singapore, and even developed economies like the United States and Germany, have adopted similar voluntary schemes as “top-up” mechanisms to strengthen healthcare protection.

The Philippine study recommends using frameworks such as cost-effectiveness, equity, and feasibility to guide prioritization of benefits for inclusion. By developing this policy foundation and consulting stakeholders, PhilHealth can ensure that future supplemental packages truly respond to the most urgent health needs of Filipinos while maintaining financial sustainability.