Most local governments underspend on primary healthcare – study

MANILA, Philippines — Most local government units (LGUs) in the country are not spending enough to deliver basic but comprehensive primary healthcare (PHC) to their constituents, despite having sufficient fiscal resources arising from higher national tax shares, a state-run think tank found.

In a recent study, the Philippine Institute for Development Studies (PIDS) said LGUs spend only about P850 per capita on average on health and nutrition programs, falling well short of the estimated P1,827.8 per person annually needed to deliver essential PHC services.

The standard estimate translates to a total of about P211.2 billion annually.

Systemic gap

Spending gaps are more pronounced in poorer and geographically isolated provinces, where health outlays can fall below P300 per capita.

But even higher-income LGUs rarely exceed P800.

Nearly all local governments, or 109 out of 120, fall short of the funding required to provide basic PHC, which PIDS said highlights a systemic underinvestment.

“This gap is widespread and systemic: In nearly all provinces and highly urbanized cities, estimated PHC costs exceed current expenditures, suggesting that most LGUs would need two- to three-fold increases in health spending to meet mandated service levels,” PIDS said.

Should LGUs fully fund PHC, it would require 15 to 30 percent of their annual operating income. However, actual spending is far lower.

According to PIDS, this shows that the shortfall is not due to lack of funds, but because health competes with other priorities such as infrastructure, administration, and local projects.

“We found substantial variation in per capita health spending across LGUs that is weakly associated with fiscal capacity, despite the presence of operating surpluses, indicating that PHC is consistently underprioritized relative to other local expenditures,” the think tank added.

Landmark ruling

The gap persists despite the landmark Mandanas-Garcia ruling, which expanded LGUs’ share in national taxes by requiring that their allotment be computed from all national tax collections, not just internal revenue.

The ruling resulted in fiscal decentralization, where LGUs have greater discretion in deciding how to allocate and spend their funds.

For many LGUs, however, the additional resources have not translated to greater investment in basic health services.

“Spending patterns over time reinforce concerns about weak prioritization of PHC under decentralization. As a result, decentralization risks reproducing and potentially exacerbating spatial inequities in access to PHC services and quality of care,” PIDS said.

“In the absence of earmarking, performance conditions, or strong accountability mechanisms, additional fiscal space is often absorbed into general budgets rather than directed toward devolved services such as health,” it added. /atm