Alternate service delivery systems: Health and education

(This column is based on a paper presented at the 5th Paderanga-Varela Memorial Lecture.)

In 2022, my wife had an eye ailment. Discovered during a regular eye check-up, her doctor immediately scheduled her operation. We then went to the administrative staff to work out the financial details. The staff immediately told us that we could claim some deductions from PhilHealth (Philippine Health Insurance Corp.). But not to worry, all the papers are ready and she would just sign and the clinic will handle the rest.

As I was then doing research on the school vouchers, I was struck by the fact that when it comes to health delivery, we could choose the doctor and the clinic and the government pays. In contrast when it comes to education delivery, the government, with the exception of the school vouchers, requires that education could only be delivered for free if availed of through the public schools.

How could two sharply different basic service delivery systems operate in the same government?

We start with some basic statistics. There are 1,800 hospitals in the Philippines, of which 721 are public hospitals and the DoH (Department of Health) operates only 70 of them. In contrast, of the 43,765 elementary schools and 10,590 high schools in the Philippines, DepEd (Department of Education) operates all the 37,496 public elementary schools and the 8,228 public high schools.

Thus while the Department of Health has devolved the running of most government hospitals to the local government units, the Department of Education continues to run all of the public elementary and high schools in the country. This means a sharp contrast between the number of employees of the Department of Health and the Department of Education. While DepEd had 965,660 regular employees as of June 30, 2022, DoH had only 31,050. By the way, the largest private corporation, San Miguel Corp., has around 45,000 employees. And they need a Ramon Ang to run it.

This contrast in scale of operation is further reflected in the budget of these two government agencies, with the DepEd having a 2022 budget of P633 billion and the Department of Health a 2022 budget of P270 billion.

One final difference is the separation of the financing of the Universal Health Care System through the establishment of the Philippine Health Insurance Corp. This provides not only the financing for the healthcare delivery system but, more importantly, its focus is on the patients or the recipients of healthcare services.

As a result, Universal Health Care coverage of all Filipinos is within reach covering already 96 million Filipinos.

The Department of Health, by design or default, adopted the principles of outsourcing in two critical areas. The first area is in the funding of the delivery of health services, through the outsourcing to PhilHealth. Once outsourced to PhilHealth, PhilHealth created a platform which could be used to service the various needs of its patients. This is shown by the different types of membership that PhilHealth offers.

The second area is in the management of the government hospitals. DoH, with the exception of the special hospitals such as the Heart Center, devolved most of its hospitals to the local government units. This lifted a heavy burden from the managerial and financial resources available to DoH.

These two outsourcing decisions resulted in my wife, the patient, being free to choose the doctor she would consult and the clinic where her operation would be performed.

In sum then we would argue that the service delivery system in education should be restructured to more closely resemble the service delivery system in health. More specifically:

1.) The public elementary schools and public high schools should be devolved to the city/municipal school boards where they are located;

2.) The establishment of the Philippine Education Development Fund along the line of the PhilHealth.

Devolving the public elementary and high schools to the city/municipal school boards could be beneficial for our Universal Education delivery system:

1.) Policies on the allocation and use of school vouchers will be done on the community level;

2.) Combine the resources of the local government with the school vouchers;

3.) Align the early school and early nutrition programs with the elementary school system;

4) Align the high schools with the Pamantasans (Colleges) of the local government;

5) Lower the cost of education. There are indications that local governments operate at a lower cost than the National Government. For example, under CHED (Commission on Higher Education), the cost of educating a student at the State Universities and Colleges (SUCs), is around P39,000 while at the Pamantasan ng Pasig, an LGU college, the cost educating a student is around P14,000.

The Philippine Education Development Fund should take over the operation of DepEd in issuing vouchers.

Above all else, the concept underlying the school voucher of putting the student first, should be at the core of all reforms at the Department of Education.

The school vouchers would immediately incorporate what we believe is the superior feature of the health delivery system; the power of choice. Where the present health delivery system endows the patient the power to choose doctors and hospitals, the school vouchers will endow the students to choose their schools and courses. This means any student could enroll in any accredited school, be informed by the Office of the Registrar of the school fees due, the vouchers that could be claimed from the Philippine Education Development Fund, sign the papers so the school could handle the claims for reimbursement and pay the net school fees if any.

In addition to giving the student a choice, the system also lowers the cost of education. Studies have shown that the cost of educating a student in private schools is around half the cost of educating a student in public school with better learning outcomes.

In summary we recommend that the Department of Education be restructured as follows:

1.) The adoption of the educational policy that the interest of the student should be the first and foremost concern of the Department of Education;

2.) The adoption of the school voucher system as the core measure for putting the interest of student first and foremost;

3.) The creation of the Philippine Education Development Fund; and,

4) The devolution of the public elementary and high schools to the city/municipal school boards.

Dr. Victor S. Limlingan is a retired professor of AIM and a fellow of the Foundation for Economic Freedom. He is presently chairman of Cristina Research Foundation, a public policy adviser and Regina Capital Development Corp., a member of the Philippine Stock Exchange.