Healthcare in the Hands of the People: An Empirical Analysis of Decentralization and Health Outcomes in the Philippines

Abstract

The shift towards decentralized governance, transferring power to plan, implement, and manage public functions from the central government to local government, is a worldwide trend. In the Philippines, this process was motivated by the emergence of President Corazon C. Aquino as the newly elected democratic leader. The new administration employed decentralization through the Republic Act. No. 7160, also known as the 1991 Local Government Code, granting greater authority to local government units (LGUs). Despite over 30 years since decentralization, the intended effect of decentralization has not manifested, especially in health service provision.

This thesis investigates the effectiveness of decentralization on population health in the Philippines during the transition period from 1989-1998 to more greatly understand the experience. The driving hypothesis of this thesis is that decentralization provides positive outcomes to health only if certain mechanisms are in place for it to function. In turn, the expected outcome of the quantitative analysis was for some regions of the Philippines to see positive health outcomes as a result of decentralization, while others no outcomes, or even negative outcomes.

Decentralization’s effect on population health outcomes is quantitatively analyzed. At a country-wide level, the fixed effects regression model is used to understand the overall implication of decentralization on health. The study then investigates the regional level using the ordinary least squares model to better understand variations across the country. In both studies, the decentralization indicator used is total LGU expenditures on public goods and the population health indicator is infant death.

The study finds that decentralization does not have a statistically significant effect on population health outcomes at a country-wide level. Despite this, four regions’ population health outcomes are found to be positively affected by decentralization. Region VIII, Eastern Visayas, shows the smallest decrease in infant death (p<0.05) followed by Region VI, Western Visayas (p<0.05) and Region II, Cagayan Valley (p<0.01). Finally, Region X, Northern Mindanao, saw the most dramatic decrease in infant death (p<0.01).

Mechanisms were identified in each of the four regions that accounted for the positive effect of decentralization on health outcomes. This thesis concludes that mechanisms including champions advocating for health within and outside of the government, citizen inclusion and feedback, strong inter-LGU linkages, and a baseline level of economic well-being is needed for decentralization to be effective in improving health outcomes.

The Philippine experience in decentralization points to the need for a standardized toolkit for such processes elsewhere. Although decentralization is seen as a panacea for promoting good governance and inclusion of citizens, it is necessary for it to be implemented in tandem with the mechanisms found in this study. Further research is also needed to better understand the experience of lower LGUs at the provincial, municipal, and barangay level to better refine the mechanisms found in this study. Additionally, further research is needed into other measures of population health such as disease incidence and family planning users, which can help explain more nuanced aspects of the Philippine healthcare system under a decentralized government.