Are Philippine local governments spending enough on primary health care?

We assessed whether health spending of local government units in the Philippines is sufficient to deliver mandated primary health care (PHC) services under a devolved system, how PHC spending varies with fiscal capacity, and whether increased intergovernmental transfers following the Mandanas-Garcia ruling have translated into higher local health investment. Using a very conservative bottom-up costing method anchored in national PHC service standards, we estimate that delivering a basic, but comprehensive PHC package requires around PHP 1,800-1,900 per capita annually, well above the observed LGU health spending, which averages less than half of this cost. 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. 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. Our regression model shows inelasticity, that is, increases in National Tax Allotment (formerly Internal Revenue Allotment or IRA) following the Mandanas-Garcia ruling led to only modest and insufficient gains in health spending, suggesting that unconditional transfers do not necessarily translate into higher PHC investments. These findings suggest to deficiencies in PHC financing under decentralization and motivate shift toward demand-side financing through social health insurance (PhilHealth) capitation for individual-based PHC services as the most sustainable system to ringfence and promote equity in PHC financing, complemented by more strategic use of national resources (e.g., matching grants) to finance capital investments and health workforce gaps in low-resourced LGUs.