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The ties that do not bind: partyaffiliations and the delivery of devolvedhealth services in the PhilippinesJoseph J. Capuno a & Marian Panganiban aa University of the Philippines, School of Economics, Diliman,Quezon City, Philippines

Available online: 24 May 2012

To cite this article: Joseph J. Capuno & Marian Panganiban (2012): The ties that do not bind: partyaffiliations and the delivery of devolved health services in the Philippines, Philippine PoliticalScience Journal, 33:1, 63-80

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The ties that do not bind: party affiliations and the delivery of devolvedhealth services in the Philippines

Joseph J. Capuno* and Marian Panganiban

University of the Philippines, School of Economics, Diliman, Quezon City, Philippines

Using a panel of province-level data, we investigate the effects of political partyaffiliations of local chief executives on the financing and delivery of devolved healthservices, where arguably the opportunities for and potential gains from inter-localgovernmental unit (LGU) cooperation abound. Despite these potential gains, theproportion of mayors that belong to the same party as the governor are found not tohave any direct, independent and statistically significant effects on the local chiefexecutives’ ability to secure additional resources from the national government andother external sources, mobilize greater spending on local health services or improveselect health service outputs. However, the re-election status of mayors and governorsis found to have a direct, independent and positive impact on some of these indicators.These results support the view that narrow electoral objectives more than partyplatforms remain the dominant influence in local fiscal decisions underdecentralization.

Keywords: party affiliations; local chief executives; local services; Philippines

Introduction

This article aims to contribute to the empirics of party politics at the local level in the

Philippines. Specifically, it investigates whether the party affiliations of municipal and city

mayors and provincial governors have effects on the financing, provision and delivery of

devolved health services. From the policy standpoint, the research is relevant since health

services constituted the bulk of national government functions devolved to local

governments in 1991 (World Bank 1993) and health care access and outcomes since then

have improved, but only marginally and unevenly across regions (Asian Development

Bank [ADB] 2005; Kraft et al. 2011). Further, more potent policies are needed as the

government gives itself modest chances of attaining some health targets as part of its

Millennium Development Goals by 2015 (National Economic and Development Authority

[NEDA] 2010). Finally, the issue bears on the continuing debate regarding the importance

to the realization of the promises of decentralization of accountability measures, including

political and electoral institutions, in making local governments more responsive (Bardhan

2002; Bardhan and Mookherjee 2006).

Instead of political parties, however, more recent studies resonate with that of Lande

(1965) in that factions, clans and classes still dominate the local political economy in the

Philippines (e.g., Gutierrez, Torrente, and Narca 1992; Lacaba 1995; Rivera 1999; Sidel

1999; De Dios 2007; Solon, Fabella, and Capuno 2009). While providing important

ISSN 0115-4451 print/ISSN 2165-025X online

q 2012 Philippine Political Science Association (PPSA)

http://dx.doi.org/10.1080/01154451.2012.684517

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*Corresponding author. Email: jjcapuno@up.edu.ph

Philippine Political Science Journal

Vol. 33, No. 1, June 2012, 63–80

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insights, most of these studies use an inductive approach based on selected cases.

Generalizing from these case studies is difficult since members of local factions or

political clans also join political parties in the country.1 The effects of clan membership or

party affiliation on, say, local fiscal decisions can be easily mistaken for the other since

political parties and clans often espouse populist programs. Also, some younger members

of political clans have shown development orientation while in office, perhaps as much as

can be expected from dedicated members of progressive political parties. Therefore, a

more statistical analysis of party affiliations may add the needed grist to the mill.

It is also widely accepted that political parties in the Philippines are weak and unlike

those found in developed countries (e.g., Banlaoi and Carlos 1996; Montinola 1999;

Teehankee 2002; Hutchcroft and Rocamora 2003; Co and Tigno 2005). Providing more

objective evidence, Kasuya (2009) further finds that party switching remains a regular

feature of elections in the country and more intensely so since 1987. While previous

analyses have focused more on the shifts in party alignments of candidates for national

positions (e.g., presidents and members of congress), some have noted as well that

candidates for local positions align themselves with the parties of presidential candidates

(or presidentiables).2 Without loyalty, members are made to toe the party line more

through the use of carrots (e.g., promises of pork barrels or campaign finances) than sticks

(e.g., expulsion or censure). Unfortunately, the party leader, usually the incumbent

president, can only distribute pork barrel funds while in office. Worse, even before his or

her term expires, the promise of pork barrel funds by presidentiables is often more

attractive to potential turncoats. Notwithstanding the weaknesses of the country’s party

system, it may be asked what elected party mates do in between elections and whether it is

easier for them to collaborate to address a common concern.

In the next two sections, we present a priori reasons for cooperation in the provision of

devolved health services among local government units (LGUs). Briefly, with the

fragmentation of local health systems, much of the gain from economies of scale, control

of epidemics or health information sharing is lost and can only be recovered with inter-

LGU cooperation. While most local health personnel are competent and dedicated civil

servants, and are continually guided and trained by the Department of Health, they are

unlikely to solve health problems without their local chief executives’ support. Where

devolved health services are improved, there is usually a supportive mayor or governor

and innovative health staff working together (Pineda 1998; Quimpo 1996). This is because

mayors and governors, like the Philippine President, have the power of the purse. He or she

can determine the timing or amounts of cash allocations to all departments including the

local health office, which does not generate its own budget or keep whatever revenues it

can raise. Moreover, the local chief executives (LCEs) have powers to hire, fire and deploy

personnel. According to the Civil Service Commission (2005), LGUs in 2004 had a total of

370,227 employees, of which 268,740 were career officials and 101,487 were non-career

officials. Of the latter, 20,514 were elective officials, 8085 were occupying positions

coterminous with those of the appointing officials and 6448 were contractual workers.

These figures do not yet include personnel on job-order status (i.e., on short-term

engagements) who are paid using the LGUs’ budget for maintenance, operating and other

expenses (MOOE).3

In the fourth section, we discuss the dataset and the econometric model used to tease

out the effects of party affiliations. The dataset consists of a panel of province-level

factoids for 2003 and 2008. We chose these non-election years to avoid confounding the

effects of party affiliations with extraneous, election-related factors. While it is true that

most incumbents are always preparing for their next term or office, we assume that party

J.J. Capuno and M. Panganiban64

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mates are less concerned about campaigning in between election years and therefore may

coordinate their provisions of devolved health services. We present and discuss the

empirical results concerning the effects of party affiliations in the fifth section. The final

section concludes the article.

Legal and economic framework

This section reviews the legal and economic frameworks for inter-LGUcooperationmediated

through party affiliations or by some other means. The legal framework effectively reduces

some of the possible legal or administrative impediments to cooperation, while the economic

framework identifies the potential gains from the coordinated or consolidated provision of

some local public services. The point to be made is that local governments can collaborate if

they want to and could realize benefits if they do so.

Providing the legal framework is the Local Government Code of 1991 (Republic Act

7160, 10 October 1991), specifically its Section 33:

Section 33. Cooperative Undertakings among Local Government Units. Local governmentunits may, through appropriate ordinances, group themselves, consolidate, or coordinate theirefforts, services, and resources for purposes commonly beneficial to them. In support of suchundertakings, the local government units involved may, upon approval by the sanggunianconcerned after a public hearing conducted for the purpose, contribute funds, real estate,equipment, and other kinds of property and appoint or assign personnel under such terms andconditions as may be agreed upon by the participating local units through Memoranda ofAgreement.

Consistent with this provision, some LGUs banded together to address their common

problems or pursue shared goals, such as in industry (e.g., Metro Iloilo-Guimaras

Development Council), urbanization (e.g., Metro Cebu Development Council) and health

(Inter-Local Health Zones). These inter-LGU collaborations range from simple

coordination in the planning and delivery of public services to formal cooperation

involving the joint use and financing of public goods, and to de jure consolidation of

devolved services under the administration or supervision of the province or a single

authority created for the purpose.

Besides political parties, there are in practice other formal and informal structures and

procedures that can facilitate, if not enforce, collaborations among local governments.

Some of the existing administrative structures would be the regional development

councils, the provincial development councils, and even the provincial chapters of the

League of Municipalities or League of Cities. The informal structures would include

political families or clans whose members occupy several local or national positions,

elective or otherwise. Arguably, both formal and informal linkages can foster

communication, knowledge sharing or peer-to-peer mentoring among local chief

executives and other officials. Some of these cooperative arrangements can even

effectively enforce joint decisions through peer pressure, moral suasion or some form of

threat or promise from national government officials.

While the Code reduces the transaction costs, where do the potential benefits of inter-

LGU cooperation come from? Here, an economic analysis of the country’s decentralized

fiscal set-up could help identify the sources. Under devolution, many of the assigned

functions (especially in health) do not match the political jurisdiction, fiscal capacity or

institutional competence of the recipient LGUs (Manasan 2004; Lieberman, Capuno, and

Minh 2005). The inefficiencies arising from these mismatches can be improved by

amending the Local Government Code to reassign the devolved functions or through inter-

LGU cooperation.

Philippine Political Science Journal 65

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To show the benefits of cooperation, consider Figure 1 (adapted from Oates 1972 and

Wellisch 2000), which illustrates the economic advantages and disadvantages of a

decentralized provision of certain public services. The vertical axis measures the benefits

and costs of devolved public services. The horizontal axis measures the degree of

decentralization from the point of origin (which indicates centralized provision). The

benefits of decentralization come from the provision of public services customized to the

specific needs of local populations. Examples of such customer-specific services are office

hours or outreach programs that accommodate the schedule of working mothers or

schoolchildren, or health services that respect cultural sensitivities or beliefs. Presumably,

these idiosyncratic factors are more known to local officials who are also more directly

accountable to the service clients. In contrast, a central authority is likely to provide a

“generic” service to suit a typical or average user.

However, decentralization can also lead to higher social costs of service provision. The

reason is that typically each LGU will want its own facility (such as a hospital) and

personnel regardless of the actual number of facility users. Thus, therewill be duplication or

gaps in services provision across areas, and even excess capacity in some places. In contrast,

a central agency (or a less decentralized set-up) can spread the costs to more service clients

(i.e., economies of scale).4

Depicted as D* in Figure 1, the ideal level of decentralization then is one that

maximizes the net benefits (i.e., the biggest difference in the total benefits and total costs

associated with decentralized provision). The problem of course is that D* may not

correspond to any level of local government, i.e., it may be too big or too small to be

contained in one political jurisdiction. In such cases, the cooperation of two or more

adjacent LGUs is warranted. Presumably, such cooperation is more likely or easier among

incumbent LCEs that belong to the same political parties since they would also benefit

from exploiting the potential gains from a consolidated provision of local services.

To be sure, many inter-LGU collaborations have been documented since 1991 (see

Gonzales 2004; Galing Pook Foundation 2009). For example, the provincial governments

of Negros Oriental and Negros Occidental in the early 1990s jointly operated barangay

health facilities for their constituents living in the mountains that separate the two

provinces. Since the term of former President Joseph Estrada, the Department of Health

has encouraged all LGUs around a district or provincial hospital to form Inter-Local

Health Zones to facilitate their resource sharing, coordinate local health plans and to

ensure an effective hospital referral system (Capuno 2008).

Total costsTotal costs,benefits

fromcustomized

servicesTotal benefitsfromcustomizedservices

Level ofdecentralizationD*

Figure 1. Total benefits from customized services and total costs of decentralized provision.

J.J. Capuno and M. Panganiban66

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The case for LGU collaboration in health

This section further discusses some features of local health systems in the Philippines that

motivate, if not demand, LGU collaboration. These health features provide the

opportunities or justifications for cooperating local governments, or LCEs who belong to

the same party, to improve their health financing, service provision or outputs. However,

they would require a greater level of LGU cooperation than their usual compliance to

existing procedures, such as the LCE participation in provincial development councils or

their submission of their local government’s annual investment plans to the provincial

government.

If there is strength in numbers, then a coalition of LGUs may receive more attention or

support from the central authority. In health, the national government support would

include co-sponsoring the social health insurance coverage of indigent families and

extraordinary grants or transfers (both cash and in kind). These grants or transfers are

special and not part of the LGUs’ internal revenue allotments (IRA), which constitute their

regular, mandated share in the national internal revenues.

Under the National Health Insurance Act of 1995, LGUs are mandated to identify and

enroll the indigent families among their constituents with the Philippine Health Insurance

Corporation (PhilHealth) that runs the country’s social health insurance program. The

sponsoring LGU shares with the national government the premium contribution for each

indigent family based on the LGU’s income class and years of participation in the

program. To boost the coverage of poor families under PhilHealth’s Sponsored Program,

the national government in 1994 aimed to enroll about five million families under the so-

called Plan 5 million (Plan 5M). This was continued as OPlan 2.5 million (OPlan 2.5M) in

the following years, but with only half the original target of indigent families for coverage.

Under these initiatives, the national government paid for the entire annual premium

contribution (amounting to 1200 pesos per beneficiary family) while the local officials

identified the eligible families and delivered to them their PhilHealth membership cards.

Besides the national government, provincial governments can also share with their

component cities or municipalities in the premium payments.5 Given the variations in

PhilHealth coverage of the poor across provinces, it may be asked if those with higher

enrolments are also those with a high proportion of LCEs who are party mates.

Besides securing greater external support, cooperating LGUs can also align their

health spending by integrating their health plans, jointly procuring drugs or medical

supplies, or resource sharing. An integrated health plan would be ideal to control

epidemics, hazardous wastes or the spread of communicable diseases across municipal

boundaries. Bulk purchasing can also lead to lower unit costs since participating LGUs

would be able to bargain harder and the winning supplier can afford to give discounts due

to savings on delivery or transaction costs. Cooperating LGUs can also share ambulances,

expensive medical equipment and even critical health personnel. Thus, to the extent that

LCEs who are party mates also collaborate, then party affiliation will have an impact on

local health spending.

Further improvements in certain health service outputs are only possible with LGU

collaboration. For example, the control of epidemics would require the coordinated

monitoring of cases among LGUs. To this extent, the health statistics that local health

personnel regularly collect are most useful when shared with other LGUs. When

reinforced by all LGUs, health education, information dissemination and advocacy

activities also become more effective. To contain the spread of pathogens or disease

vectors, immunization campaigns must be undertaken by LGUs at the same time. The

Philippine Political Science Journal 67

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efficient use of hospital services calls for a referral system where simple cases are handled

at the lowest facility levels (usually rural health units) and only the more complicated

cases are referred to district or provincial hospitals. This will require LGU cooperation

since the rural health units are devolved to municipalities, while the hospitals are devolved

to provinces. Without a functioning referral system, higher-level facilities will be

overcrowded, while lower-level facilities will be under-utilized. The variations in health

service outputs again provide the opportunity to tease out the possible effects of party

affiliations.

While the efficient level of decentralization (or consolidation of devolved services),

depicted as D* in Figure 1, may correspond to a configuration of LGUs smaller than a

typical province but bigger than a typical municipality or city, we use the province in our

empirical analysis for two reasons. Firstly, the province in many places is the highest level

of local government and has administrative jurisdiction over most lower-level LGUs.

Hence, the province as a political-administrative unit provides a natural or default

grouping of local political leaders.

Secondly, the province as a geographical unit is often large enough to exploit whatever

possible economies of scale or synergy can be had from inter-LGU cooperation and yet

still close enough and directly accountable to the service clients to provide for their

specific needs. In addition, the assignment of some fiscal functions builds on the

hierarchical structure of LGUs. In health, for example, the lowest level of facilities that

provide primary care services are devolved to municipalities and cities. The provision of

secondary or tertiary health care services is assigned to provinces. However, the three

levels of health care are complementary and must be administered as integral parts of a

functioning provincial health system. Arguably, provincial health systems work better

where the governors and mayors work closely together.

Data and methodology

Data

To tease out the effects of party affiliations, we assembled a province-level dataset

obtained from the Bureau of Local Government Finance, the Department of Health, the

Commission on Elections, the Department of the Interior and Local Government,

PhilHealth and the National Statistical Coordination Board. Specifically, our dataset

constitutes a panel of 73 provinces for the years 2003 and 2008. The list of provinces

excludes those in the Autonomous Region of Muslim Mindanao because of the region’s

unique administrative structure, and three provinces with missing data for 2003 (Batanes,

Zamboanga Sibugay and Dinagat Islands). Table 1 shows the descriptive statistics of the

regression variables used.

The key variable of interest is the proportion of incumbent mayors that belong to the

same political party as the incumbent governor. Party affiliation is constructed from the

reported local political parties of the elected governors and mayors in the 2001 and 2007

local elections. In cases where the elected candidate listed his or her membership in a local

political and a national political party, we used the local party to construct the party

affiliation variable. In cases when a governor is listed as independent, the variable party

affiliation is assigned a value of zero. Around 38% and 36% of the elected mayors in 2003

and 2008, respectively, had the same party affiliation as the elected governors.

The effect of party affiliation on the devolved health services is measured using several

dependent variables. As proxy measures of national support (other than the IRA), we use

the proportions of indigent families sponsored by the national government in PhilHealth’s

J.J. Capuno and M. Panganiban68

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Table

1.

Summarystatistics.

2003

2008

Variable

Mean

Standard

Deviation

Min.

Max.

Mean

Standard

Deviation

Min.

Max.

Dependentvariables

Proportionofindigentfamiliessponsoredbynational

governmentin

PhilHealth

0.034

0.084

0.00

0.68

0.88

0.72

0.00

6.25

ProportionofindigentfamiliessponsoredthroughPlan5M

or

OPlan2.5M

inPhilHealth

0.00

0.00

0.00

0.00

0.078

0.16

0.00

1.10

Totalextraordinaryreceiptsoraidreceived

byprovince

and

componentcities

andmunicipalities,per

capita

0.15

0.45

0.00

3.89

37.88

157.77

0.00

1223.24

Healthspendingper

capitaofprovincial

government

163.35

135.90

0.00

910.68

138.90

161.98

3.38

979.02

Healthspendingper

capitaofcomponentcities

and

municipalities

113.62

50.19

38.41

296.16

367.00

1602.46

1.00

12805.93

Proportionofindigentfamiliessponsoredbylocalgovernment

inPhilHealth

0.081

0.086

0.00

0.469

0.027

0.172

0.00

1.53

Proportionofindigentfamiliessponsoredbylocalgovernment

inPhilHealth,less

those

sponsoredbyothers

0.080

0.812

0.002

0.469

0.178

0.239

0.00

1.514

Proportionoffacility-based

deliveries

0.30

0.18

0.00

0.76

0.15

0.06

0.05

0.46

Proportionoffullyim

munized

under-5

children

0.83

0.12

0.39

1.18

0.80

0.12

0.45

1.24

Explanatory

variables

Proportionofmayors

that

belongto

sameparty

asgovernor

0.38

0.27

0.00

1.00

0.36

0.25

0.00

1.00

Proportionofmayors

re-elected

0.47

0.19

0.00

1.00

0.33

0.19

0.00

1.00

Governorisre-elected

0.47

0.50

0.00

1.00

0.64

0.48

0.00

1.00

Internal

revenueallocationper

capita,

provincial

goverment

744.56

729.99

188.33

6020.68

784.36

1017.49

24.62

5655.28

Internal

revenueallocationper

capita,

componentcities

and

municipalities

119.24

254.59

5.89

1791.33

87.54

372.18

0.00

2851.51

Internal

revenueallocationper

capita,

independentcities

251.23

872.21

01959.00

284.86

924.89

0.00

5578.60

Poverty

incidence

31.547

13.196

3.40

64.6

22.960

19.367

063

Doctors

per

10,000population

0.42

0.59

0.00

4.52

0.36

0.35

0.01

2.80

Midwives

per

10,000population

2.51

1.36

0.00

8.47

2.88

3.20

0.07

21.41

Nurses

per

10,000population

0.869

2.393

020.339

0.604

0.820

0.070

5.484

Year2008

00

00

10

11

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Sponsored Program, or through its Plan 5M/OPlan 2.5M, and the total extraordinary

receipts or aids (i.e., not the internal revenue allocation) received by the province and its

component cities and municipalities from the national government. In 2003 and 2008, the

national government on average enrolled 3.4% and 8.8% of the indigent population in each

province. In 2008, Plan 5M/OPlan 2.5M on average enrolled around 7.8% of the indigent

families per province. The value for this variable is zero in 2003 since these initiatives

were started only in 2004. The average extraordinary receipts amounted to around 38

pesos per capita in 2008, up by a significant amount from less than a peso in 2003.

To measure the coalition’s ability to coordinate their fiscal spending, we use the health

spending per capita (in 2000 prices) of the provincial government and of the component

cities and municipalities of the province. In 2008, the mean provincial health spending per

capita was around 139 pesos, down by about 23 pesos from 2003. In contrast, health

spending per capita of the component LGUs was 367 pesos in 2008, about three times

more than they were spending on average in 2003. Since the provincial government on the

one hand and the component cities and municipalities on the other hand are supposed to

provide complementary health services, their health spending should not have negative

effects on the other, more so when local political leaders coordinate their fiscal decisions.

Finally, we assess the party’s impact against several health service delivery outputs.

The first set of output indicators pertains to the proportion of indigent families that the

province and its component municipalities and cities themselves enrolled in PhilHealth’s

Sponsored Program. The corresponding mean proportions are around 8% and 2.7% in

2003 and 2008. The lower proportion in 2008 is due to the increased sponsorship by the

national government under Plan 5M/OPlan 2.5M. However, when we net out these

national government-enrolled indigent families, the average proportions of LGU-

sponsored indigent families are now 8% in 2003 and 17.8% in 2008.

The other set of output variable includes the proportion of facility-based deliveries and

the proportion of children aged below 5 years old who are fully immunized. In 2003 and

2008, the average proportions of maternal deliveries that were performed in public or

private hospitals and clinics are 30% and 15%, respectively. The average proportion of

under-5 children who have completed immunization against polio, diphtheria, tetanus and

other childhood diseases was about 80% in both 2003 and 2008. Like the other sets of

indicators mentioned above, these maternal and child health indicators are presumably

higher in places where the LCEs are united and can thus share resources or personnel,

other things being constant.

We also included other variables to account for the political incentives for the

incumbent LCEs to perform, and other province-level indicators of service needs and of

fiscal or service delivery capacity. To account for electoral incentives, we used the

proportion of mayors that were re-elected in 2003 (47%) and 2007 (33%) and the

re-election status of governors in the same years. About 47% and 64% in 2003 and 2008,

respectively, were re-elected governors. Presumably, the re-elected LCEs already have

some experience running their local governments and some may still look forward to

another term.

The local population’s need for local services is captured with poverty incidence,

which on average was 31.54% in 2003 and 22.96% in 2008. Fiscal capacity is indicated by

the IRA per capita of the province and of the component cities and municipalities. For the

provincial government, the average IRA per capita (in 2000 prices) was 745 pesos in 2003

and 784 in 2008. For the component cities and municipalities, the corresponding figures

were about 119 pesos and 88 pesos. To account for possible spending spillovers from

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independent cities within some provinces, we also include the IRA per capita (also in 2000

prices) of these cities, which amounted to about 251 pesos in 2003 and 285 pesos in 2008.

Finally, the numbers of doctors, nurses and midwives per 10,000 population are

included as measures of service delivery capacity. In both 2003 and 2008, on average there

was less than one doctor, one nurse and around two midwives per 10,000 population.

Estimating equation

Using the province-level dataset, we estimated the following model using the panel-data

estimation technique (see Greene 2008, 183). We assume that the dependent variable Y,

which indicates a specific health impact (financing, spending, output) is linked to party

affiliation and a host of other possible explanatory variables as follows:

Yit ¼ ai þ bPit þ dXit þ uTt þ 1it; ð1Þ

where the subscripts i and t refer to the ith province and year t, respectively, P is an

indicator of party affiliation, X is a vector of province-level characteristics, T is the dummy

variable for year, e is the error term, a is a constant term, and u, b and the vector d are

regression coefficients. An estimate of bwould capture the marginal (or own independent)

effect of party affiliation on Y, holding other factors constant.

Using stata’s xtreg module, Equation (1) is estimated as a panel data model with

province-level fixed effects. Specifically, the term ai in Equation (1) captures the effects of

the omitted or unobserved, province-specific characteristics such as topography, culture

and physical capital or infrastructures. The coefficient ai also captures the possible effects

of political clans, which is found to be a critical factor in previous studies but is not

included in our list of explanatory variables because of data unavailability. While our

specification allows us to tease out the independent effects of party affiliations, it is not

possible to tease out the effects of political clans from those other unobserved factors

captured by ai.

Further, the model allows for year fixed effects or those shared characteristics of the

provinces in a given year but which change through time, such as the prevailing national

political situation, macroeconomic or global economic conditions.

Analysis of results

Effects on securing national government support

Table 2 presents the estimated effects of party affiliation on securing some national

government support for health. The regression results show that the proportion of mayors

that belong to the same party as the governor has no statistically significant effect in terms

of securing a higher proportion of their poor constituents extended insurance coverage by

the national government or through the Plan 5M/OPlan 2.5M programs (in 2008 only).

It also does not appear to help generate additional funds or aid from the national

government and other external sources.

Likewise, the proportion of re-elected mayors or re-elected governors does not show

any statistically significant effects. This means that re-elected LCEs are not necessarily

favored over first-term LCEs.

Each peso of IRA per capita received by the province or the component cities and

municipalities increases by around 20–25 centavos the extraordinary receipts or aid that

the LGUs additionally get. These results suggest that extraordinary receipts are allocated

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Table

2.

Regressionresultsontheeffect

ofparty

affiliationonnational

governmentsupport.

Independentvariables

Proportionofindigent

familiessponsored

throughPlan5M

orOPlan

2.5M

(in2008only)

Proportionofindi-

gentfamiliescovered

bynational

government

Proportionofindigent

familiescovered

by

national

government

(inc.Plan5M/OPlan

2.5M

in2008)

Totalextraordi-

naryreceipts/aid,

per

capita

Proportionofmayors

that

belongto

sameparty

asgovernor

20.056

20.025

20.106

16.316

(0.455)

(0.432)

(0.103)

(0.546)

Proportionofmayors

re-elected

0.096

0.010

0.105

20.553

(0.371)

(0.799)

(0.200)

(0.550)

Governorisre-elected

0.023

0.017

0.017

12.221

(0.565)

(0.284)

(0.578)

(0.360)

IRA

per

capita,province

20.00004

20.00007

20.00017

0.251**

(0.631)

(0.337)

(0.476)

(0.000)

IRA

per

capita,componentcity

andmunicipality

0.00001

20.000009

20.000009

0.214***

(0.835)

(0.745)

(0.856)

(0.000)

IRA

per

capita,independentcities

0.000001

0.000

0.00001

20.003

(0.825)

(0.886)

(0.444)

(0.664)

Poverty

incidence

0.0005

20.0002

20.0036

0.111

(0.693)

(0.897)

(0.271)

(0.936)

Doctors

per

10,000population

0.151

0.061

20.186

9.151

(0.537)

(0.651)

(0.492)

(0.936)

Midwives

per

10,000population

0.005

0.0187

0.021

242.730**

(0.830)

(0.254)

(0.514)

(0.003)

Nurses

per

10,000population

20.096

20.001

0.708

22.308

(0.443)

(0.977)

(0.546)

(0.963)

Year2008

20.034**

0.536**

50.343***

(0.021)

(0.068)

(0.000)

Constant

0.042

0.017

0.017

2118.272*

(0.594)

(0.826)

(0.269)

(0.064)

Number

ofgroups

73

73

73

73

R-squared

0.0587

0.171

0.143

0.812

Prob.

F0.95

0.360

0.534

0.000

Note:Figuresin

parentheses

arep-values.***p,

0.01,**p,

0.05,*p,

0.10.

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based on population density or equity consideration (as are used in the IRA formula), or

transferred as matching grants tied to the uses of the IRA funds.

The other statistically significant factors are the ratio of midwives to 10,000 population

and the year dummyvariable for 2008. Thefirst of these factors shows that it is associatedwith

lower extraordinary receipts or aids (247.73 pesos), which implies that this external

assistance goes more to LGUs with low existing health human resource capacity. Finally,

national government insurance coverage of the indigent population, coverage under Plan

5M/OPlan 2.5M and the amount of extraordinary receipts are all higher in 2008 than in 2003.

The model is able to explain 5% of the variation across provinces in the proportion of

indigent families sponsored through Plan 5M/OPlan 2.5M (in 2008 only); 17% of the

variation in the proportion of indigent families sponsored by the national government;

14% of the variation in the proportion of indigent families enrolled by the national

government and under Plan 5M/OPlan 2.5M; and 81.2% of the variation in total receipts

and aids received by the province and component LGUs per capita. The F-test for the

regression on proportion of indigent families sponsored through Plan 5M/OPlan 2.5M and

total extraordinary receipts or aid per capita tells us that we can reject the null hypothesis

that all coefficients of independent variables are equal to zero at the 10% level. However,

we are unable to reject this hypothesis for the regression on the proportion of indigent

families sponsored by the national government (including or not Plan 5M/OPlan 2.5M),

which means that the econometric model as a whole does not very well explain the

patterns in these dependent variables.

Effects on local spending

If LCEs that are affiliated to one party are unable to obtain additional support from the

national government, are they at least able to coordinate and increase their health

spending? The regression results in Table 3 show that this is not the case. The proportion

of mayors that belong to the same party as the governor has no statistically significant

effect on the level of health spending of either the provincial government or the component

cities and municipalities. Moreover, the re-elected mayors and governors also do not

appear to be associated with a higher level of health spending.

The only statistically significant variables pertain to the available fiscal resources,

health service capacity and the dummy variable for the year 2008. Specifically, a peso

increase in the provinces’ IRA or in that of the component cities and municipalities tends

to increase the latter’s health spending by about two pesos. However, the effect is not

symmetric. A peso increase in the IRA of the component LGUs does not have any

statistically significant effect on the province’s own health spending. Interestingly, the

IRA of independent cities has a positive, statistically significant although small impact

(around 20 centavos) on provincial health spending. This suggests possible spillovers to

neighboring jurisdictions, such as residents of the independent cities crossing political

boundaries to make use of provincial hospitals or rural health units of neighboring towns.

Again, the ratio of midwives to 10,000 population and the dummy variable for the year

2008 are both statistically significant. In particular, a unit increase in the midwives-to-

10,000-population ratio leads to a 47-peso rise in provincial health spending and a 441-

peso reduction in the health spending of the component LGUs. Since most midwives are

employed in rural health units and city health offices, the results suggest that provinces

could be spending on drugs and medical supplies that complement the services of the

midwives, while cities and municipalities may be constrained to spend more on the same

things the more health personnel they already employ.

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Table

3.

Regressionresultsontheeffect

ofparty

affiliationonlocalhealthspending.

Independentvariables

Provincial

health

spending,per

capita

Componentcity

andmunicipality

healthspending,per

capita

Proportionofmayors

that

belongto

sameparty

asgovernor

220.180

204.844

(0.411)

(0.428)

Proportionofmayors

re-elected

32.257

178.981

(0.303)

(0.585)

Governorisre-elected

23.295

95.752

(0.785)

(0.447)

IRA

per

capita,

province

20.079

2.584***

(0.139)

(0.000)

IRA

per

capita,

componentcity

andmunicipality

20.034

2.060***

(0.138)

(0.000)

IRA

per

capita,

independentcities

0.019**

20.048

(0.012)

(0.534)

Poverty

incidence

21.542

0.735

(0.221)

(0.955)

Doctors

per

10,000population

2119.620

141.914

(0.248)

(0.896)

Midwives

per

10,000population

47.100***

2441.238***

(0.000)

(0.001)

Nurses

per

10,000population

218.427

28.664

(0.680)

(0.985)

Year2008

234.841***

373.738***

(0.002)

(0.002)

Constant

185.554***

21116.828*

(0.002)

(0.067)

Number

ofgroups

73

73

R-squared

0.589

0.824

Prob.

F0.000

0.000

Note:Figuresin

parentheses

arep-values.***p,

0.01,**p,

0.05,*p,

0.10.

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The R-squared statistics indicate that econometric models are able to account for 59%

of the variation in provincial health spending per capita and 82% of the variation in health

spending per capita. Further, the F-test for the regressions on health spending per capita

indicates the joint significance of the coefficients of the independent variables.6

Effects on service delivery outputs

Finally, Table 4 shows the estimated impact of party affiliation, with the expectation that

LCEs in the same parties will work together to improve selected service delivery outputs,

especially those that affect the health of mothers and children. As in the previous tables,

however, the proportion of mayors that belong to the same party as the governor still has

no statistically significant effects on the proportion of indigent families extended insurance

coverage by the LGU, facility-based deliveries or fully immunized under-5 children.

These results are consistent with those reported in Table 3 since health spending should

translate to service outputs. However, they also suggest that party affiliations per se do not

help improve the administration (or the technique) of health services delivery to make up

for lower spending.

Interestingly, the underlying incentives and competence of the LCEs matter. Recall the

assumption that re-elected LCEs already have some experience with actual public

administration. Indeed, the higher the proportion of mayors re-elected, the greater the

proportion of indigent families that the LGUs enroll in PhilHealth (between 22 and 24

percentage points) and of fully immunized under-5 children (8 percentage points). On the

other hand, re-elected governors are associated with a higher proportion (6.6 percentage

points) of facility-based deliveries.

The component cities and municipalities with high IRA per capita also tend to extend

insurance coverage to a higher proportion of their poor families. The proportion of

indigent families sponsored by their own LGUs (and not by the national government or

other sponsors) also tends to be higher in poor areas. A lower proportion of facility-based

deliveries is associated with higher midwives-to-10,000-population ratio, presumably

because midwives can deliver babies at home. Finally, all four output indicators are higher

in 2008 than in 2003, indicating possible shifts in the overall economy or national

government policies that affected all provinces.

The models explain around 48% of the variation in the proportion of indigent families

sponsored by the local government and in the proportion of indigent families sponsored by

the local government (net of those sponsored in other programs). The model’s explanatory

power is slightly higher at 52% with facility-based deliveries but is only 26% with

proportion of children fully immunized. The F-test for all the regressions on service

delivery outcomes allows us to reject the null hypothesis that all coefficients of

independent variables are equal to zero and therefore statistically significant.

Conclusion

In sum, our empirical results confirm that party affiliations do not matter to the provision

of devolved health services. More precisely, the proportion of incumbent mayors that

belong to the same party as the incumbent governor has no direct, independent and

statistically discernible effect on their ability to secure additional support for health from

the national government, on increasing health spending of the provincial government or of

the component cities and municipalities, or on improving selected health service delivery

outputs such as health insurance coverage of the poor, maternal deliveries in health

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Table

4.

Regressionresultsontheeffect

ofparty

affiliationonselected

servicedeliveryoutputs.

Independentvariables

Proportionofindigent

familiescovered

by

localgovernment

Proportionofindigent

familiescovered

bylocal

government,less

those

spon-

soredin

other

programs

Proportionof

facility-based

deliveries

Proportionoffully

immunized

under-

5children

Proportionofmayorsthatbelongto

sameparty

asgovernor

20.118

20.103

0.028

0.057

(0.119)

(0.151)

(0.626)

(0.159)

Proportionofmayors

re-elected

0.241**

0.218**

0.047

0.081*

(0.014)

(0.018)

(0.528)

(0.078)

Governorisre-elected

0.003

0.00008

0.065**

20.013

(0.936)

(0.998)

(0.027)

(0.466)

IRA

per

capita,

province

20.0001

0.0002

20.00005

20.00001

(0.114)

(0.100)

(0.093)

(0.852)

IRA

per

capita,

componentcity

andmunicipality

0.0004***

20.0001***

0.00006

0.00001

(0.012)

(0.009)

(0.093)

(0.722)

IRA

per

capita,

independentcities

0.00004

20.007*

20.00001

20.00007

(0.063)

(0.069)

(0.353)

(0.944)

Poverty

incidence

20.008**

0.377**

0.003

0.0008

(0.038)

(0.045)

(0.289)

(0.658)

Doctors

per

10,000population

0.388

20.018

0.201

0.029

(0.222)

(0.209)

(0.414)

(0.849)

Midwives

per

10,000population

20.018

20.018

20.029***

0.003

(0.625)

(0.615)

(0.324)

(0.861)

Nurses

per

10,000population

20.102

20.112

20.136

20.087

(0.455)

(0.385)

(0.205)

(0.186)

Year2008

0.150***

0.138***

0.143***

20.033**

(0.000)

(0.000)

(0.000)

(0.046)

Constant

0.064

0.057

0.164

0.827***

(0.717)

(0.729)

(0.231)

(0.000)

Number

ofgroups

73

73

73

73

R-squared

0.475

0.480

0.524

0.262

Prob.

F0.000

0.000

0.000

0.047

Note:Figuresin

parentheses

arep-values.***p,

0.01,**p,

0.05,*p,

0.10.

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facilities and basic immunization of infants and toddlers. Given that we specifically chose

the devolved health services where the potential gains from inter-LGU collaboration are

clear and realizable, the results only confirm (objectively so in this case) that party

affiliations in the Philippines count for less than they should.

In contrast, there is some evidence that the re-election status of mayors and governors

has a direct, independent and positive impact on the same health service delivery outputs.

Perhaps the re-election status reflects the incumbent LCEs’ prior experience in local

administration and their desire to perform well to secure another. The two results suggest

that unless political parties are strengthened to make them responsive and accountable to

voters, candidates will continue to change alliances to win elections and their decisions

once elected will be motivated more by narrow electoral objectives than party platforms.

Reform advocates contend that through a strong party system, successful candidates will

espouse more long-term, strategic objectives (e.g., Montinola 1999).

The internal revenue allocations per capita, midwives-to-10,000-population ratio and,

in some cases, poverty incidence are the factors that consistently show some effects. These

suggest fiscal resources, existing health personnel and the health needs of the local

population are stronger determinants than party affiliations. Moreover, external assistance,

local health spending and service outputs are also better in 2008 than in 2003, which

perhaps reflects more favorable government policy or macroeconomy in the latter year.

It is important to note, however, that while party affiliations do not have an effect on

the devolved health service, the results do not mean that party affiliations may not have an

impact on the financing or delivery of other public services. It is possible as well that party

affiliations matter more for local governments in the same congressional district. If elected,

representatives align themselves to the incumbent president or to presidentiables to secure

pork barrel allocations. They can then use their allocations to secure the political support

of the mayors within their districts. This topic and the following ones can be pursued in

future studies toward a more comprehensive assessment of political parties in the context

of decentralization.

Aside from helping each other during elections, party affiliates who are elected may

also work together to secure other forms of national government support, such as the

establishment of special economic zones or free port zones or the construction of airports

or seaports in their jurisdictions. In addition, they could be pursuing sub-provincial goals

involving only a few of their party mates so that the gains from cooperation are greater and

the enforcement costs are lower. This could explain, for example, why Metro Naga

Development Council and the Banate Bay Coastal Resource Management Council, Inc.

appear to be successful. A province-wide voluntary collaboration of LGUs runs into a

collective action problem, i.e., some will inevitably free-ride on the efforts of others,

which then eventually discourages cooperation.

However, where party affiliations seem to work, they do so perhaps only because most

members belong to the same political clans or dynasties. Hence, it is important to

disentangle the effect of party membership (which is presumably more ideology or

platform driven) from that of clan membership (which caters more to narrow or special

interests) by having these two indicators in one regression model. While we effectively

controlled for clan presence here using a fixed-effects model, we cannot tease out its own

effects from other unobserved factors to compare it with that of party affiliation. It would

also be worthwhile to investigate where party members draw the line between their party’s

positions in regard to their clan interests, and why political clans persist despite

opportunities to build or strengthen existing political parties (see De Dios 2007 and

Querubin 2010 for some interesting insights). To push the analysis further, future research

Philippine Political Science Journal 77

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may compare the effectiveness of the de jure or de facto rules for candidate selection,

division of the “spoils,” and the enforcement of discipline among members of political

parties and clans.

Acknowledgements

The authors gratefully acknowledge the two anonymous referees for comments and suggestions onan earlier version of the article, the participants in the 11th National Convention on Statistics held on4–5 October 2010 at the EDSA Shangri-La Hotel, Ortigas Center, Mandaluyong City, and those inthe 12th International Conference of the East Asian Economic Association held on 2–3 October2011 at Ewha Women’s University Seoul, Korea. This study is a spin off from another report by theauthors submitted to the UPecon-Health Policy Development Program. The contents of this studyhowever are the sole responsibility of the authors and do not necessarily reflect the views of USAID,the United States Government or UPecon Foundation, Inc.

Notes

1. Gutierrez, Torrente, and Narca (1992) observe that “political parties in the Philippines arecoalitions of political clans.” Coronel et al. (2007) list party and family alignments in the 12thHouse (2001–2004) which include the Dys in Isabela, the Floirendos in Davao del Norte, andthe Zubiris in Bukidnon for Lakas; the Cojuangcos and Teodoros in Negros Occidental,Pangasinan and Tarlac for the National People’s Coalition; the Angaras in Aurora, the Remullasin Cavite, and Lobregats and Zamboanga for the Laban ng Demokratikong Pilipino; and theAbads in Batanes for the Liberal Party.

2. After the 2010 elections, 24 congressmen left Lakas-Kampi-CMD, the party of the previouspresident, Gloria Macapagal-Arroyo, and were sworn into the Liberal Party, the party ofBenigno Aquino III who was to be inaugurated a few days later. More representatives and localchief executives would follow. One of those who joined the Liberal Party said that they would be“supporting the present administration but it does not mean all the way in time for the 2013elections” (see Diaz and Padua 2010; Managbanag 2011).

3. Charging against the MOOE allows the LGUs to get around the cap on expenditures onpersonnel services specified in the Local Government Code.

4. Surgeons in health facilities are an example of trade-offs between customized service provisionunder a fragmented set-up and exploiting economies of scale in a more centralizedconfiguration. There are no regular surgeons serving in barangay health stations because theircapacities are under-utilized in this facility. Visits from patients who need medical attentionfrom a surgeon are not very common. The services of surgeons are most needed in districthospitals where they can serve a broader group of patients who require their attention. However,having surgeons serve in district hospitals or other higher-level facilities implies a loss in servicespecificity for patients who go to barangay health stations who may immediately need theservices of a surgeon. Such instances may be rare, but the unavailability of the kind of service atthe specific time and place needed by a patient constitutes a loss.

5. See Lavado (2010) for a lengthier discussion on this.6. A similar analysis of the shares of health in total spending (not shown) yields F-test statistics that

do not allow us to reject the null hypothesis that the coefficients are simultaneously equal tozero. However, we maintain that the levels are adequate for the purposes of the study.

Notes on contributors

Joseph J. Capuno is an Associate Professor of Economics in the University of the Philippines Schoolof Economics, where he is also developing a graduate-level course on local public economics. Hisoriginal research interest in the devolution of health services in the Philippines has led him to furtherwork in the economics and politics of decentralization. He has published articles in both economicsand political science journals and edited books on local fiscal decisions and political clans,innovations in local services, governance and local development, and local government performanceratings and civic participation. He earned his PhD from the School of Economics of the University ofthe Philippines.

J.J. Capuno and M. Panganiban78

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Marian Panganiban is a BS and MA graduate of the University of the Philippines School ofEconomics. Her recent work on health policy has been featured in The Lancet, the Global HealthResearch Forum’s Young Voices in Research for Health, and in Asian Politics and Policy.

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