Enhancing the private provision of care through premiums for ability: the case of tuberculosis care in the Philippines

This paper examines how premiums for ability are set and how these can enhance the quality of care provided in private markets. The specific context for this study is the market for tuberculosis (TB) care in the Philippines. While the most cost- and clinically-effective treatment method known as TB Directly Observed Treatment Short Course (TB DOTS) is increasingly being provided by the public sector, few private doctors have adopted this protocol. As findings of multivariate regression analyses of private physicians' fees suggest, this low adoption rate can be partly explained by the modest premiums private doctors receive for using TB DOTS. While the public provision of TB DOTS should be pursued in earnest, this paper argues that the complementarity between public and private provision of TB DOTS should be strengthened, especially since Filipino TB patients seem to prefer private doctors. This goal can be achieved through user fees that (i) include a sufficiently large premium for physician ability and (ii) are paid through the social insurance system.