A10 Wednesday, May 24, 2017 • Editor: Angel R. Calso
Opinion BusinessMirror
editorial
Govt must ensure ample supply of affordable rice
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fter months of uncertainty surrounding the country’s rice supply-and-demand situation, the government finally announced last week its decision to buy rice from foreign private suppliers. The National Food Authority Council (NFAC), the interagency body vested with the power to decide on the timing and volume of rice importation, has also given its nod to the private sector’s initiative to buy 805,000 metric tons (MT) of rice via the minimum access volume (MAV) scheme. The announcement came after revelations that the NFA’s buffer stock had fallen to eight days’ worth of national consumption, nearly half of the 15 days buffer mandated by the Legislative-Executive Development Advisory Council (Ledac).
Days after the NFAC made its announcement, however, it has yet to determine the final volume of rice the government would buy via the so-called government-to-private (G2P) scheme. Cabinet Secretary Leoncio B. Evasco Jr. said the rationale behind this is to ensure that the purchases would be covered by Republic Act 9184, or the Government Procurement Reform Act. As we go to press, the NFAC has yet to decide on the final volume of rice imports and when it would conduct the bidding. It is now becoming more apparent that the National Food Authority (NFA) would not be able to build up a stockpile equivalent to 30 days of national rice consumption before the start of the lean season in July. It could take anywhere from one to two months for the rice imports to arrive in the country and this would depend on how fast the government would conduct the bidding and award the right to supply rice, as well as the origin of the imports. The decision not to import rice undoubtedly benefited the farmers during the dry season harvest as traders in some areas were buying paddy rice for as much as P22 per kilogram. There is nothing wrong in favoring local producers because it is the obligation of the State to safeguard the livelihood of its citizens. But some members of President Duterte’s Cabinet seems to have conveniently forgotten or refused to recognize the nature of the Philippine rice industry. Given its mandate, the NFA continues to act as the “big, bad wolf” to private traders because its intervention prevents price spikes, which could hurt producers or consumers. Until and unless this function is scrapped via the amendment of pertinent laws, this should not be swept under the rug or disregarded and should have been used to the government’s advantage. For one, the Duterte administration should have embarked on massive palay-buying and raised the NFA’s support price to boost the food agency’s stockpile. This is cheaper than importing rice and would benefit more farmers. Also, importations should be timed to ensure that the price of unmilled rice during the dry season and main harvest in the fourth quarter would not go down. The announcement of the government’s decision to import rice last week would no longer affect rice farmers but it could have an impact on prices during the main harvest, particularly if the arrival of the imports via G2P and the MAV scheme are ill-timed. It takes about three months to grow rice so the government would have ample time to estimate the possible shortfall in the country’s rice requirement. Importation should be the government’s last resort, but if it is certain that local production would not be enough to support its citizens’ needs, then it should do what’s necessary to ensure the availability of affordable rice.
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Are HMOs engaged in insurance business? Dennis B. Funa
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INSURANCE FORUM
re Health Maintenance Organizations (HMOs) engaged in insurance business? This question was squarely placed before the Supreme Court (SC) in Philippine Health Care Providers Inc. v. Commissioner of Internal Revenue (GR 167330). The Court (First Division) at first ruled (June 12, 2008) that yes, HMOs are engaged in insurance business, and that the petitioner’s health-care agreement was in the nature of a nonlife insurance contract. However, in a motion for reconsideration, the Special First Division (resolution, September 18, 2009), but through the same ponente, reversed itself and ruled HMOs are NOT engaged in the business of insurance. In two earlier cases, Blue Cross Healthcare Inc. v. Olivares (GR 169737, February 12, 2008) and Philamcare Health Systems Inc. CA (429 Phil. 82 [2002]), the SC ruled that a health care agreement is in the nature of a nonlife insurance policy. However, it was clarified in Philippine Health Care Providers Inc. (resolution) that those cases only involved the interpretation of health care agreements as contracts of adhesion, similar to insurance contracts which are also contracts of adhesion. An HMO was first defined in 1995 through Republic Act 7875 (National Health Insurance Act of 1995), Section 4, (o), enumerating what health-care providers are “a health-maintenance organization,
which is an entity that provides, offers or arranges for coverage of designated health services needed by plan members for a fixed prepaid premium”. Among the pioneer HMOs in the Philippines are Health Maintenance Inc. (HMI) and Bancom Health Care Corp. (later renamed to Integrated Health Care Services Inc. (Intercare). HMI was first organized in 1965, but formally incorporated in 1991. Bancom was formed in 1974. The SC applied the Principal Object and Purpose Test, as formulated in American jurisprudence, in reaching the said conclusion. The test is “whether the assumption of risk and indemnification of loss (which are elements of an insurance business) are the principal object and purpose
of the organization, or whether they are merely incidental to its business. If these are the principal objectives, the business is that of insurance. But if they are merely incidental, and service is the principal purpose, then the business is not insurance”. In other words, if the main object is to provide health services rather than indemnity, it is not engaged in insurance business. The “mere presence of risk would be insufficient to override the primary purpose of the business to provide medical services as needed, with payment made directly to the provider of these services. In short, even if [the] petitioner assumes the risk of paying the cost of these services, even if significantly more than what the member has prepaid, it nevertheless cannot be considered as being engaged in the insurance business”. Before this test is applied, there is a need “to scrutinize the operations of the business as a whole, and not its mere components”. The operations of an HMO must first be characterized. It operates as “a prepaid group-practice health care-delivery system or a health-maintenance organization to take care of the sick and disabled persons enrolled in the health-care plan and to provide for the administrative, legal and financial responsibilities of the organization”. “Individuals enrolled in its health-care programs pay an annual membership fee, and are entitled to various preventive, diagnostic and curative medical services provided by its duly licensed physicians, specialists and other professional
technical staff participating in the group-practice health-delivery system at a hospital or clinic owned, operated or accredited by it.” Its medical services also provide for the following general health-care services: preventive, diagnostic and curative. The Court cited Jordan v. Group Health Association (107 F.2d 239. D.C. App. 1939), which held Group Health Association should not be considered as engaged in insurance activities, since it was created primarily for the distribution of health-care services rather than the assumption of insurance risk. The Principal Purpose Test was also applied in California Physicians Service v. Garrison (28 Cal. 2d 790 [1946]) and Michigan Podiatric Medical Association v. National Foot Care Program Inc. (438 N.W.2d 350 [Mich. Ct. App. 1989]). Moreover, other distinctions were also pointed out by the Court. Applying Somerset Orthopedic Associates PA v. Horizon Blue Cross and Blue Shield of New Jersey (345 N.J. Super. 410, 785 A.2d 457 [2001]), it pointed out the main difference between an HMO and an insurance company is that HMOs undertake to provide or arrange for the provision of medical services through participating physicians, while insurance companies simply undertake to indemnify the insured for medical expenses incurred up to a preagreed limit. Dennis B. Funa is the current insurance commissioner. He was appointed by President Duterte as the new insurance commissioner in December 2016.
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How Democrats could leverage Trump’s sinking presidency
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nyone who thinks Donald J. Trump’s staggering, stumbling presidency is going to destroy the Republican Party really needs to remember what actually happened after Richard Nixon’s resignation in 1974.
Yes, Republicans were routed in the midterm elections that year and lost the presidency in 1976. But they recovered strongly in 1978 and 1980. It was the same story after the Iran-Contra scandal in late-1986, which severely hurt Ronald Reagan’s approval numbers, but didn’t even cost Republicans the White House in 1988. George W. Bush’s unpopular presidency wiped out the Republicans in 2006 and 2008...but then they rallied back sharply only two years later during Barack Obama’s mildly unpopular early presidency. Voters have extremely short memories. But the effects of an electoral disaster caused by their temporary shifts can be enormously long-lived in
terms of policy, judges and energizing the opposition.
Legislation
First of all, the status-quo bias of the US political system means that it’s very difficult to pass anything major, but once something does pass, it’s hard to dislodge it. We may yet see a major Republican health-care bill pass during this Congress, but even if that does happen, much of the Affordable Care Act will survive. And that bill only passed because of George W. Bush’s massive unpopularity after the Iraq War and the recession that began in late-2007, leading to Democratic landslides in 2006 and 2008. Similarly, Jimmy Carter’s inept
presidency yielded the 1980 Republican landslide and Ronald Reagan’s big tax cuts and budget changes in 1981, much of which survived for a long time. The electoral reaction doesn’t last—Republicans stormed back in 2010, just as Democrats had done back in 1982. But the policy changes that couldn’t have happened otherwise persist.
Judges
What else lives on long after a landslide? Judges. The effects of Lyndon Johnson’s electorally disastrous Vietnam War lived until Supreme Court Chief Justice William Rehnquist, a Nixon appointee, died in 2005. Jimmy Carter’s failure to win a second term will live on as long as Justice Anthony Kennedy stays on the high court. And the effects of Bush’s Iraq folly and the Bush-era recession will last as long as Justices Sonia Sotomayor and Elena Kagan remain on the bench. Not to mention the dozens and dozens of lower-court judges that also matter quite a lot. Granted, not all shifts of partisan control of the White House are caused by incumbent ineptness (or even just incumbent bad luck). But, when a party does give up the presidency unnecessarily, the effects are huge, even though the electoral punishment doesn’t last long.
Creating opponents And there’s a third long-lived effect. We think of the Affordable Care Act as Barack Obama’s accomplishment, but it’s at least equally the achievement of a group of members of Congress. Five of them—Henry Waxman, George Miller, Max Baucus, Chris Dodd and Tom Harkin—were Watergate babies. That is, they were first elected to Congress in the 1974 Democratic landslide brought on by Richard Nixon’s scandal. It’s impossible to know exactly how important the skills that these legislators had developed over the decades were to getting “Obamacare” over the finish line. Obviously, if they had never been elected, some other Democrats would have been the chairmen of House Energy and Commerce, Senate Finance and the other relevant committees. But I think most congressional observers would agree that their level of skill and expertise was unusually high, and it’s quite possible that they did make the difference on that bill (and several others over the course of their careers). And while some Watergate babies might have had congressional careers regardless of that scandal, it’s quite possible that some of them would not.