Finance department warned over raids on PhilHealth reserve funds
By Beatriz Marie D. Cruz, Reporter
HEALTHCARE industry representatives urged the Department of Finance (DoF) to halt future transfers of “excess” funds out of the Philippine Health Insurance Corp. (PhilHealth), saying that as an insurance entity PhilHealth needs to maintain an adequate reserve that, if tapped, must finance improved health services.
In a letter addressed to Finance Secretary Ralph G. Recto, the healthcare associations said PhilHealth funds belong to the system’s members and must not be tapped by the government to cover for budget shortfalls.
“We strongly believe that the solution to PhilHealth’s inability to use its funds is not to strip Filipinos of healthcare funding but to implement immediate and substantial PhilHealth reforms such as increasing the scope and coverage of benefit packages,” according to the letter signed by 71 representatives from the healthcare sector.
They called it “unjust to take these funds for other purposes, when the unmet need for healthcare is enormous.”
According to the letter, around 44% of healthcare spending consists of out-of-pocket payments, pointing to the inadequacies of the health insurance system.
“We are daily witnesses to patients who are unable to get the care they desperately need due to the inefficiencies within our social health insurance system,” they said.
In March, the DoF issued Circular No. 003-2024, instructing government-owned and -controlled corporations (GOCCs), including PhilHealth to remit their excess funds to the Treasury, which would allow the government to fund unprogrammed appropriations in accordance with a provision in the 2024 General Appropriations Act.
The third and fourth tranche of fund transfers amounting to P30 billion is scheduled for October, with P29.9 billion to follow in November.
Mr. Recto said via Viber that while PhilHealth payouts have improved significantly for some treatments, “Even so, (PhilHealth) still will have P500 billion in reserve funds.”
Following the DoF circular, PhilHealth remitted P20 billion to the national treasury in the first tranche of fund transfers. These funds were applied to the P27-billion unpaid Health Emergency Allowance (HEA) for healthcare workers who worked through the pandemic.
The funds transferred out of the GOCCs will also be used to co-finance foreign-assisted and other big-ticket infrastructure projects.
In a separate statement, Mr. Recto said the use of PhilHealth’s funds for the government’s priority programs will not affect PhilHealth’s daily operations.
“The DoF’s move is consistent with the medical principle of ‘do no harm’. I repeat, the daily operations of PhilHealth will not be affected and we will not use its members’ contributions,” he said.
Mr. Recto also said the P500 billion PhilHealth will have left over after the transfers “is more than enough to increase the benefits of its direct and indirect contributors, covering two to three years of expenses.”
Antonio L. Dans, President of the Asia Pacific Center for Evidence-based Healthcare, said at a briefing that the law compels PhilHealth to maintain a certain level of reserves.
Under Section 11 of Republic Act (RA) No. 11223 or the Universal Healthcare Act, PhilHealth must set aside a portion of its excess accumulated revenue as reserve funds, provided that the total reserve does not the exceed a ceiling equivalent to the amount actuarially estimated for two years of projected expenditures.
PhilHealth reserves should be used to increase its benefits or to reduce member contribution levels, according to the law.
“No portion of the reserve fund or income thereof shall accrue to the general fund of the National Government or to any of its agencies or instrumentalities, including GOCCs,” the law said.
PhilHealth funds are better spent on increasing case rates and outpatient care benefits, Mr. Dans told BusinessWorld on the sidelines of the briefing.
“Outpatient benefits are expensive. It’s going to cost a lot of money. Our initial estimate is P120 billion will be spent per year just to supply half of the outpatient care benefits.”
“Binabayaran lang natin ’yung hospitalization ’pag malapit nang mamatay pero wala tayong benefit para doon sa mga sakit na naging sanhi ng ating pagka-ospital” (We only pay for the hospitalization of people who are well along in their illness, but we have no benefits for the conditions that led to the hospitalization), Mr. Dans said.
Case rates refer to the fixed amount of hospital expenses to be paid by PhilHealth. This was recently adjusted by the PhilHealth board to 30% in March.
“But that was after 10 years. If you compound inflation in 10 years, that’s supposed to be more than 30%,” Mr. Dans added.
“Instead of diverting the purported funds for the bolstering of the economy, infrastructure, and other social services, the same must be used in the furtherance of the mandate of RA 11223 and PhilHealth, affording the members and those who are in dire need of healthcare services of their rights to benefit from it,” Anthony C. Leachon, healthcare advocate and former president of the Philippine College of Physicians, said via Viber.
The Supreme Court has ordered government officials including those in the DoF to comment on a petition seeking to block the PhilHealth fund transfers.
“(We) will follow whatever Supreme Court decides on the matter,” Mr. Recto said.