The Philippine Health Insurance Corp. (PhilHealth), boasted of P22.955 billion in net income for the year ending March 31, 2024, earned from a net operating income of P16.557 billion, boosted by P6.397 billion in interest and other income.
The surplus can be simplistically gleaned from the difference between the P53.345 billion compulsory and automatically deducted premiums of contributing PhilHealth members (the “formal sector,” the “direct contributors,” those privately and publicly employed) and their employers (50-50% sharing), versus benefit claims of only P35.166 billion and P1.621 billion in operating expenses for 2024.
But of course, the net income of P22.955 billion for the year, with the prior year adjustment of P1.473 billion enriched the PhilHealth reserve fund as of March 31, 2024 to P488.107 billion. The reserve fund is for contingencies, like some unforeseen surge in benefit claims or emergency funding for extraordinary health situations. PhilHealth has complied with RA No. 7875 (July 25, 1994) to maintain a reserve fund not exceeding a ceiling equivalent to the amount actuarially estimated for two years’ projected Program expenditures. In 2023, PhilHealth’s reserve fund was P463.7 billion.
PhilHealth is healthy. Perhaps too healthy, and too wealthy.
Guess what? The Department of Finance (DoF) noticed PhilHealth’s robust health, and remembered the cumulative unutilized government subsidy for PhilHealth’s “indirect contributors” (non-paying beneficiaries) amounting to P89.9 billion between 2021 and 2023, contributing to its surpluses.
The DoF issued Circular No. 003-2024 in June, a directive to transfer unused subsidies from Government-owned- or -controlled corporations (GOCCs), specifically PhilHealth’s P89.9 billion, to the national treasury to bolster the government’s unprogrammed appropriations. Unprogrammed appropriations are funds included in a government’s budget that serve as a financial reserve for projects, programs, or expenses that are not specifically itemized or detailed in the budget.
Public health reform advocates and budget watchdogs asked lawmakers to investigate the move of the executive department to divert billions of pesos in excess funds of GOCCs, particularly PhilHealth’s, to finance the unprogrammed appropriations this year (Philippine Daily Inquirer, July 15). A petition has been filed with the Supreme Court, seeking to declare as unconstitutional the DoF circular and a provision in the 2024 General Appropriations Act (GAA) on which the circular was based, which allowed the impounding of the “savings” of all GOCCs for diversion to unprogrammed appropriations in the GAA — the new version of the congressional “pork barrel” (The Philippine Star, Aug. 19).
According to Finance Secretary Ralph Recto, the reversion of funds is legal and is provided for under the GAA, which says unused funds can be given back. Mr. Recto clarified, however, that only P20 billion has been remitted so far, which was used by government to fund the Health Emergency Allowance (HEA) of COVID frontliners. The remaining amount will be used for unprogrammed appropriations such as the Metro Manila Subway Project and routine maintenance of national roads. He also said they will not touch the contributions of members and that their benefits will not be affected (ABS-CBN News, July 30.)
In his third State of the Nation Address (SONA) on July 22, President Ferdinand Marcos, Jr. highlighted several improvements in the benefits packages offered by PhilHealth. However, what was not mentioned was the ongoing controversy over the diversion of billions of pesos in unused funds from the state insurer to the national treasury for unprogrammed appropriations (inquirer.net, Aug. 1). What also was not mentioned was that the PhilHealth contribution rate (premium) jumped from 4% to 5% of the contributor/employee’s monthly salary effective Jan. 1, as publicly announced on Jan. 12 this year (sunstar.com, March 1).
So, the unused subsidies (intended to alleviate the burden on PhilHealth’s direct contributors subsidizing the non-contributing indirect members — the indigent, senior, and incapacitated) would not have funded the increased benefits packages, but this will have to be funded by the increase to 5% of contributing direct premium-paying members.
On July 30, at the hearing of the Senate Committee on Health and Demography, PhilHealth President Emmanuel Ledesma, Jr. agreed with Committee chairperson Senator Bong Go that PhilHealth contributions must be reduced. Mr. Ledesma promised to take up the reduction with Mr. Marcos Jr. along with the enhanced and expanded case rate packages, which should be funded from the “Universal Health Care (UHC) Law that provides that 50% of the National Government share from the income of PAGCOR (the Philippine Amusement and Gaming Corp.) as provided for in Presidential Decree No. 1869, as amended; and 40% of the Charity Fund (Sweepstakes), net of Documentary Stamp Tax Payments, and mandatory contributions of the PCSO (Philippine Charity Sweepstakes Office) as provided for in RA No. 1169, as amended, to be transferred to PhilHealth precisely for the improvement of its benefit packages” (philhealth.gov.ph).
Health rights advocates noted that the UHC Act is only halfway through its 10-year implementation timeline, with Filipinos still having to shoulder 45.95% of out-of-pocket health expenditure in 2022, according to the World Health Organization Global Health Expenditure report (ABS-CBN News, Aug. 2). Reports show that the out-of-pocket share of the contributor for national health insurance in Thailand is only about 9%, and in Australia, 20%. The late former Health Secretary Alberto “Quasi” Romualdez, Jr. (in office from September 1998 to January 2001), who pushed for universal health care, reproductive health, and tobacco control, once said that every Filipino should pay only P2 out-of-pocket for every P10 of quality healthcare (bworldonline.com/opinion, July 29).
Yet the second tranche of “excess funds” from PhilHealth amounting to P10 billion was transferred to the national treasury on Wednesday, Aug. 21, the Finance department said on Thursday. The P10 billion was part of the P89.9 billion total in excess funds of PhilHealth that are set to be transmitted to the national treasury on a staggered basis. An initial P20 billion was already remitted last May.
“So, a total of P30 billion has been remitted to the Bureau of the Treasury,” DoF Director Euvimil Nina Asuncion said in a Bagong Pilipinas Gayon interview (gmanetwork.com, Aug. 22).
Was the admonition that the advocacy group, the 1SAMBAYAN Coalition, wrote to Finance Secretary Ralph Recto on Aug. 22 — “An Urgent Demand to recall the directive on remitting PhilHealth’s excess funds to the National Government” — too late and futile.;
“First, in the Executive Branch, only the President can be authorized by law to transfer savings from one item to another in the appropriations for the Executive Branch under the GAA (General Appropriations Act),” wrote the 1SAMBAYAN Coalition. “The delegation of power in the 2024 GAA to the Finance Secretary to transfer savings (fund balance resulting from the review and reduction by the Finance Secretary of GOCC reserve funds to reasonable levels) from GOCCs to the Bureau of the Treasury to fund items in the Unprogrammed Appropriations in the 2024 GAA is unconstitutional for being an undue delegation of constitutional power that belongs exclusively to the President,” it said.
“Second, the two transfers of idle or unused funds to date from PhilHealth result is Technical Malversation of public funds, and constitute the crime of Plunder,” it said. “Under Section 29 (3), Article VI of the Constitution, the funds of PhilHealth are Special Funds raised through taxation for a specific purpose, and can be used only for the specific purpose intended by law, which is the universal health of the Filipino people, a purpose that has not been accomplished or abandoned.
“In view of the foregoing, we seek your sound discretion to recall the directive (DoF Circular 003-2024) to remit PhilHealth’s unused funds to the national treasury. In the event that no recall is made, we will be constrained to test the validity of the circular to the Supreme Court.”
It was signed, “in behalf of 1SAMBAYAN,” by Justice Antonio T. Carpio and Atty. Howard M. Calleja, convenors
— and in behalf of the Filipino people.
Amelia H. C. Ylagan is a doctor of Business Administration from the University of the Philippines.
