Patronage politics has caused the loss of health insurance coverage for millions of Filipinos

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Busting the Universal Health Care dream? The Congress-approved cash sweep of government-owned and -controlled corporations (GOCCs) did not exempt the Philippine Health Insurance Corp. or PhilHealth for a reason. PhilHealth seemed vulnerable with its large reserves and a damaged reputation during COVID-19.

To make things worse, PhilHealth’s budget for premiums was reduced by 50%, leaving at least 11 million indirect members and 18 million dependents without health coverage this year.

While the Department of Budget and Management (DBM) claims all of this happened because legislators hold the keys to the budget, the final nail in the coffin was driven by the DBM’s inability to advise the President that Congress had cut PhilHealth’s budget for the health coverage of millions of Filipinos and that PhilHealth could be adversely affected by a provision that would allow the Department of Finance (DoF) to take up billions more from it.

The Universal Health Care (UHC) Law clearly requires government support for premiums in Section 10 of the law:

“Provided, That for indirect contributors, premium subsidy shall be gradually adjusted and included annually in the General Appropriations Act (GAA): Provided, further, That the funds shall be released to PhilHealth: Provided, furthermore; That the DoH (Department of Health), in coordination with PhilHealth, may request Congress to appropriate supplemental funding to meet targeted milestones of this Act: Provided, finally, That for every increase in the rate of contribution of direct contributors and premium subsidy of indirect contributors, PhilHealth shall provide for a corresponding increase in benefits.”

By reducing budget support to P40 billion, PhilHealth will start incurring deficits in its program for indirect contributors which will jeopardize its ability to pay benefits.

Congress, during the bicameral committee conference, took P40 billion from PhilHealth and transferred much of it to the DoH’s MAIP (Medical Assistance to Indigent and Financially Incapacitated Patients) Program. The DoH had only requested P22.263 billion for MAIP, but Congress, through the bicameral committee conference, inflated the program to P58.093 billion. While the DoH gained P35.83 billion, PhilHealth had to shed 11 million indirect members. The irony of it all is that one must be a PhilHealth member to avail oneself of the MAIP.

MAIP is favored by most legislators who give health assistance to constituents through Guarantee Letters (GL) to pay for health costs that PhilHealth cannot cover with its limited benefit packages that usually only cover 20-30% of hospital bills.

MAIP has become the preferred option due to the failure of the DoH, PhilHealth, and local government units (LGUs) to implement the UHC law. Funds from sin taxes and premiums from the direct contributors accumulate in PhilHealth when LGUs and the DoH do not deliver the services that PhilHealth can pay for.

PhilHealth can continue to increase benefits, but if the claims are insufficient in number and value and the eligible members decline, contributions will accumulate in PhilHealth. Congress will then lose interest in funding a UHC law through PhilHealth and instead continue funding MAIP where they can exercise patronage politics, which is most important during election years.

For 2025, DBM must explain why it has recommended a reduction of indirect contributors from 25,229,037 to 14,157,910. The slide included here clearly shows a reduced member count.  This effectively removes 10,981,036 indirect contributors. With an average of two dependents per indirect member, that will mean over 30 million Filipinos without health insurance coverage next year.

DBM has also recommended a premium of P3,000 for the poor individual covered by the 4Ps (Pamilyang Pilipino Pantawid Program) and P5,000 for each senior citizen in 2025, which is below the P6,000 annual premium to retain membership. This will reduce coverage to only six months for 4Ps and 10 months for senior citizens. This could actually lead to even lower coverage for 4Ps members and seniors compared to 2024.

No one can predict who will need healthcare at any given time, which is why universal coverage is essential. The fact that only 15% of indirect members made claims in 2022 should not be used as a justification to deny coverage to everyone, particularly the poor and elderly. In a year, public health planners usually presume that 20% of the population will get sick, and 5% may require hospitalization. By proposing to cover with inadequate coverage only 14 million indirect members in 2025, has the DBM pre-determined who will get sick next year?

Further, the DoF’s claim that the government has provided excess amounts to fund the premiums of the poor does not hold water.

PhilHealth’s annual reports and the General Appropriations Acts (GAA) for the period 2010-2022 show that the GAA-provided “subsidies” were used up and had deficits in 10 out the first 13 years of the social health insurance program.

This author estimates from its reports that PhilHealth received P564.46 billion contributions for indirect members, and that it paid out P553.599 billion in claims. The DoF’s study only focused on the last three years (2021-2023) to determine the P89.9 billion, neglecting the many years of deficits of the program.

Furthermore, the GAA of 2023 only showed P61.229 billion for premium payments. When PhilHealth reported benefit payments for 2023 amounting to P58.7 billion on Sept. 4, 2024, that would only leave PhilHealth with P2.529 billion, not P38.8 billion in 2023.

So, one would wonder why is the PhilHealth reserve fund growing if most government contributions are being paid out?

PhilHealth annual reports for 2018-2022 show the expansion of the direct contributors in numbers and contributions (see the table).

The table, derived from PhilHealth’s annual reports for 2018-2022, shows that direct contributors increased by 7,536,785, contributing P165.9 billion to the reserve fund in surplus contributions. This constitutes at least a third of PhilHealth’s reserve funds.

For argument’s sake, presuming that the DoF Circular ordering the transfer of PhilHealth funds is legal, PhilHealth must still reexamine the source of the P89.9 billion it intends to turn over to DoF and ensure that not one peso is coming from direct contributions. If any amount is being sourced specifically from direct contributions, DoF might be dipping into the pockets of contributing members, which could be an illegal tax on PhilHealth member contributions.

Jeepy Perez, MD specializes in public health administration and primary healthcare and has worked with nine Health secretaries and three Economic Planning secretaries since 1992. He was undersecretary for Population and Development and executive director of the country’s Commission on Population and Development up to Sept. 8, 2022, when he retired.  He occasionally writes for Action for Economic Reforms.