PhilHealth’s budget for benefits will run out by November
According to the 2025 2nd quarter financial statement of the Philippine Health Insurance Corp. better known as PhilHealth, the corporation has been paying out an average of P25.4 billion a month so far this year, and with new benefits on the way, its annual benefits budget will run out by November, if not earlier.
Its expenses for benefits are expected to reach P305 billion by end of December 2025. Its income in the first six months (without government’s sin taxes) stands at P100 billion, far behind its expenses1.
At that rate of expenditure, PhilHealth will exceed its benefits budget of P271 billion by over P34 billion2. That means by early November, the Board of PhilHealth will have to find additional funding to sustain operations, and it will come from its reserve funds.
While PhilHealth could boast of a reserve fund of P464 billion in 2023, this has gone down to P281 billion in its most recent 2024 audited financial statement3. With retained earnings of P150 billion, PhilHealth’s investment portfolio, including the reserve, now stands at P492 billion, which also declined from P498 billion in 2023.
PhilHealth will most likely use up all the premiums paid by workers in the formal and informal sectors, its only major income source this year, estimated to be P202 billion, to pay for all the claims of direct and indirect contributors. This will make its expenses exceed its income by 50%.
A GROWING FINANCIAL AND TECHNICAL CRISIS
All the signs of a financial crisis are in place: low income, high expenditures (growing by 60% this year), declining reserves and investments. Further, under political pressure, all the technical guardrails are off as the government keeps announcing benefits that have not passed the Health Technology Assessment as required by the Universal Healthcare Law (UHC Law). On top of that, the Executive is not enabling the required transfers from the sin taxes, and the Philippine Amusement and Gaming Corp. (PAGCOR) and Philippine Charity Sweepstakes Office (PCSO) funds.
The Commission on Audit’s (CoA) observation and recommendation of PhilHealth’s 2024 Financial Statement warned:
“The potential depletion of the Reserve Fund, resulting from the partial release of the amounts appropriated for PhilHealth in the fiscal years 2023 and 2024 and the zero subsidy for PhilHealth in 2025 poses a significant risk to PhilHealth’s operations. Consequently, the objective of ensuring that all Filipinos are guaranteed equitable access to quality and affordable healthcare goods and services and protected against financial risk, may not be fully achieved, an outcome inconsistent with the RA 11223, otherwise known as the UHC act.4”
CoA could have included in its scrutiny the Memo from the Department of Finance (DoF) ordering the transfer of P89.9 billion from PhilHealth to the Bureau of the Treasury in 2024, which led to a reduction in PhilHealth’s reserve fund by another P60 billion.
The administration used what it took away from PhilHealth to cover infrastructure projects in what has been described as the “most corrupt budget.” One wonders if the resources intended for health went to infamous flood control projects.
NO ASSESSMENT, ACTUARIAL REVIEW
Over a year ago when the issue of “excess funds in PhilHealth” was put up as the reason to transfer P89.9 billion to the National Government, PhilHealth and the Department of Health (DoH) cited “policy differences” as the reason for the delay in the rollout of new and improved benefit packages.
In response to the backlash resulting from the PhilHealth transfer of funds, then PhilHealth President Emmanuel Ledesma agreed to increase benefit packages and institute new benefits that politicians wanted. PhilHealth was forced to implement them, but without the proper health technology assessments and actuarial review.
The new PhilHealth leadership renamed the Konsulta primary program to YAKAP (Yaman ng Kalusugan Program). It launched GAMOT (Guaranteed and Accessible Medications for Outpatient Treatment), which would give up to P20,000 worth of medicines every year for all PhilHealth members and beneficiaries. If fully implemented and utilized, this could mean spending P2 trillion a year on medicines.
ERODING UNIVERSAL HEALTHCARE
The key objective of PhilHealth is the reduction of Out-of-Pocket (OOP) payments in health, mainly made by the poor and middle-class households. By increasing financing for health services through its benefit packages, PhilHealth is expected to reduce OOP over time to 30%.
In the first year of implementing UHC in 2020, the OOP expenditure stood at 44.7%. Two years ago, the OOP even increased to 45.3% (when PhilHealth payments declined to P119 billion). In 2024, OOP spending stood at 42.7% of a family’s total health spending.
All in all, from 2020 to 2024 PhilHealth spent P615 billion and effectively reduced OOP expenses by only 2%. This indicates that PhilHealth’s social health insurance program has hardly made a dent in alleviating the financial difficulties of the poor.
So, when PhilHealth presented its budget request for 2026, it asked for P198.76 billion just to pay for the benefit claims of indirect, poor members. This is in anticipation that benefit claims will continue to grow by 50% per year, reaching P198 billion in 2026.
PhilHealth also asked for the release of P43.38 billion from PAGCOR and PCSO as required by the UHC law (Rule IX, section 37.2) and a Joint Memorandum Circular signed in May 2022 by PCSO, PAGCOR, the DoF, the DoH and PhilHealth that would allocate 50% of the government’s share from PAGCOR and 40% of the government’s share of the PCSO Charity Fund net of documentary stamps to improve PhilHealth’s benefit packages.
During the Technical Budget Hearing earlier this year, the Department of Budget and Management (DBM) ignored PhilHealth’s budget request. The DBM recommended to the President that PhilHealth get only P53.3 billion. This is a reduction of almost 75% of the original budget that PhilHealth proposed for 2026.
The defunding of PhilHealth together with the politicized and arbitrary decision-making related to benefits can only lead to further deterioration of healthcare services and make the health system more inequitable.
The Oversight Committee for the UHC law needs to meet and start a process of taking stock of the current health situation after the first five years of UHC. This is the first and main task of Congress, even before it even thinks of amending the UHC law and introducing dozens of supposed health bills that would only undermine UHC.
The Oversight Committee should tackle the impending financial crisis: PhilHealth is projected to pay out P450 billion in 2026. Obviously, its retained earnings of P480 billion will be woefully insufficient to cover the actual operation and secure the two-year reserve requirement of the UHC law.
We, the public, must assert that funds due to PhilHealth must be given fully and promptly. We must defend PhilHealth benefits from being politicized; from being stripped of a health technology assessment. And we must push back any legislative attempt to weaken UHC and PhilHealth.
1 PhilHealth Consolidated Trial Balance June 2025, PhilHealth website
2 PhilHealth Corporate Operating Budget 2025, PhilHealth website
3 PhilHealth Audited Financial Statement 2024, PhilHealth website
4 PhilHealth 2024 Audited Financial Statement, page 9.
Jeepy Perez, a doctor of medicine, specializes in public health administration, primary healthcare, and has worked with nine Health Secretaries and three NEDA 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.
