State health insurer a flatliner by 2022 if not subsidized, official warns

MANILA, Philippines — Philippine Health Insurance Corp. (PhilHealth), the main agency that most Filipinos rely on for affordable health-care services, may cease to exist by 2022 without additional subsidy from the national government, according to its senior vice president.

Nerissa Santiago’s dire warning came as PhilHealth grappled with allegations of corruption that could have defrauded it of P15 billion, and as COVID-19 cases surged in the country.

The agency’s actuarial life, or its survival, is down to just one year from 10 because members’ contributions have declined and its payouts have significantly increased amid the pandemic, said Santiago, who was responding to questions from Senate Minority Leader Franklin Drilon on how long PhilHealth could sustain its operations.

The state health insurer will be in the red in 2021, Santiago said. “By next year, we would no longer have a reserve fund. So our actuarial life is only for one year,” she said at a Senate hearing on Monday on alleged corruption at PhilHealth.

Her statement prompted Drilon to ask if she was saying there would be no more PhilHealth by 2022. “Yes, sir,” she replied.

P147-B loss in 2021

PhilHealth, according to her, is expected to have a P90-billion net operating loss this year.

If the pandemic continues and no vaccine for the new coronavirus is found, the corporation’s net operating loss in 2021 would be P147 billion, she said.

To be able to continue, PhilHealth will need government help, she said. “The government has the responsibility to keep it afloat. We can only survive with additional contributions from the government.”

Government subsidy for PhilHealth is P71 billion for this year and next year, she noted.

The law also limits the contribution rate the corporation can impose, according to the senior vice president.

Cause for concern

Drilon said he was “dumbfounded” by Santiago’s statements and that PhilHealth’s dreadful situation was a cause for concern for the entire country.

PhilHealth has a package for COVID-19 testing and covers hospitalization for the disease. But its collections are down because the pandemic and the resulting quarantine restrictions have adversely affected the economy, causing many businesses to stop or scale down operations and resulting in people losing their jobs and livelihoods.

Earlier, President Duterte directed PhilHealth not to compel overseas Filipino workers to pay higher premiums but to make the payment voluntary.

Lifeline

Presidential spokesperson Harry Roque said the national government would extend a helping hand to the state health insurance firm so it would not go under.

“If the PhilHealth runs out of money, the government will provide funds,’’ Roque said at a press briefing.

He said the agency’s survival did not depend only on members’ contributions and that the government would fund the universal health-care program if the corporation’s funds were depleted.

Mr. Duterte’s spokesperson said that when he helped write the Universal Health Care Act in the House of Representatives, he knew that the survival of PhilHealth did not depend solely on premiums.

“That is why it is called universal health care, not medical insurance,” he said.

Not brink of collapse

Senate President Pro-Tempore Ralph Recto said he did not think PhilHealth was on the brink of collapse, noting that it had a reserve fund it could dip into for situations like the pandemic.

PhilHealth’s P110 billion in retained earnings or reserve fund would not be used up by next year, Recto said.

According to him, PhilHealth is a monopoly and does not have a hard time raising revenue because the payment of its contributions is mandated by law.

It is also subsidized by sin taxes, he said.

PhilHealth’s total assets in March was about P230 billion and its liability was P119 billion, he noted.

While direct contributions to PhilHealth could go down this year, the government subsidy would not, he said. By his estimate, P50 billion would be spent from the P110 billion reserve fund this year, so there would be P60 billion left for next year.

“The P100-billion reserve fund would not be depleted,” he said.

He also said lawmakers would look at PhilHealth’s real numbers to determine if the government would need to increase subsidy for it in next year’s budget.