Watchdogs question PhilHealth fund transfer

Inquirer file photo/Grig C. Montegrande

MANILA, Philippines — Public health reform advocates and budget watchdogs are asking lawmakers to investigate the move of the executive department to divert billions of pesos in excess funds of government-owned and -controlled corporations (GOCCs), particularly the Philippine Health Insurance Corp. (PhilHealth), to finance “unprogrammed appropriations” this year.

Independent health reform advocate Dr. Tony Leachon questioned Circular No. 003-2024 issued by the Department of Finance (DOF), which directs PhilHealth to remit unused government subsidies amounting to P89.9 billion to the national treasury.

Former Finance Undersecretary Cielo Magno and Filomeno Sta. Ana III, executive director and cofounder of local think tank Action for Economic Reforms, also warned that the new DOF circular might be a new way for the government to misappropriate funds, similar to how the controversial Maharlika Wealth Fund took its P250-billion startup investment from state-run insurance firms Government Service Insurance System and Social Security System, among other financial institutions.

READ: House to revisit P15 billion PhilHealth advance payments

The circular, issued in February, was reportedly in compliance with the 2024 budget law directing the DOF to issue guidelines to implement the collection of unprogrammed appropriations sourced from the fund balances of GOCCs.

Violation of health-care law

This is a new method of generating funds for unprogrammed appropriations previously absent in the budget laws.

In justifying its action to target PhilHealth’s excess funds, the DOF argued that the state health insurer has accumulated substantial fund balances over the past few years.

“The national government is in a better position to effectively utilize the unused subsidies for programs that directly and immediately benefit the Filipino people while advancing the goals of Universal Health Care,” it noted.

But Leachon, Magno and Sta. Ana stressed that the circular violated Republic Act No. 11223, or the Universal Health Care Act of 2019.

Citing Section 11 of the law, they said that “whenever actual reserves exceed the required ceiling at the end of the fiscal year, the excess of the PhilHealth reserve fund shall be used to increase the program’s benefits and decrease the members’ contribution amounts. No portion of the reserve fund or income thereof shall accrue to the general fund of the national government or any of its agencies or instrumentalities, including government-owned or -controlled corporations.”

The DOF circular also violated RA 11467 and RA 10963, which earmark parts of revenue from excise taxes on alcohol, tobacco and e-cigarettes and sweetened beverages, to PhilHealth for implementing UHC programs.

“Excess funds should not be directed to unprogrammed appropriations within the national budget when PhilHealth has been ineffective at carrying out its mandate of ensuring affordable, acceptable, available and accessible health-care services for all citizens of the Philippines,” Leachon argued.

“Our legislators and policymakers must investigate this terrible lack of foresight and care for Filipino patients,” he added.

For Magno, the DOF circular put all Filipinos — who are all automatically members of PhilHealth under the UHC law — to be “ginisa sa sariling mantika” (literally, being fried in one’s own fat).

“We are diligently paying our monthly contributions so that we have a good and expanded health insurance system, not for these to be used as funding for your questionable insertions in the national budget. So utang na loob, do not touch the funds of PhilHealth,” she said in a TikTok video.

P20B already returned

As of May, PhilHealth had already transferred P20 billion out of the P89.9 billion of its unutilized subsidies back to the national government, saying the move was approved by its board of directors, chaired by Health Secretary Teodoro Herbosa, in compliance with the special provision on unprogrammed appropriations of this year’s budget law and the DOF circular.

“PhilHealth did its due diligence on the matter, with coordination and guidance by the Office of the Government Corporate Counsel, Governance Commission for GOCCs, and the Commission on Audit,” PhilHealth vice president for corporate affairs Rey Baleña said in a message to the Inquirer.

“This compliance is in support of the national government’s thrust and directive to invest in the nation’s economic growth and development, particularly in government infrastructure and social programs,” he added.

Baleña maintained that no funds from contributions of paying members would be remitted to the national treasury, but only the unused portion of the national government subsidy would be released to PhilHealth.

PhilHealth originally proposed a P101.5-billion subsidy for the implementation of the National Health Insurance Program from the national government for 2024, but it was slashed to P61.45 billion in the General Appropriations Act of 2024.

“This will not affect in any way the agency’s financial stability. Its members — both the direct and indirect contributors (or indigents who are incapable of paying the monthly contributions) — can rest assured that their PhilHealth benefits will not be affected and will even continue to be expanded and enhanced following the PhilHealth board’s approved benefit plan which already started in 2023,” Baleña said.

“Partner hospitals of PhilHealth can likewise be assured of continuous payment of good and properly filed claims within the prescribed period,” he added.

Benefit packages expanded

According to Baleña, PhilHealth “has been aggressively enhancing the benefit packages since last year.” Among these was the 30-percent increase in most of its benefit packages for inflation adjustment — the first adjustment made since 2013, when the case-based payment system was first implemented. Other high-burden case rates have been expanded to more than 100 percent, translating to lower or zero out-of-pocket expenses from PhilHealth members.

“These enhancements will soon translate to bigger benefit payouts as members become more aware and empowered to seek treatment and use their benefit, which will translate to more funds going back to the healthcare system,” he said.

But Leachon wanted PhilHealth to be held accountable for its gross negligence and inefficiency in utilizing subsidies from the national government, which could have benefited more Filipinos in lessening or completely eliminating out-of-pocket expenses during hospital confinement.

To add salt to the injury, PhilHealth has implemented, starting on Jan. 1 this year an increase in the premium rate of its members, from 4 percent to 5 percent. This means that direct contributors are expected to pay new monthly contributions ranging from P500 to P5,000, depending on their income level.

He also called on the DOF to revise its circular “to comply with the spirit and letter of the law.” “If a legal challenge is necessary, let it be on behalf of all members of PhilHealth, the Filipino people,” Leachon said.

He also urged the Philippine Medical Association, the umbrella organization of physicians in the country, to “speak in one voice” on the issue.

If left unchecked, the DOF circular could establish a “very bad precedent,” Leachon warned.

(Reporter’s note: The article has been updated to expound on the comments of the watchdogs, and to present the response of PhilHealth.)