SC asked to stop transfer of P90-B PhilHealth funds

MANILA, Philippines Sen. Aquilino “Koko” Pimentel III, a former finance undersecretary, doctors and public health advocates on Friday asked the Supreme Court to stop the transfer of P89.9 billion from the Philippine Health Insurance Corp. (PhilHealth) to fund other government projects, saying it was illegal and unconstitutional.

The petition for a temporary restraining order (TRO) was sought against the Department of Finance (DOF) Circular No. 003.2024, which ordered the transfer of billions of unused PhilHealth funds for “unprogrammed appropriations.”

Such appropriations are included in the national budget to serve as a financial reserve for projects, programs, or expenses that are not specifically itemized or detailed in the budget.

The petitioners told the court that despite the state health insurer’s “glaring lack of financial resources” it still transferred nearly P90 billion of its funds to the national treasury.

“By taking out the alleged ‘unused funds’ which are pooled funds from members’ contributions, whether direct or indirect, Congress, Department of Finance and especially PhilHealth, deprive the Filipino people access to quality and affordable health care goods and services,” the petitioners said.

“There can be no greater disservice to the Filipino than infringing upon their right to health. And this is what Congress, Department of Finance and PhilHealth are doing—aggravating the injury and causing injustice to its (PhilHealth’s) members,” they said.

The unprogrammed appropriations serve as a contingency fund, allowing the government to address unforeseen or emergency expenditures that arise during the fiscal year.

The DOF circular, issued in February, was reportedly in compliance with the 2024 budget law directing the finance department to issue guidelines to implement the collection of unprogrammed appropriations sourced from the fund balances of government-owned and -controlled corporations (GOCCs).

DOF explanation

On July 17, the DOF defended the fund transfer, saying they were only doing what Congress had empowered them to do and assured the public that taking back the “idle funds” would not harm PhilHealth’s ability to provide services since they were excess from its budget.

“We cannot afford to have excess money sleeping in our GOCCs while withholding the same funds from public investment,” it said. “Hibernating funds can help the nation without harming government corporations. This way the government does not have to inflict additional taxes, increase our debt, and put pressure on our deficit.”

PhilHealth vice president for corporate affairs Rey Baleña also assured the public during a Senate inquiry on the issue last month that this fund transfer would not affect health services since none of the funds were taken from the contributions of its PhilHealth members.

But instead of taking out the funds from PhilHealth, the funds should be used to help in making free maintenance medicines for various illnesses available to beneficiaries, according to one petitioner, Dr. Minguita Padilla, a former head executive staff at PhilHealth.

“It has been five years and the plan was to make the maintenance medicines free but it’s still not,” she said in an interview at the Supreme Court.

“If we’re going to follow the Universal Health Care (UHC) Act, the budget this year should be P500 billion. That’s why what they’re saying is that this fund is an ‘excess,’ is not true. In fact, it’s still not enough,” Padilla said.

Assurance

According to former Finance Undersecretary Cielo Magno, an economics professor at the University of the Philippines and another petitioner, of the P89.9-billion PhilHealth fund, P20 billion had already been transferred to the national treasury.

“The fund transfer goes against our goal to have a comprehensive universal health insurance program,” Magno said.

The government should aim for the enrollment of all Filipinos in comprehensive health-care coverage.

“It should include preventive, proactive, and reactive care. Taking the government subsidy contradicts that goal. It betrays the Filipinos especially those who cannot afford to pay for their health care,” she said.

During a forum on July 24, Health Secretary Teodoro Herbosa assured the public that the billions in excess funds from PhilHealth would still be used for the health sector.

He said that the P20 billion was already used to pay the health emergency allowances of health-care workers who served at the height of the COVID-19 pandemic.Public health advocate Dr. Anthony 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.

Grave disservice

On Jan. 1, PhilHealth implemented an increase in the premium rate of its members, from 4 percent to 5 percent. This meant that direct contributors were expected to pay new monthly contributions ranging from P500 to P5,000, depending on their income level.

The socioeconomic think tank Action for Economic Reforms (AER), said “pilfering of the reserve funds is a grave disservice to the Filipino people who depend on PhilHealth for financial risk protection from illness and who are still heavily burdened by out-of-pocket health expenditure.”

The petitioners cited several alleged constitutional violations in the fund transfer, including the insertion of a “rider” in the 2024 national budget to justify the fund transfer. That move to transfer the fund itself already was unconstitutional because it exceeded the Congress’ power to appropriate funds. The transfer also cannot amend the provisions of the UHC Act on PhilHealth, it added.

READ: Petition filed at SC vs PhilHealth fund transfer, cites constitutionality

The petitioners noted that the national budgets from 2021 to 2023 did not have such a provision that allowed “excess reserve funds” of the GOCCs to be returned to the national treasury, saying this was the “first time” it was inserted in the General Appropriations Act.

“With consistently rising inflation and worsening social conditions, it is imperative that these funds be used exclusively for the implementation of the Universal Health Care Act, the expansion of benefit packages, and the reduction of premium contributions,” AER said.

Other petitioners

“Without challenging the act of Congress and the Executive of siphoning public funds intended by law and public policy for health, a dangerous precedent will be set that shall be inimical to the public welfare and the citizens’ right to accessible and affordable health and medical services,” the petitioners said.

In addition to Pimentel, Magno and Padilla, the other petitioners are Ernesto Ofracio, Dr. Junice Lirza Melgar, lawyers Dante Gatmaytan and Ibarra Gutierrez, Sentro ng Mga Nagkakaisa at Progresibong Manggagawa, Inc., Public Services Labor Independent Confederation Foundation Inc., and Philippine Medical Association, representing both direct and indirect PhilHealth contributors.

Named respondents were Speaker Martin Romualdez, Senate President Francis Escudero, Finance Secretary Ralph Recto, Executive Secretary Lucas Bersamin and PhilHealth president Emmanuel Ledesma Jr. —WITH A REPORT FROM INQUIRER RESEARCH