PhilHealth P500-B fund investment questioned

MANILA, Philippines — Lawmakers scored the Philippine Health Corp. (PhilHealth) for turning into a “business enterprise” after learning that the state insurer was “prioritizing” investing its reserve funds instead of spending it on social health expenditures.

On Tuesday, members of the House committee on good government grilled the agency over its P600-billion excess funds even as it faces issues over its collection rates and providing benefits to PhilHealth members.

This after the bicameral conference committee composed of House and Senate lawmakers, which reconciled the chambers’ version of the P6.4 trillion 2025 national budget, stripped the state insurer of its subsidy because of its massive reserve funds.

READ: PhilHealth ‘very healthy’ with P150B surplus, P490B investment funds

The substantial reserve exceeds the statutory requirement, which mandates that PhilHealth should maintain a reserve fund equivalent to two years’ worth of average benefit payments.

The Department of Finance (DOF) estimates this requirement at P280 billion, or P140 billion per year.

Marikina Rep. Stella Quimbo and Antipolo Rep. Romeo Acop were especially incensed to learn that the agency had P504 billion being used as investible funds in government securities and corporate funds when its primary mandate was to provide social health insurance programs for the public.

Wrong priority

“Your brain is in investment, not service [provision],” Acop said. “Why are your excess funds being used to increase the market rather than increase the [program’s benefits]?”

“You don’t know how to run a health insurance program,” Quimbo said. “That’s the problem. That’s the reason why you have zero subsidy” for 2025.

In the proposed 2025 national budget, the bicameral conference committee allocated zero funding for PhilHealth subsidies. This decision was based on the state health insurer’s ample reserves and investible funds, which were deemed sufficient to cover its obligations without additional government support.

Assistant Majority Leader and Lanao del Sur Rep. Zia Alonto Adiong also stressed that even with zero premium subsidies from the government, “annual premium collections from direct members are sufficient to cover [PhilHealth’s] average benefit spending of P140 billion.”

“Ultimately, the question is: why does PhilHealth have over P500 billion in investments when its primary mandate is to spend to save the lives and pockets of our kababayan, not to earn interest?” he asked.

In fact, Adiong said that based on an order from the finance department early this year, PhilHealth returned unused reserve funds to the national treasury, proof that it really has excess funds.

More patience

For his part, PhilHealth chief Emmanuel Ledesma admitted that “we are in the business of providing health insurance and not making money.”

He also asked lawmakers for “a little patience ... as [it’s] very clear what direction we’re taking. And our focus on benefit expansion will continue to be aggressive.”

Apart from its sizable investments, Ledesma cited the COVID-19 pandemic—where very few were going to the hospitals for treatment—as well as the mandatory premium contributions of its members as the reason why the agency accumulated such a large amount of excess funds.

But Ledesma assured lawmakers that they were in a “financially robust position” despite the zero subsidy allotted to them by Congress.

“We are well positioned to sustain operations and are fully capable of addressing the health care needs of our 115 million members,” he said. “In fact, we are about to implement another 50 percent increase in coverage for most of our case rate packages.”

Once that is implemented, Ledesma said, “we will have implemented a total of 80 percent increase across the board for almost all the case-rate packages.”

He added that they plan on “aggressively expanding benefits in the coming year ... We do wish to manage expectations, but rest assured, for 2024, all benefits will be paid, including for our most vulnerable members, senior citizens, indigents, persons with disabilities, rebel returnees and other marginalized sectors.”

During an interpellation by Ako Bicol Rep. Jil Bongalon, Ledesma also committed to decreasing members’ contributions as per its mandate to do so when reserve funds exceed the ceiling needed to meet expenditures.

In response, Ledesma confirmed PhilHealth’s intention to recommend a decrease in contributions, aligning with a pending Senate measure to reduce the rate from 5 percent to 3.25 percent.

“We are fully supporting that reduction. And that is a very huge reduction,” he added.

Ledesma explained that premium rates were set by law and that PhilHealth does not unilaterally decide increases.

“All that is set. And then just for the information of this honorable body, it’s currently at 5 percent this year,” he said.

(2024/12/18-05:10)