To accomplish President Ferdinand Marcos Jr.’s directive to speed up the full implementation of the Universal Health Care (UHC) Act, the Philippines Health Insurance Corp. (PhilHealth) should have a higher budget.

The rationale is that hospitals lack the resources to foot the bills while waiting for PhilHealth to reimburse them under the state subsidy.

Thus, the Department of Finance’s retrieval of the P89.9 billion in excess PhilHealth funds contradicted the President’s specific order.

Finance Secretary Ralph Recto called the money taken from the health insurance agency “excess funds,” where none existed, considering PhilHealth’s mandate under the UHC.

Granting that the amount siphoned off was an idle resource of the health insurer, still it should have been used to augment the shortfalls of PhilHealth instead of being redirected to projects of the government.

State think tank Philippine Institute for Development Studies (PIDS) said PhilHealth reporting a P463.7-billion cumulative reserve fund in 2023, with an annual unutilized fund of P89 billion in 2024, had led to calls for a reduction in premiums.

In response, the Senate on 27 August passed Senate Bill 2620 which reduced PhilHealth premiums to 3.25 percent beginning next year, to increase to 4 percent in 2028. This is lower than the original five percent stipulated under the Universal Health Care (UHC) law.

PIDS conceded that a lower utilization rate of PhilHealth benefits after the pandemic meant assistance payments had tapered off relative to the rise in premium collections, which the research agency attributed to demographic factors.

It cited a demographic transition in which the working-age population increased, fertility rates declined and life expectancy improved, indicating a potential for a “demographic dividend,” a situation where the health system has a larger pool of contributors and relatively fewer dependents.

More workers mean more premium contributions, which surged from P85 billion in 2020 to P158 billion in 2023. This happened even without a premium rate increase.

With the majority of Filipinos of working age, health expenditures are less since spending is typically highest among the young and old people.

Instead of reallocating funds, PhilHealth must maximize its resources, including the use of its so-called excess funds.

PIDS suggested instead that PhilHealth use the surplus funds to expand health packages; improve cost coverage to prevent catastrophic health expenditures for individuals and families; invest in high return-on-investment health services such as nutrition and maternal health that yield strong economic returns throughout the life course; prepare for the eventual aging of the population; review premium schemes, focusing specially on making them more progressive to ensure equity and sustainability; explore other sources of financing, such as sin taxes or dedicated health funds; and increase the efficiency of PhilHealth funds by reducing fraud, covering cost-effective interventions, and focusing on primary and preventive care.

Rather than reduce premiums, PhilHealth can expedite the expansion of its benefits package while remaining prudent with its use.

“While it may take time for the health system to fully implement the UHC, some low-hanging fruits may be considered such as expediting the roll-out of the expanded primary care benefit package (Konsulta), and covering the provision of discharge medicines that can be integrated into the inpatient benefit packages,” the paper indicated.

In all, while the goal is to cover outpatient medicines eventually, this is easier to implement in the short term as it will not require any additional capital investment from providers.

Thus, if there are indeed funds that can be scraped off PhilHealth they must be for the improvement of healthcare and not to plug fiscal shortfalls caused by the oversized insertions of legislators in the yearly budget.