The inept leadership at the Philippine Health Insurance Corp. (PhilHealth) tried to dazzle economic managers with its financial wizardry in accumulating P89.9 billion in savings from subsidies that the government provided for three years to 2023, which prompted the Department of Finance (DoF) to order the return of the amount to the National Treasury.

The Commission on Audit (CoA) was unimpressed, as it said a thorough review of the statement of cash flows (SCFs) disclosed that for 2023, outflows from operating activities, including the payment of benefit claims amounting to P127.036 billion, were less than half of the cash paid for investing activities at P274.241 billion.

Cash inflows from investing activities were also higher than operating activities. CoA indicated that from the cash flow analysis, “it can be deduced that the corporation is not prioritizing the expansion of its benefits programs to achieve its mandate, as most funds are allocated for investing activities.”

Considering the increase in members’ contributions since 2019, an increase in the payment of benefit claims is expected in compliance with Section 10 of the Universal Health Care (UHC) Act.

There was, however, a noted decrease in the payment of benefit claims, with PhilHealth spending P118.9 billion for benefit claims payment in 2023, which was less than the P130.56 billion paid in 2022.

The DoF issued Department Circular 003-2024 on 27 February 2024, providing guidelines for the collection of Unprogrammed Appropriations sourced from the fund balance of Government-Owned or -Controlled Corporations (GOCCs) from any remainder resulting from the review and reduction of reserve funds to reasonable levels taking into account the disbursements from prior years.

CoA said PhilHealth notified it about the unutilized portion of the subsidies totaling P89.9 billion, which was placed in various investments, but was to be returned to the Bureau of the Treasury in compliance with the DoF circular. Immediately, P20 billion was remitted to BTr on 10 May 2024.

Losses were incurred from the transfer due to the pre-termination of the P20 billion invested in long-term savings, costing the government P59.5 million for documentary stamps plus the interest loss of P329.3 million, for a total of P388.8 million.

PhilHealth tried to retract its bluster during an oversight meeting in the House of Representatives on 29 May 2024, halving its claimed excess funds to P49.64 billion.

In the House oversight meeting, PhilHealth was questioned about the difference in amounts shown in their presentation compared to the earlier report of the transfer of unprogrammed appropriations to the BTr.

PhilHealth said the data provided to the DoF was based on the Statements of Comprehensive Income while the amounts shown in the presentation during the oversight meeting were lifted from the SCFs.

To verify the amounts presented in the briefer, CoA requested from PhilHealth a breakdown and details of the SCFs per membership category.

“However, as of the audit report date, only the details of the premium contributions were provided,” according to CoA.

Instead of declaring savings, PhilHealth should have used the amount “to significantly expand its benefit programs provided specifically for indirect contributors such as senior citizens, persons with disability and marginalized members of the society,” CoA stated.

PhilHealth admitted the delayed and minimal expansion of the benefit programs, and attributed this to the meager utilization of some of its benefit packages, such as the Konsulta.

The poorly publicized and promoted Konsulta package covers individual-based health services, including initial and follow-up primary care consultations, health screening and assessment and access to selected diagnostic services and medicines.

The decrease in payment of benefit claims was also blamed on the hacking incident on PhilHealth on 22 September 2023, prompting the temporary shutdown of its online system that greatly disrupted the processing of benefit claims.

Considering the several serious problems that saddled PhilHealth, the first response of its leadership was to brag about savings, hoping that they would be rewarded.

As the mischievous fairy Puck said in A Midsummer Night’s Dream: “Lord, what fools these mortals be!”