Why PhilHealth can’t bring out-of-pocket costs to below 20 percent— and how to fix it
PhilHealth’s limited coverage of medicines continues to pose significant burdens on families.
Share
Daily TribunePhilHealth’s limited coverage of medicines continues to pose significant burdens on families.
Share
For PhilHealth to genuinely reduce out-of-pocket healthcare costs to acceptable levels, significant changes are necessary.
Photographs courtesy of unsplash
Pharmaceuticals represent nearly half of household healthcare expenses, yet PhilHealth’s drug coverage remains narrow and insufficient.
Ultimately, achieving the UHC promise hinges on transforming PhilHealth from merely an insurer to a proactive protector of Filipino families’ financial health.
In 2019, the Philippines passed the landmark Universal Health Care (UHC) Act, promising every Filipino protection against healthcare-related financial ruin. Central to this promise was PhilHealth — the country’s primary national health insurer. Yet, nearly four years later, the goal of reducing out-of-pocket (OOP) healthcare expenses to below 20 percent remains elusive, largely due to persistent challenges within PhilHealth itself.
When the law was enacted, Filipino households were paying around 54 percent of their total healthcare expenditures directly from their pockets, pushing approximately 1.5 million citizens into poverty annually. PhilHealth was envisioned as the cornerstone of UHC, meant to dramatically reduce this financial burden by comprehensively covering medical costs.
However, PhilHealth has struggled to fulfill this role effectively. By 2021, household OOP spending was still at 41.5 percent, only a slight improvement from earlier years. Even more troubling, families were paying more in absolute terms — averaging nearly 10,000 per person yearly.
Several key issues within PhilHealth have driven this gap between expectation and reality. First, PhilHealth’s reimbursement rates (or case rates) often fall significantly below actual hospital charges, leaving patients with substantial balances. The insurer has been slow to update these case rates, which have barely kept pace with medical inflation, forcing families to cover the difference out-of-pocket.
Secondly, inefficiencies plague PhilHealth’s operations, particularly delayed payments to healthcare providers. With billions in unpaid claims and lengthy processing times, hospitals face financial strain, prompting some to demand upfront payment from patients or threaten to withdraw from PhilHealth accreditation altogether. Such practices undermine the intended protection of the UHC law.
Additionally, PhilHealth’s limited coverage of medicines continues to pose significant burdens on families. Pharmaceuticals represent nearly half of household healthcare expenses, yet PhilHealth’s drug coverage remains narrow and insufficient. Even programs like PhilHealth Konsulta, designed to provide free primary care and essential medications, have been slow to implement fully and widely.
The structural dominance of private hospitals also complicates PhilHealth’s efforts. Private hospitals frequently charge well beyond what PhilHealth covers, and enforcement of the No Balance Billing policy — intended to shield patients from additional charges — is weak. Many Filipinos continue to receive unexpected bills despite government assurances to the contrary.
Nevertheless, the picture isn’t entirely negative. PhilHealth enrollment is at an all-time high, and certain programs like Konsulta, despite delays, show promise for the future. Increased government investment during the pandemic demonstrated that public health spending can significantly alleviate household financial burdens, at least temporarily.
For PhilHealth to genuinely reduce out-of-pocket healthcare costs to acceptable levels, significant changes are necessary. PhilHealth must regularly update and realistically adjust its case rates to align with actual hospital costs. Streamlining claims processes to ensure timely payments to hospitals will encourage facilities to cooperate fully, eliminating the need for patient pre-payments.
Furthermore, PhilHealth must expand its coverage of outpatient medicines and treatments comprehensively, as drug costs disproportionately burden households. Strengthening oversight and regulation of private hospital billing practices, ensuring robust enforcement of no-balance billing rules, will be crucial to protecting patients from unfair charges.
Other nations, such as Thailand and South Korea, have demonstrated that well-funded, efficiently managed national insurers can significantly lower OOP expenses. The Philippines must learn from these examples, prioritizing political commitment, consistent funding, and managerial excellence within PhilHealth.
