The debate over the transfer of PhilHealth’s excess funds — some P60 billion of the targeted P89.9 billion to the National Treasury — hit a pause on 3 April after the Supreme Court (SC) ended the oral arguments, but the battle is far from over.

The temporary restraining order (TRO) on the remaining P29.9 billion stays while the P60 billion spirited away is under scrutiny for potential reimbursement pending a final ruling.

The outcome of the exchanges at the High Tribunal indicated that inefficiency, more than anything else, resulted in surpluses over the years, which fiscal managers argued were unspent subsidies of the government and should be recovered.

The term used in admitting PhilHealth’s inefficiency to turn funds into actual benefits for its members and the marginalized is the low absorptive capacity of the agency.

The oral arguments concluded on 3 April with the SC requiring all parties to submit their memoranda by 3 May. The Court’s decision, expected later in 2025, will determine the fate of the transfer and its alignment with the Universal Health Care (UHC) goals.

The Tribunal’s ruling will have a significant bearing on the UHC’s future and the more crucial determination of congressional actions to resurrect the pork barrel system that the SC jettisoned to oblivion in a 2013 decision.

Absorptive capacity refers to an organization’s ability to utilize its available resources effectively. PhilHealth has a dismal record of around 58 percent in recent years, which means 42 centavos of every P1 allocated for healthcare has been underspent.

The poor performance of PhilHealth was more pronounced during the pandemic when surpluses accumulated as Filipinos reeled from the effects of the plague.

Finance Secretary Ralph Recto argued that the inefficiency resulted in “sleeping funds” or money sitting idle in PhilHealth’s accounts while national needs, including health-related projects, remained unmet.

From this perspective, the transfer of the excess funds was regarded as a pragmatic move to redirect unutilized subsidies to critical government programs.

The fiscal managers argued that the funds redirected from PhilHealth were spent on health projects anyway, which only painted an idiotic exercise of transferring money already allocated for healthcare to another with a similar purpose as the Department of Finance claimed.

The stupid daisy chain started with the 2024 General Appropriations Act (GAA) that allowed the government to tap into the fund balances of government-owned and controlled corporations (GOCCs) for unprogrammed appropriations (UA).

The UA used to be items that could only be accessed when revenue exceeded targets or additional foreign funds were secured.

Fiscal executives argued that leaving funds idle is a disservice to Filipinos, mainly when PhilHealth retains a substantial reserve, estimated at P498 billion in 2024 after the transfer.

Healthcare advocates and petitioners to the SC argued that the transfer undermines the UHC Act or Republic Act 11223, enacted in 2019 to ensure equitable access to quality healthcare without causing Filipinos financial strain.

Section 11 of the UHC Act mandates that excess reserves be used to enhance benefits or reduce member contributions, not be diverted to the national treasury.

The transfer of subsidies, allocated initially for indigents, seniors and other vulnerable groups, raised questions about funds misuse, especially when 44 percent of health expenditures in the Philippines are still out-of-pocket.

Rather than justifying the transfer, PhilHealth’s low absorptive capacity highlights its failure to efficiently deliver on its mandate, as Supreme Court Associate Justice Antonio Kho Jr. emphasized during the proceedings.

Rather than addressing the inefficiencies of PhilHealth, the transfer of funds exacerbated the problem of reduced healthcare resources.

To top it all, PhilHealth’s and other GOCCs’ excess funds are being pilfered to cover the UA bloated over the years to make room for pork barrel projects.