The manipulation of state-owned Philippine Health Insurance Corp.’s (PhilHealth) reserve funds opened the public’s eyes to the deplorable state of healthcare in the country, where basic medicines have become scarce in government-run provincial hospitals.

PhilHealth has been made a milking cow for unprogrammed appropriations (UA) in the 2024 budget, per the directive of then Finance Secretary Ralph Recto to divert P89.9 billion of its “excess funds” to the Bureau of the Treasury.

The PhilHealth problem goes to the heart of a nationwide situation in which provincial hospitals lack even basic medicines, while the Commission on Audit’s 2024 report on the Department of Health (DoH) cited billions of pesos’ worth of expired and unusable drugs.

Some hospitals, for unknown reasons, are trying to hide the shortage of medicines.

Dagupan City Mayor Belen Fernandez revealed on the sidelines of a recent corporate event that there was a lack of medicines at the Region 1 Medical Center (R1MC) in Dagupan City, but the hospital was temporarily stocked during President Ferdinand “Bongbong” Marcos Jr.’s (PBBM) visit, only for the supplies to disappear afterward.

Marcos visited Dagupan on 23 May 2025 to inaugurate the R1MC Cancer Institute, focusing on healthcare expansion pledges, facility tours, and interactions with hospital officials and patients.

The system is now in a state of critical emergency, akin to a patient in the intensive care unit, according to healthcare stakeholders.

Health advocate Dr. Anthony Leachon said the government owes PhilHealth P345 billion, an amount that undermines the very foundation of universal healthcare.

The amount refers to unremitted or withheld funds that are legally mandated to support PhilHealth, particularly the Universal Health Care (UHC) Act (RA 11223) and the Sin Tax Law (RA 11346).

These laws require earmarking revenues from sin taxes on tobacco, alcohol, and sweetened beverages, and portions of Philippine Amusement and Gaming Corp. and Philippine Charity Sweepstakes Office earnings for health financing.

Leachon argues that the government’s failure to remit funds has created chronic deficits, leading to underfunded healthcare services, delayed hospital reimbursements, and eroded public trust, ultimately undermining the UHC’s goal of accessible, affordable care for all Filipinos.

Deficit, not excess funds

The debt, admitted during Senate budget hearings, has no clear repayment plan.

Worse, the 2025 PhilHealth budget was vetoed, effectively leaving the system with “zero” funding for that year.

Revenues from sin taxes were diverted elsewhere, a violation that strips hospitals and patients of their state financial support.

“Ghost” hospitals or institutions that exist only on paper, alongside allegations of mismanagement within the Department of Health, had eroded public trust.

Planned infrastructure that fails to materialize, coupled with weak governance, exposes the system’s fragility.

Without transparency and accountability, reforms cannot take root.

If these trends persist, the healthcare system may reach a point of no return within three years.

PhilHealth reserves will be depleted, hospitals will continue to turn away patients, and ordinary Filipinos will be forced to pay out-of-pocket or forego treatment altogether.

Leachon said the collapse will not be felt in policy papers — it will be felt in the lives of families denied care.

In a country where health is constitutionally recognized as a human right, the medical activist said the healthcare system remains chronically underfunded, inequitable, and inaccessible, especially for the poor.

“Healthcare workers are leaving because the government is failing them,” he added.

The Philippines faces a shortage of at least 127,000 nurses, with fewer than eight doctors per 10,000 people, far below the World Health Organization (WHO) standard of 10 per 10,000.

In contrast, over 300,000 Filipino nurses are now working overseas, leaving local hospitals understaffed and overwhelmed.

The transfer of PhilHealth funds to the national treasury occurred despite the agency having negative equity and a P663 billion deficit.

Healthcare literally out of reach

Rural areas suffer from severe shortages of hospitals and medicines. In provinces like Cebu, patients travel 150 kilometers or more for basic diagnostics like CT scans.

Infirmaries, often misclassified as hospitals, lack equipment, staff, and beds. Some operate without dental chairs or nebulizers.

In 2023, rural patients waited 30 percent longer for medical consultations than urban residents.

The Department of Health reports worn-out facilities, delayed referrals, and overcrowded emergency rooms across provincial hospitals.

Out-of-pocket costs crush families

In 2024, Filipinos paid P615 billion out of pocket for healthcare, an 11.8 percent increase from the previous year.

These payments accounted for 42.7 percent of total health expenditure, nearly matching government contributions.

According to Leachon, healthcare is now the third-leading cause of household debt in the Philippines.

Audits point to DoH system flaws

Even as PhilHealth assures the continued availability of essential medicines under its Yaman ng Kalusugan Program (YAKAP), long-standing shortages in regional and government-run hospitals underscore deeper structural failures in the country’s fragmented health system, according to auditors and health policy experts.

PhilHealth had said all 21 essential medicines covered by YAKAP remain available in accredited primary care facilities nationwide, including antibiotics, respiratory treatments, and maintenance drugs for chronic illnesses.

“All Filipinos can be assured that they will continue to receive these 21 medicines at their chosen YAKAP Clinic, as we further enhance PhilHealth benefits,” PhilHealth president and CEO Dr. Edwin M. Mercado said.

PhilHealth said the program aims to ensure continuity of care and reduce out-of-pocket spending, particularly for common illnesses managed at the primary care level.

However, multiple government audits and policy studies point to a disconnect between insurance-based coverage for medical care and the actual availability of drugs and services in regional hospitals that handle more severe, inpatient cases.

Expired drugs

Commission on Audit (CoA) has repeatedly flagged the Department of Health (DoH) for massive medicine waste, even as public hospitals report supply gaps.

In its review, CoA found that drugs, medicines, and medical supplies worth more than P134.3 million were either expired or nearing expiration in 2024, with some still undistributed across DoH hospitals.

State auditors said excess stockpiling, weak inventory controls, and slow distribution led to medicines expiring despite urgent demand in public facilities.

The largest share was recorded at Dr. Jose N. Rodriguez Memorial Hospital in Caloocan City, followed by Valenzuela Medical Center, Batangas Medical Center, and regional CHDs in Ilocos, Eastern Visayas, Western Visayas and Southern Mindanao.

The problem has persisted for years. In 2023, CoA reported more than P11.2 billion worth of expired medicines and supplies, while P7.4 billion was logged in 2022 — figures that auditors said could have been used to support health programs for the poor.

Spending rises, access uneven

Health policy experts from the Philippine Institute for Development Studies (PIDS) said rising health spending has not translated into equitable access or functional service delivery, particularly outside major urban centers.

At a PIDS forum in November 2025, Senior Research Fellow Dr. Valerie Gilbert Ulep said health spending has more than doubled over the past decade, exceeding P1 trillion in 2021 and projected to reach P1.4 trillion in 2024.

“Health spending has more than doubled over the past decade, even after adjusting for inflation and population growth,” Ulep said, noting that per-capita spending rose from about P3,000 in 2000 to nearly P12,000 today.

Despite this increase, Ulep said outcomes remain uneven due to fragmented governance, overlapping funding streams, and varying LGU capacity — conditions that undermine Universal Health Care implementation.

The complex mix of LGU budgets, PhilHealth reimbursements, national grants, and discretionary funds, he warned, “exacerbate inequity” rather than resolve it.

System stretched thin

PIDS researchers also flagged persistent infrastructure and staffing gaps.

Research Specialist Therese Jules Tomas said hospital bed capacity has not kept pace with population growth, while decentralization has left capital spending dependent on LGU capacity.

Meanwhile, Technical Specialist Louie Iyar Dagoy said only about 3 percent of the national workforce consists of health professionals, with more than half working in the private sector.

“Areas with higher poverty tend to have fewer health workers per 1,000 population,” Dagoy said, limiting access to quality care in regional hospitals.

Weak health information systems further compound the problem. PIDS Technical Specialist Jomelle Wong said fragmented data systems and declining technical capacity within DoH prevent facilities from optimizing available resources.

Credibility issues linger

PhilHealth’s assurance on YAKAP medicines also comes as the state insurer continues to face scrutiny over governance and fund management.

Earlier this month, criminal complaints were filed before the Office of the Ombudsman against Executive Secretary Ralph Recto and former PhilHealth president Emmanuel Ledesma over the transfer of P60 billion in PhilHealth reserve funds to the National Treasury.

The Supreme Court has since ordered the return of the funds and declared the transfer unconstitutional, ruling that it violated the Philippine Health Insurance Act and the Universal Health Care Law.

Recto has denied wrongdoing, saying the government has complied with the Court’s ruling and that PhilHealth funding has been restored.