Removing the subsidy on the Philippine Health Insurance Corp. (PhilHealth) as a sanction for failing its mandate in carrying out the provisions of the Universal Health Care (UHC) Act penalizes poor Filipinos.
Senator Bong Go, who has been among the UHC proponents, has opposed the position of his peers to scrap the P74 billion subsidy on the state agency on which the marginalized population relies for medicines and hospitalization.
The decision was firmed up in the bicameral conference committee in the version of the 2025 budget submitted to President Ferdinand Marcos Jr.
“We are fighting to ensure that PhilHealth uses its funds properly, but as lawmakers, we should also support this goal by ensuring that funds meant for health are spent on health as mandated by law. These funds should not be diverted to other uses,” he indicated.
The budget assistance was meant to augment premium payments for the destitute who do not have the means to pay for the monthly premiums in the health insurance fund.
Members of the bicameral conference committee, which is derisively called the third chamber of Congress, said PhilHealth could draw the subsidy from its P600 billion in reserve funds.
The reserve funds are the pool to back up the insurance contract liabilities of about P1.128 trillion to its members.
Research undertaken by the independent group Ibon Foundation showed that from 2020 to 2023, there was little change in Filipinos’ household out-of-pocket (OOP) share of healthcare costs.
In 2020, OOP accounted for 44.6 percent of current health expenditure (CHE), decreasing negligibly to 44.4 percent in 2023.
The role of PhilHealth in providing healthcare assistance is declining despite the implementation of the UHC Law in 2019.
PhilHealth’s share of the CHE dropped from 14.6 percent in 2020 to 10.2 percent in 2023.
In contrast, the agency’s reserve funds grew significantly over this period, from P140.9 billion in 2020 to P463.7 billion in 2023.
The trend indicated that PhilHealth prioritized savings and investments over new programs that would improve health services as mandated by the law.
Since the UHC Law was enacted, PhilHealth’s subsidies and premiums have risen substantially.
However, one of its main targets — reducing the out-of-pocket share in healthcare costs and making the agency the primary contributor to health expenditures — remained unmet.
Independent figures showed the agency’s substantial savings come from spending less on benefit packages than it receives in contributions.
From 2020 to 2023, PhilHealth’s total contributions amounted to P732.5 billion, with P447.7 billion from direct premiums and P284.8 billion from government subsidies for indirect contributors.
However, during the same period, the agency paid out only P436.1 billion in claims, or P229.4 billion for direct contributors and P206.7 billion for indirect contributors.
PhilHealth used 60 percent of its total contributions to cover health benefit claims, leaving nearly P300 billion in unused funds.
PhilHealth accumulates funds from direct and indirect contributions.
Direct contributions come from the premiums paid by workers, as well as overseas Filipino workers. Indirect contributions are provided through government subsidies covering the premiums of senior citizens, indigent Filipinos, and other sponsored members.
With the subsidy cut, PhilHealth’s funding for next year will rely only on continuous direct contributions and its reserve funds.
The national subsidy to PhilHealth, as mandated by the Universal Health Care Law, is sourced from various channels such as sin tax collections, the national share of income from the Philippine Amusement and Gaming Corporation, the Charity Fund (net of Documentary Stamp Tax Payments), and mandatory contributions from the Philippine Charity Sweepstakes Office.
In 2022, over P79 billion in sin tax collections was allocated to PhilHealth, which was reflected in the 2024 General Appropriations Act (GAA).
The subsidy has now been withdrawn; instead, the unprogrammed funds — commonly used as a source of pork barrel — have increased.