COA: PhilHealth's P89-B excess funds could have expanded benefit programs

The P89.90 billion excess funds of the Philippine Health Insurance Corp. (PhilHealth) could have been used to expand the benefits of its members, the Commission on Audit (COA) said.

In its 2023 audit report on the state health insurer, COA said the turnover of the unutilized  funds to the Bureau of Treasury resulted in "depriving the members of adequate and additional benefit coverage."

"The Audit Team opined that the unutilized portion of the subsidies from NG (national government) could have been used by PhilHealth to significantly expand its benefit programs provided specifically for indirect contributors such as Senior Citizens, Persons with Disability, marginalized members of the society included in NHTS (National Household Targeting System), and others," COA said.

GMA News Online has sought a comment from PhilHealth and will update the story once it is received.

The Department of Finance earlier directed PhilHealth to remit its nearly P90 billion in unused subsidies to fund unprogrammed appropriations in the 2024 budget.

The directive was questioned by several groups before the Supreme Court (SC), which argued that the funds should be used for PhilHealth members' benefits.

In October, the SC issued a temporary restraining order against the further transfer of the PhilHealth funds to the national treasury.

So far, PhilHealth said that P60 billion has been transferred to the national treasury with only P29.9 billion remaining with the agency.

In the audit findings, COA said the management of PhilHealth Reserve Fund did not fully comply with Republic Act No. 11223 or the Universal Health Care Act to ensure all Filipinos have equitable access to quality and affordable health care goods and services.

COA identified two factors that contributed to PhilHealth's failure to adhere to the law: one, "investment of funds without considering actuarially estimated two-year projected program expenditures," and two,  "delayed and minimal expansion of benefit programs and partial utilization of subsidies from the National Government, resulting in the planned return of P89.9 billion unutilized funds to the Bureau of Treasury, thus depriving the members of adequate and additional benefit coverage."

Expand benefits, decrease contributions

With billions in excess funds, COA said it conducted verification if the state health insurer was actively expanding its benefits programs or decreasing the amount of members' contributions.  The latter was not considered "due to the progressive premium collection scheme," which limited the management's ability to slash premium contributions.

"Nonetheless, PhilHealth is still required to expand members’ benefits to fully utilize any unused portion of the Reserve Fund, if any, pursuant to Section 10 of the UHC Act which states that for every increase in the rate of contribution of direct contributors and premium subsidy of indirect contributors, PhilHealth shall provide for a corresponding increase in benefits, subject to financial sustainability," COA said.

Following scrutiny of PhilHealth circulars and other issuances, COA said most pertained to benefit packages associated with COVID-19 and revision of old and existing benefit packages.

COA said the only new package implemented in 2023 not related to COVID-19 was the Outpatient Benefits Package for Mental Health.

"To ascertain the implementation and dissemination of information for the new benefit package, the Audit Team requested from certain PROs the amount of benefit claims paid for the Outpatient Benefits Package for Mental Health. The data showed nil amount in benefit claims paid during CY 2023, considering that there is a rising epidemic of mental health crises in the country according to the Philippine Mental Health Association, Inc.," the commission said.

COA added, "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."

COA also said that despite the increase in members' contributions since 2019, there was a noted decrease in payment of benefit claims, with PhilHealth spending P118.90 billion for benefit claims payment for 2023, which is less than the P130.56 billion paid in 2022.

Earlier, PhilHealth announced it would roll out new benefit packages in the latter part of 2024 and throughout 2025.

In the first quarter of the year, it introduced enhanced benefit packages such as Bronchial Asthma in Acute Exacerbation; Neonatal Sepsis; Z Benefits Package for Breast Cancer; and Pediatric Community Acquired Pneumonia.—LDF, GMA Integrated News