Watchdogs question PhilHealth fund transfer

MANILA, Philippines — Public health reform advocates and budget watchdogs are asking lawmakers to investigate the move of the executive department to divert billions of pesos in excess funds of government-owned and -controlled corporations (GOCCs), particularly the Philippine Health Insurance Corp. (PhilHealth), to finance “unprogrammed appropriations” this year.

Dr. Tony Leachon, a former special adviser of the Department of Health, questioned Circular No. 003-2024 issued by the Department of Finance (DOF) which directs PhilHealth to remit to the national treasury its unused government subsidy amounting to P89.9 billion.

Former Finance Undersecretary Cielo Magno and Filomeno Sta. Ana III, executive director and cofounder of local think tank Action for Economic Reforms, also warned that the new DOF circular might be a new way for the government to misappropriate funds, similar to how the controversial Maharlika Wealth Fund took its P250-billion startup investment from state-run insurance firms Government Service Insurance System and Social Security System, among other financial institutions.

READ: House to revisit P15 billion PhilHealth advance payments

The circular, which was issued in February, was reportedly in compliance with the 2024 budget law directing the DOF to issue guidelines to implement the collection of unprogrammed appropriations sourced from the fund balances of GOCCs.

Violation of health-care law

This is a new method of generating funds for unprogrammed appropriations that was absent in the previous budget laws.

In justifying its action to target PhilHealth’s excess funds, the DOF argued that the state health insurer has accumulated substantial fund balances over the past few years.

“The national government is in a better position to effectively utilize the unused subsidies for programs that directly and immediately benefit the Filipino people, while advancing the goals of Universal Health Care,” it noted.

But Leachon, Magno and Sta. Ana stressed that the circular was in violation of Republic Act No. 11223, or the Universal Health Care Act of 2019.

Citing Section 11 of the law, they said that “whenever actual reserves exceed the required ceiling at the end of the fiscal year, the excess of the PhilHealth reserve fund shall be used to increase the program’s benefits and to decrease the amount of members’ contributions. No portion of the reserve fund or income thereof shall accrue to the general fund of the national government or to any of its agencies or instrumentalities, including government-owned or -controlled corporations.”

“Excess funds should not be directed to unprogrammed appropriations within the national budget when PhilHealth has been ineffective at carrying out its mandate of ensuring affordable, acceptable, available and accessible health-care services for all citizens of the Philippines,” Leachon argued.

As of May, PhilHealth has already transferred P20 billion out of the P89.9 billion of its unused funds back to the national government, saying this was approved by its board of directors chaired by Health Secretary Teodoro Herbosa.