PHILHEALTH FINANCIAL WOES STUN SENATORS
WITH operating losses of P90 billion and counting, state-run Philippine Health Insurance Corporation (Philhealth) admitted on Tuesday it may collapse in 2022 without additional funding from the government as the Covid-19 pandemic forces it to increase benefit payouts despite declining collections.
Briefing senators, Philhealth Acting Senior Vice President Nerissa R. Santiago revealed that the Covid-19 impact slashed the agency’s actuarial life to just one year from more than 10 years before the pandemic hit the country.
“Before the pandemic occurred, the actuarial life was more than 10 years. However because of the pandemic, there is a double impact on the program because of the decreased collections, as well as the expected increase in benefit payouts,” Santiago said in response to Minority Leader Senator Franklin Drilon’s question. Senators convened as a Committee of the Whole on Tuesday, opening an inquiry into fresh allegations of corruption and mismanagement at the state health insurer.
The revelations of Philhealth’s problems—characterized by the agency’s President and Chief Executive Officer Ricardo Morales as apparently part of a serial “bash-phil
Health” annual exercise—come at the worst time, with people’s Covid-19 medical bills soaring, and as the nation anxiously awaits full implementation of the Universal Health Care (UHC) law.
“By next year po, wala na po tayong [we will no longer have a] reserve fund, so one year lang po ang ating actuarial life,” Santiago told senators, some of whom joined the inquiry virtually, while others, led by Senate President Vicente Sotto III, were physically present at the Senate premises along with the resource persons.
When asked by Drilon if she meant that there will be no Philhealth by 2022, Santiago replied, “Yes, sir.”
Drilon immediately expressed concern over the Philhealth official’s statement on the agency’s actuarial life, saying that the agency’s financial situation is “worrisome.”
To prevent the collapse of the agency by 2022, Santiago said Philhealth needs subsidy from the government—a tall order given how the pandemic has slashed government revenues while shuttering businesses and causing economic contraction.
Pressed by Drilon on how much subsidy Philhealth would need from the government, she said: “For 2020, we expect a net operating loss of P90 billion. And if the Covid pandemic persists for 2021 and no vaccine is discovered by 2021, we will incur about P147 billion in terms of operating loss.”
P153-B subsidy
IN June, Philhealth President Morales had proposed a P153-billion subsidy for this year, but was only granted over P71 billion. For 2021, Morales is seeking a P138-billion subsidy from the government.
Morales also earlier recommended postponing the implementation of the expanded primary care benefits, which cover more illnesses, disabilities and maintenance medicines of members.
Audit rules ignored
DRILON said urgent action was needed to avert a looming collapse of Philhealth by 2022, due to “decreased collections amid high payouts.”
The minority leader suggested that Philhealth work it out to implement remedial measures to prevent the Philhealth from collapsing, even as Drilon noted controversies continue to haunt Philhealth because it “does not follow simple auditing rules.”
Addressing Morales, Drilon said, “We are in this mess because of Philhealth’s non-compliance with rules, including a simple COA rule. That is why we have all these problems because you disregard all the rules designed to protect public funds.”
He reminded Philhealth officials of the COA rule that no additional cash advances shall be allowed to any official or employee unless the previous cash advance given to him is first settled or a proper accounting is made.
“Per COA rules, you must first liquidate before further advances are made,” Drilon said, on learning that the agency released about P15 billion to certain hospitals from its controversial Interim Reimbursement Mechanism (IRM) even if only P1 billion was liquidated.
“Even the name Interim Reimbursement Mechanism is a misnomer because this is not a system of reimbursement but an advance—one with very weak liquidation procedure, ” Drilon said in disbelief.
Villanueva hits ‘evasiveness’
SENATOR Joel Villanueva assailed the failure of Philhealth officials to offer substantial answers on issues he raised at the hearing.
Noting Philhealth officials’ “evasiveness” to answer simple questions, such as the average hospital bill of Covid-19 patients or the rationale for the insistence of certain board members to endorse a P750-million budget despite a pending audit or inventory of the ICT equipment of the corporation, Villanueva admitted being worried.
Villanueva questioned the Philhealth board approval of the P750-million ICT budget despite having previously approved only a P327-million budget for ICT.
The matter of “overpriced” ICT equipment and systems, the controversial IRM, and the alleged “tweaks” in the agency’s financial condition had been cited earlier by Sen. Panfilo Lacson in pushing for the inquiry on Philhealth.
Villanueva lamented that, “They couldn’t answer my questions, not even the average hospital bill of confirmed and possible Covid patients, so we can see if the Philhealth case rates for Covid-19 patients are enough. I’m therefore tempted to think they don’t want it said that the benefit value of Philhealth is too small.” He asserted that the small benefit value “goes against the spirit of the Universal Health Care law.”
The UHC law, which mandated increased premiums to support more and increased benefit packages, should have eased the burden of members in shelling out cash to cover health-care expenses, he explained.
Citing Philhealth data, Villanueva pointed out that even before the pandemic, Philhealth has been recording persistently low support value, or the portion of hospitalization costs that the agency shoulders vis-à-vis the members’ total hospital bill. This, despite the increased funds of Philhealth from premium payments of direct contributors and the annual appropriations in the national budget to finance UHC implementation.
The support value was as high as 59 percent in 2014, but decreased steadily every year after. In the first six months of 2019, Philhealth support value was at mere 41 percent, according to agency data.