Rx for PhilHealth: Systemic reform and equity infusion

The tug-of-war between private hospitals and the Philippine Health Insurance Corporation (PhilHealth) rages on. Amid a surging pandemic and calls from the Department of Health (DOH) for provision of more beds and facilities, hospital owners report that they are constrained to lay off health workers as PhilHealth receivables have reportedly ballooned to about ₱30 billion.

Private hospitals bear the brunt of tertiary health care as the DOH operates a limited number of district hospitals in regional and urban centers. This explains the stark reality that up to seven out of every 10 Filipinos live and die without seeing a doctor.

Last year, there was a hue and cry over alleged corruption at PhilHealth that eventually led to the forced resignation of its president and top officials and to a probe by the Department of Justice. A former director of the National Bureau of Investigation, a certified public accountant, was appointed PhilHealth president and the controversy faded as other stories hogged the headlines.

Concerns over the PhilHealth’s viability prompted the entire Senate, acting as a committee of the whole, to conduct an investigation. One of its principal recommendations was to install the Finance Secretary as the chairman of the board, in place of the Health Secretary, “to further strengthen the agency’s fiduciary responsibility to protect the national health insurance fund.”

This leads to a crucial question: How healthy is PhilHealth financially?

A comparison of its published financial statement as of September 30, 2020, compared to December 31, 2019, shows that its principal source of funds is an increase in Benefits Payable amounting to ₱31.9 billion, which includes the ₱28 billion in receivables or reimbursement claims due to private hospitals. The primary uses of funds are increases in Premium Receivables of ₱24.9 billion and Other Receivables (namely, the controversial Interim Reimbursement Mechanism set up by PhilHealth management late last year) of ₱7.2 billion.

In simple terms, the private hospitals are unable to collect their reimbursement claims because PhilHealth is unable to promptly collect its receivables. And who are those who owe PhilHealth? The level of receivables from “the formal economy,” or from private individuals and entities, is steady at more than ₱7 billion. The national government owes Philhealth to the tune of ₱26 billion while local government units owe more than ₱600 million.

These arrears in receivables are accounted for by the entitlement of senior citizens and Bangsamoro residents to PhilHealth benefits under the newly enacted Universal Health Care Act. The implementation of expanded compulsory coverage coincided with the onset of the pandemic.

Systemic reform – by way of massive fund or equity injection – is the long-term solution to PhilHealth’s perennial woes. Private hospitals are being squeezed and saddled with unpaid reimbursement claims that many of them are forced to write off because of PhilHealth’s fund deficiency.

The government must act swiftly to enable private hospitals to operate more efficiently. PhilHealth must level up to a higher bar of public accountability and quality of governance.