COA: PhilHealth 3rd biggest spender among gov’t firms in 2020

The Commission on Audit (COA) reported that the Philippine Health Insurance Corp. (PhilHealth) spent P128.04 billion in 2020, ranking as the third highest spender among government-owned and controlled corporations (GOCCs). The agency has faced criticism for its financial management, particularly its failure to settle growing unpaid hospital claims, which has led some healthcare institutions to threaten withdrawal from PhilHealth accreditation and even stage temporary work stoppages.

If the global COVID-19 pandemic persisted into the following year, Nerissa Santiago, PhilHealth’s acting senior vice president, warned a Senate committee in August 2020 that the agency would collapse by 2022, citing a projected P57-billion operating loss. However, in a September 2020 congressional hearing, Santiago stated that PhilHealth might sustain operations until 2027, depending on government subsidies and member premium contributions.

The COA report also highlighted the financial disparities among GOCCs, noting that while institutions like the Social Security System (SSS) and Government Service Insurance System (GSIS) recorded significantly higher expenditures, their primary focus remained on pension and financial assistance programs. In contrast, PhilHealth’s spending was directed towards medical reimbursements and health coverage, raising concerns about whether its funds were being utilized efficiently amid mounting unpaid claims. The delays in hospital reimbursements have further strained the healthcare sector, particularly during the COVID-19 pandemic, when timely funding was crucial for medical facilities.

Amid these financial struggles, calls for reform and increased transparency in PhilHealth’s operations have intensified. Lawmakers and healthcare experts have urged the agency to modernize its claims processing system, ensuring faster and more efficient reimbursements for hospitals and medical providers. Independent audits and stricter government oversight have also been proposed to prevent fund mismanagement and potential corruption. Without decisive action, PhilHealth’s ability to fulfill its mandate of providing affordable healthcare remains uncertain, posing long-term risks to millions of Filipinos who rely on its services.

Breakdown of GOCC Spending

According to COA, the Social Security System (SSS) was the largest spender among GOCCs, with total expenditures reaching P681.61 billion, followed by the Government Service Insurance System (GSIS) at P299.93 billion. PhilHealth came in third with its P128.04 billion spending, but unlike SSS and GSIS, which primarily focus on pension and financial assistance programs, PhilHealth’s expenditures were directed toward healthcare services and medical reimbursements.

Other top government firms with significant expenditures included the Bangko Sentral ng Pilipinas (BSP) at P118.154 billion, Land Bank of the Philippines at P80.998 billion, Home Development Mutual Fund (Pag-IBIG Fund) at P49.666 billion, Philippine Deposit Insurance Corp. (PDIC) at P41.733 billion, and Philippine Amusement and Gaming Corp. (PAGCOR) at P36.006 billion. The report, however, did not provide a detailed breakdown of spending per agency.

Despite these expenditures, COA noted that some GOCCs managed to maintain the positive financial standing, while the others, including PhilHealth, faced sustainability concerns due to unsettled obligations and financial mismanagement. The state audit agency has repeatedly emphasized the need for better fiscal discipline among government firms to prevent excessive spending and ensure that funds are directed toward their intended purposes. In PhilHealth’s case, this means prioritizing timely hospital reimbursements and improving healthcare services rather than accumulating debts that could endanger its long-term viability.

The financial performance of these GOCCs plays a crucial role in the overall economic stability of the Philippines, as they handle significant public funds that they contribute to social welfare programs, banking services, and economic development initiatives. Experts have urged greater transparency and accountability in how these corporations utilize their budgets, particularly in times of crisis like the COVID-19 pandemic, when public funds must be allocated efficiently to support critical sectors such as healthcare, employment, and financial assistance programs.

PhilHealth’s Financial Struggles and Unsettled Claims

Despite its P128.04 billion spending, PhilHealth continues to struggle with delayed hospital reimbursements and mounting unpaid claims, leading to tensions with private hospitals and healthcare providers. The PhilHealth Holiday, a form of protest staged by hospitals refusing to accept PhilHealth coverage, underscored growing dissatisfaction with the agency’s payment system. Many hospitals reported severe financial distress due to delayed reimbursements, which affected their capacity to maintain operations and pay healthcare workers.

The agency has been repeatedly urged to streamline its claims processing system to ensure timely payments to hospitals and other medical providers. Delayed reimbursements have jeopardized the quality of healthcare services, especially during the height of the COVID-19 pandemic, when hospitals needed stable funding the most. The COA report fueled further concerns about whether PhilHealth is effectively utilizing its funds or if inefficiencies continue to hamper its ability to provide adequate health coverage to the Filipinos.

Beyond hospital reimbursements, questions have also been raised about PhilHealth’s financial sustainability, especially after the agency previously warned of the possible fund depletion in the coming years. While government subsidies and increased premium collections have provided temporary relief, experts argue that structural reforms are needed to prevent another financial crisis. Transparency in fund allocation and improved risk management strategies are essential to restoring public confidence in the state-run health insurer.

Additionally, the healthcare advocates have called for stricter auditing and digital transformation within the PhilHealth to expedite claims processing and prevent fund mismanagement. Investing in automation and fraud detection mechanisms could significantly reduce inefficiencies, ensuring that hospitals and medical professionals receive timely payments. Without concrete reforms, PhilHealth risks losing more accredited hospitals, which could further limit healthcare access for millions of Filipinos relying on government health insurance.

Calls for Financial Reforms and Transparency

Following the COA report, lawmakers and health sector representatives have called for financial reforms within PhilHealth, demanding greater transparency in its spending and subsidy allocation. Some legislators have suggested an independent audit to track how PhilHealth disburses its funds and whether any inefficiencies or irregularities exist. Given the agency’s history of corruption scandals, public trust in PhilHealth’s financial management remains fragile.

PhilHealth has responded by reaffirming its commitment to improving claims processing and enhancing fund management. Officials have stated that efforts are underway to modernize its systems, aiming to reduce payment delays and ensure hospitals receive reimbursements on time. However, healthcare institutions remain skeptical, urging concrete actions rather than promises.

In addition to calls for greater accountability, several healthcare advocates have proposed legislative measures that would strengthen oversight on PhilHealth’s financial transactions. Some have suggested the creation of a special regulatory body tasked with monitoring government health funds, ensuring that they are efficiently allocated and free from mismanagement. Others have emphasized the need for stronger anti-corruption safeguards, including stricter penalties for officials found guilty of misusing public funds.

Meanwhile, hospital associations and medical organizations continue to the push for system-wide reforms that go beyond financial audits. They argue that PhilHealth must address deeper structural issues, such as bureaucratic inefficiencies and a lack of digital integration in its claims processing. Without meaningful reforms, they warn that the agency’s financial struggles could lead to reduced access to healthcare services, disproportionately affecting low-income and vulnerable populations who depend on PhilHealth coverage.

Long-Term Implications and Next Steps

If PhilHealth fails to resolve its financial inefficiencies, the consequences could be severe for millions of Filipinos who rely on the agency for affordable healthcare services. The ongoing tension with hospitals may lead to more institutions withdrawing their accreditation, limiting patient access to PhilHealth-covered services. The lack of financial stability within the agency also raises concerns about its long-term sustainability, particularly as healthcare demands increase due to population growth and emerging health crises..

To prevent further financial instability, experts suggest that PhilHealth work closely with the Department of Health (DOH) and the Department of Finance (DOF) to develop stronger financial policies and explore alternative funding solutions. Strengthening government oversight and ensuring efficient fund utilization will be crucial in restoring both hospital confidence and public trust in the country’s state-run health insurance system.

Beyond immediate reforms, PhilHealth must adopt long-term strategies to enhance operational efficiency and fiscal responsibility. This includes investing in digital transformation, such as automated claims processing and real-time tracking of fund disbursements, to minimize delays and eliminate bureaucratic bottlenecks. Additionally, implementing risk-based auditing mechanisms can help detect anomalies in fund allocations early, reducing the likelihood of fraud and mismanagement.

Moreover, the government should consider expanding private sector partnerships to ease PhilHealth’s financial burden. Encouraging collaborations with health maintenance organizations (HMOs) and private insurers could provide Filipinos with more coverage options, ensuring sustainable healthcare financing in the long run. Without decisive action, PhilHealth risks further deterioration, jeopardizing the nation’s universal healthcare goals and leaving millions at risk of losing critical medical coverage.

 

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