Philippine Health Insurance Corporation (PhilHealth) Report

1. Background of PhilHealth
The Philippine Health Insurance Corporation (PhilHealth) was established on
February 14, 1995, through Republic Act 7875, also known as the National Health
Insurance Act of 1995. It was created to provide social health insurance coverage to all
Filipinos within 15 years, ensuring that every citizen can access affordable and quality
healthcare services. PhilHealth operates as a tax-exempt, government-owned and
controlled corporation (GOCC) under the supervision of the Department of Health
https://www.philhealth.gov.ph/joint_issuances/2022/jc0001-2022.pdf(DOH). It
administers the National Health Insurance Program (NHIP) to reduce the financial
burden of medical expenses on Filipinos.

2. Mission, Vision, and Core Values

Vision

"Bawat Filipino, Miyembro; Bawat Miyembro, Protektado; Kalusugan ng Lahat, Segurado."

(Every Filipino is a member; Every member is protected; Everyone's health is
ensured.)

Mission

"Benepisyong Pangkalusugang Sapat at De-kalidad para sa Lahat." (Adequate and quality

health benefits for all.)

Core Values

●​ Integridad (Integrity): Upholding honesty and strong moral principles.

●​ Inobasyon (Innovation): Implementing new ideas to improve services.
●​ Agarang Serbisyo (Prompt Service): Delivering timely and efficient services.
●​ Taos-Pusong Paglilingkod (Sincere Service): Serving with genuine care and
dedication.
●​ Pagmamalasakit (Compassion): Demonstrating empathy for members.
●​ Angkop na Benepisyo (Appropriate Benefits): Providing suitable health benefits.
●​ Panlipunang Pagkakabuklod (Social Solidarity): Promoting unity and mutual
support.

These guiding principles reflect PhilHealth's commitment to providing accessible and

quality healthcare services to all Filipinos.
3. Major Final Outputs (MFOs) and Functions
PhilHealth's Major Final Outputs (MFOs) emphasize administering social health
insurance services. These outputs aim to achieve efficient service delivery, strengthen
results-based management, and ensure that health insurance benefits are accessible to
all members.

Key MFOs and Functions:

●​ Social Health Insurance Services: Ensuring timely and efficient delivery of health
benefits.
●​ Accreditation of Healthcare Providers: Maintaining a network of accredited
hospitals and clinics.
●​ Member Management Services: Overseeing member enrollment, updating, and
servicing.
●​ Claims Processing: Reviewing and approving benefit claims to ensure proper fund
allocation.
●​ Premium Collection: Managing contributions from members and employers to
sustain financial stability.

4. Sources of Funds
PhilHealth receives its budget from various sources as mandated by Section 37 of the
Universal Health Care Act (RA 11223):

●​ Total incremental sin tax collections as provided for in RA 10351, otherwise known as
the "Sin Tax Reform Law"; Provided, That the mandated earmarks as provided for in
Republic Act Nos. 7171 and 8240 shall be retained;
●​ Fifty percent (50%) of the National Government share from the income of the Philippine
Amusement and Gaming Corporation (PAGCOR), as provided for in Presidential Decree
No. 1869, as amended: Provided, That the funds raised for this purpose shall be
transferred to PhilHealth at the end of each quarter subject to the usual budgeting,
accounting and auditing rules and regulations; Provided, further, That the funds shall be
used by PhilHealth to improve its benefit packages;
●​ Forty percent (40%) of the Charity Fund, net of Documentary Stamp Tax Payments, and
mandatory contributions of the Philippine Charity Sweepstakes Office (PCSO), as
provided for in Republic Act No. 1169, as amended: Provided, That the funds raised for
this purpose shall be transferred to PhilHealth at the end of each quarter subject to the
usual budgeting, accounting, and auditing rules and regulations: Provided, further, That
the funds shall be used by PhilHealth to improve its benefit packages;
●​ (Premium contributions of members;
●​ Annual appropriations of the DOH included in the GAA; and,
●​ National government subsidy to PhilHealth included in the GM.
 General Appropriations Act

-​ How funds are sourced and allocated:

●​ The Department of Budget and Management (DBM) includes PhilHealth’s budget in the General
Appropriations Act (GAA).
●​ Funds are released as part of the Department of Health (DOH) budget and subsidy allocations to
PhilHealth.
●​ The budget proposal must go through the National Expenditure Program (NEP) and be approved
by Congress.
●​ Once approved, funds are transferred to PhilHealth through Notices of Cash Allocation (NCAs).

Sin Tax Revenues

How funds are sourced and allocated:

●​ Republic Act No. 10351 (Sin Tax Reform Law) mandates that a portion of sin tax
collections (from tobacco, alcohol, and sugary beverages) is earmarked for health
services.
●​ The Bureau of Internal Revenue (BIR) and Bureau of Customs (BOC) certify the total
excise tax collected.
●​ By April 30 each year, BIR and BOC submit certifications to DBM, which computes
the health sector allocations.
●​ The funds are transferred to PhilHealth through the Bureau of Treasury (BTr).

PAGCOR COntribution
How funds are sourced and allocated:

●​ Republic Act No. 1869 (PAGCOR Charter) mandates that 50% of PAGCOR’s national
government share be allocated to healthcare.
●​ PAGCOR remits funds to the Bureau of Treasury (BTr) every 20th of the month.
●​ The funds are then transferred to PhilHealth at the end of each quarter, following
budgeting, accounting, and auditing rules.
●​ The Development Budget Coordination Committee (DBCC) monitors these
remittances to ensure compliance.

PCSO Contribution
How funds are sourced and allocated:

●​ Republic Act No. 1169 mandates that 40% of PCSO’s Charity Fund (net of taxes and
mandatory contributions) be allocated to PhilHealth.
 ●​ PCSO remits funds quarterly to the Bureau of Treasury (BTr) every 20th day of the
month following the end of each quarter.
●​ In the first two years of UHC Act implementation, only 50% of the required PCSO
contributions were remitted to allow PCSO to complete its Individual Medical
Assistance Program (IMAP) obligations.

Member Premium Contributions

-​ How fund are allocated:
a.​ Contributions are collected from formally employed workers (payroll
deductions), self-employed individuals, OFWs, and indigent members
funded by the government.
b.​ These contributions go directly to PhilHealth’s operating funds. Premium
contributions cover a significant portion of the budget and are the primary
source of financing for benefit payouts.
-​ PhilHealth operates through a structured process to provide health insurance services:
1.​ Membership Enrollment: Individuals apply for membership under different
categories such as employed, self-employed, indigent, or senior citizen.
2.​ Premium Contributions: Members and employers contribute to the fund, ensuring
financial sustainability.
3.​ Accreditation of Healthcare Providers: Hospitals, clinics, and doctors undergo
assessment to qualify for providing services under PhilHealth coverage.
4.​ Claims Filing and Processing: Members avail medical services, and hospitals file
claims with PhilHealth for reimbursement.
5.​ Benefit Disbursement: Approved claims are paid to accredited healthcare providers
or reimbursed to members.

Budget preparation
1.​ Subject to consultations with PCSO and PAGCOR, PhilHealth shall
develop and submit to the DOH a three-year rolling MTEP for benefits
improvement under the NHIP
2.​ PhilHealth's MTEP shall be submitted to DOH based on parameters, and
assumptions discussed with the inter-agency Development Budget
Coordination Committee - Executive Technical Board (DBCC-ETB), with
the DBM as Secretariat, copy furnished PCSO and PAGCOR. The MTEP
shall be subject to the approval of the DBCC
3.​ The DOH, including PhilHealth, shall develop its annual national (DOH)
and corporate (PhilHealth) budget proposals highlighting allocations for
the implementation of the UHC Act
4.​ The Office of the Secretart will endorse the budget proporal for the
following:
 a.​ Human resource for health deployment programs
b.​ Health facilities enhancement program
c.​ Medical assistance program
d.​ population -based interventions
e.​ Other specific requirements
5.​ The Philhealth BOD through Executive Committee shall endorse the
budget proposals of the following as national government subsidy to
the Philhealth
a.​ Premium subsidy for indirect contributory members funded from
the allocations for health from sin tax collections
b.​ Subsdity for the improvement of benefit packages

Budget Legislation
-​ The DOH in coordination with Philhealth may request Congress to appropriate
supplemental funding to meet targeted mileston of the UHC Act

Budget Execution
-​ The DBM shall provide the DOH and Philhealth the appointment of budget levels taking
into consideration their financial and physical performance in accordance with existing
laws, budgeting rules and regulations which will be used by DOH and Philhealth in the
budget preparation.

Budget Monitoring
1.​ DBM shall issue the Special Allotment Order and Notice of Cash ALLocation for the
purpose subject to existing budgetary procedures for the release of subsidy to the
Philhealth chargeable against the Budgetary support to Government Corporations.
2.​ The DOH and philhealth shall separately implement the funded programs, activities and
projects indicated in the GAA
3.​ The DOH and Philhealth shall separately report to the DBM their quarterly physical and
financial performance based on commitments indicated in the GAA using the UNified
reporting system or its equivalent under Budget and TReasury Management System
4.​ The DOH and Philheath shall separately publish and disseminate annual reports on the
allocation and uses of the amounts provided for the implementation of the UHC Act
through their respective official website.
Budget for the current fiscal year
For fiscal year 2025, PhilHealth is operating with a corporate budget of PHP 284 billion,
notably without a government subsidy. Despite this, the agency remains financially stable,
supported by a PHP 150 billion surplus and investment income. The budget allocation
includes:

●​ PHP 271 billion for benefit claims and case rate increases (an 11% increase
from the previous year).
●​ PHP 12.5 billion for administrative expenses (a 3% increase from 2024).

President Ferdinand Marcos Jr. has emphasized the need for uninterrupted PhilHealth
services and directed the DOH to ensure that the lack of government subsidy does not impact
healthcare delivery.

Financial Challenges:

Despite financial stability, concerns persist regarding the sustainability of PhilHealth’s

funds without government subsidies. Critics argue that reducing or eliminating government
support could weaken financial stability and affect the agency’s ability to provide
comprehensive coverage.

6. Topical Discussion: Issues and Challenges

PhilHealth has faced several issues affecting its efficiency and credibility:

●​ Fund Mismanagement and Fraud: Allegations of corruption and fraudulent claims

have led to financial losses.
●​ Delayed Reimbursements: Hospitals report delays in claim payments, affecting
service quality.
●​ Universal Health Care Implementation: Expanding services under the Universal
Health Care Act requires significant funding and system improvements.
●​ COVID-19 Response: PhilHealth provided benefit packages for testing and treatment,
but faced administrative challenges due to high demand.

7. Conceptual Framework vs. Agency Practice

PhilHealth's conceptual framework is based on universal health coverage, aiming to
provide equitable healthcare access to all Filipinos. However, practical implementation
presents challenges:

Key Discrepancies:

●​ Coverage vs. Accessibility: PhilHealth aims to cover all Filipinos, yet many
encounter difficulties in accessing benefits due to inefficient processes, lack of
awareness, and limited healthcare facilities in rural areas.
●​ Benefit Availability vs. Utilization: While PhilHealth offers a comprehensive set of
benefits, delayed reimbursements and administrative inefficiencies
 discourage healthcare providers from prioritizing PhilHealth patients,
limiting members' ability to fully utilize their entitlements.
●​ Financial Sustainability vs. Service Delivery: Operating without government
subsidies requires PhilHealth to efficiently manage its resources. However, issues such
as fraudulent claims, mismanagement, and corruption threaten fund
stability, raising concerns about its ability to continuously provide quality services.
●​ Theoretical Efficiency vs. Real-World Bureaucracy: The agency’s framework
envisions seamless service delivery, but in practice, lengthy processing times,
bureaucratic red tape, and inconsistencies in policy implementation hinder
its efficiency.

Bridging the Gap:

To align its practices with its conceptual framework, PhilHealth must implement systemic
reforms, including:

●​ Enhancing transparency and accountability measures to prevent fund misuse.

●​ Strengthening digital infrastructure to streamline claims processing and member
services.
●​ Increasing healthcare provider partnerships to expand service accessibility,
especially in underserved areas.
●​ Promoting public awareness programs to educate members on their benefits and
how to access them.

8. Conclusion
PhilHealth plays a crucial role in the Philippine healthcare system by administering NHIP,
facilitating member access to healthcare, and managing funds from member
contributions, government subsidies, and sin tax revenues. While PhilHealth has
significantly expanded coverage and benefits, challenges such as financial
sustainability, fund management, and healthcare accessibility remain.

Ensuring alignment between concepts and practice requires reforms, enhanced

transparency, and continuous service improvements to fully realize the goal of
universal health coverage in the Philippines.