Oral arguments began at the Supreme Court (SC) challenging the Department of Finance (DOF)-mandated transfer of PhilHealth’s P89.9 billion excess funds to the national treasury, Feb. 4. 

Of the excess funds, P60 billion have already been transferred since 2024 while the remaining tranche worth P29.9 billion remains on hold after the SC issued a temporary restraining order.  

Petitioners Sen. Aquilino Pimentel III and Bayan Muna Chairperson Neri Colmenares, accompanied by political group 1SAMBAYAN and other private individuals, feared the transfer could further catalyze the company's inability to pay claims, especially with PhilHealth’s zero subsidy in the 2025 national budget.

The excess funds will be remitted to the national treasury if the transfer is successful. Once received, it will be directed to unprogrammed funds, where it will remain on standby and will only be used for priority programs or projects when initial funding does not suffice. 

This move puts the company’s operational mobility at risk considering the already slow processing of claims or reimbursements to state hospitals and the lack of subsidies for members unable to pay monthly premiums, as pointed out by Jocelyn Andamo, secretary general of Filipino Nurses United.

“Kung walang subsidy ang gobyerno, lalong mababawasan yung serbisyo para sa mga kababayan natin,” Andamo said in an interview with the Collegian. 

Budgeting Issues

PhilHealth is no stranger to funding and budget management issues, with the 2025 General Appropriations Act (GAA) inking the company’s zero-subsidy status. 

During its proposal stage, Sens. Francis Escudero and Grace Poe of the bicameral committee argued that the zero-subsidy decision was made assuming that PhilHealth shall operate through its P600 billion in reserves and direct contributions from members. 

PhilHealth is a government-owned and controlled corporation exempted from taxes to provide health insurance to its members. Its budget is sourced from its members’ contributions, known as premiums, paid by their employers and deducted from their wages, and also from other channels as stipulated in the Universal Healthcare Law.

Experts have long since criticized PhilHealth’s budget management and its failure to reduce patients’ out-of-pocket spending. While out-of-pocket expenses paid by Filipinos may have decreased marginally from 44.6% to 44.4%, the health-related costs covered by the company have also reduced from 14.6% to 10.2%, economic research group IBON Foundation found. 

The foundation also noted that the reserve funds for the beneficial functions of the company kept piling up from P140.9 billion in 2020 to P463.7 billion in 2023. This implies that despite having reserves, out-of-pocket payments are still high. 

Esther Saguil, director of the Philippine General Hospital’s outpatient department, drew the discrepancy between how much the company has and the supposed amount of money spent on the state hospitals that were promised to receive claims. 

“We are happy that the government has been giving us funds for medical advancements, however, they should increase the allocation to facilities and hasten the payment to state hospitals registered under PhilHealth,” Saguil told the Collegian. 

Legal Arguments

Various groups like Action for Economic Reforms and Sentro ng mga Nagkakaisa at Progresibong Manggagawa argued that PhilHealth’s zero subsidy directly violates laws like the 2012 Sin Tax Reform Law and 2019 Universal Healthcare Law.

The Universal Healthcare Law stipulates that the insurance company must operate with an ample budget allocated from the GAA for that year. Simultaneously, 80% of the incremental revenue derived from the Sin Tax Reform Law must be directed to PhilHealth. 

But currently, as the bicameral panel said, the company is expected to utilize its reserve funds, citing its history of slow and inefficient fund use. However, critics have pointed out that instead of reducing its funds further, PhilHealth should focus on expanding its benefit packages, per its policy.

The P600 billion in reserves are also only half PhilHealth’s Insurance Contract Liabilities, or the estimated expenditures needed to keep the corporation fulfilling its liabilities to its members. It reached an estimated P1.15 trillion in 2023, per the Commission on Audit. 

Following previous reports, there is a probability that PhilHealth’s expenditures will increase even more in the following year. 

Courtroom Showdown

All eyes are now on the High Court as it reviews the oral arguments petitioning to stop the DOF’s ordered transfer of PhilHealth’s unused funds.

Following the SC’s temporary restraining order to halt the transfer, petitioners laid down claims on its unconstitutionality, particularly the power to order the transfer of funds, which is only granted to high-ranking officials. 

At the moment, PhilHealth’s transfer of funds to the national treasury is still in troubled waters. Processing of complaints against the GAA 2025 is still underway and will not produce immediate results within the following days. Oral arguments before the court will resume on Feb. 25.

If the transfer pushes through, PhilHealth’s obligations of state hospitals’ overdue claims totaling over P59.6 billion, listed under the company’s care, might still stand. To make better use of the funding, one of the most urgent issues that need resolving would be paying back what was owed by the company to the state hospitals, said Saguil. 

These hospitals are entitled to these claims as backed by the Universal Healthcare Law. But with PhilHealth’s inefficiency, reports have mentioned that some hospitals have stopped services or closed down entirely because of strict document requirements and slow processing of payouts.

Considering these burdens, Andamo emphasized that better management would relieve the company of its issues of inefficiency.

“Dapat i-prioritize ang kalusugan, irespeto, at itaguyod ang karapatan sa kalusugan ng bawat mamamayan. Dapat may libre, dekalidad, at kumpletong serbisyo sa lahat ng public healthcare facilities,” Andamo stated. ●

First published in the Feb. 18, 2025 print edition of the Collegian.