SUPREME Court justices yesterday continued to scrutinize the controversial transfer of P89.9 billion in excess funds of the Philippine Health Insurance Corporation (PhilHealth) to the National Treasury for unprogrammed appropriations, at the resumption of oral arguments on petitions challenging the constitutionality of the move.
The first oral arguments on the petitions filed by Senate minority leader Aquilino “Koko” Pimentel III, former Finance undersecretary Cielo Magno, the Philippine Medical Association, 1Sambayan Coalition, and the group led by former Bayan Muna representative Neri Colmenares were held on February 25.
The next oral arguments will be on April 29.
During the February proceedings, Associate Justice Amy Lazaro-Javier repeatedly emphasized that the PhilHealth funds should be “used exclusively” for the state insurer’s programs and not diverted to unrelated programs or purposes.
“Reserve funds, as it is named, are reserved and cannot be subject to the discretion of PhilHealth to be used for another purpose,” Lazaro-Javier said then.
In yesterday’s proceedings, Lazaro-Javier pursued the issue.
“It is important that we become aware of your financial standing, your financial status from the years 2021 to 2023 because it is these years that the P89 billion was charged, collected and will be transferred to the National Treasury,” Lazaro-Javier told PhilHealth senior vice president Renato Limsiaco Jr.
She also asked Limsiaco about the state health insurer’s financial status and if it still needs government subsidy, considering the move to transfer excess funds to the National Treasury.
“So, there is no need for you to negotiate with the national government to get more funding because you are self-sufficient? So, you will still depend and from the very start you are depending on the subsidy from the national government. Pag walang (if there is no) subsidy, would you have collapsed?” she said.
Limsiaco said with the expansion of the programs under the National Health Care Act, there is still a need for subsidies from the national government.
“So what is your present financial situation?” Lazaro-Javier said, to which Limsiaco replied, “We have enough to cover the 2025 operations, your Honor, based on the financial record.”
But Lazaro-Javier asked Limsiaco if he would not change his statements, considering the finding of the Commission on Audit about PhilHealth’s financial status.
“So, kung walang subsidy nasaan ang PhilHealth (If there is no subsidy, what happens to PhilHealth)?” she asked at one point during the nearly four hours of hearing.
According to COA data presented during the proceedings on PhilHealth’s financial status in 2023, it has total assets amounting to about P588.5 billion, total liabilities of about P1.3 trillion, and total equity of P663.8 billion.
It said “the faithful representation in the financial statements for insurance contract liabilities (ICL) amounting to P1.150 trillion and P266,873 billion for calendar years 2023 and 2022, respectively, cannot be ascertained due to the following factors: the completeness and accuracy of the claims and premium data cannot be established, casting doubt on the reliability of the reported figures and the evaluation of the Cy 2023 actuarial valuation report, intended to assess the adequacy of the ICL revealed inconsistencies and irregularities that affects its reliability and validity to third parties.”
It also stated that the absence of a reasonableness test on expense loading further undermines the reliability of the ICL account in the financial statements, which are inconsistent with Philippine Accounting Standards, Philippine Financial Reporting Standard, and Revised Conceptual Framework for Financial Reporting.
CORPORATE REVENUE
Limsiaco insisted that PhilHealth’s corporate revenue is more than enough to cover its expenditures, prompting Lazaro-Javier to again ask about its reserve funds.
“And it should depend on the actual valuation for two years, am I right? Hindi ba dapat ang (Shouldn’t it be that) reserve funds is accumulated reserve less expenditures and it should correspond with the actual estimate,” she said.
Limsiaco said, “Your Honor, may projected revenue po tayo for the year at yun ang ginagamit, ang sourcing ng expenditure (PhilHealth has projected revenue for the year, and that is being used, the sourcing of expenditure), meaning the operation of the corporation must depend on the revenue expected to be received for the particular year).”
The magistrate then asked if the transfer of funds to the National Treasury made PhilHealth viable. “Please go directly to the point. Just a straight answer…” she said.
Limsiaco said only P60 billion has been transferred so far.
“Despite the transfer, PhilHealth operates their program, your honor, expanding the benefit payments. Tumaas pa nga siya (It even increased),” he said.
ABSORPTIVE CAPACITY
Associate Justice Antonio Kho Jr. said the reserve fund and its transfer is “precisely the meat of this case.”
“You are telling us the problem is the absorptive capacity of PhilHealth? You are just providing excuses to take the money from PhilHealth so people will not understand absorptive capacity,” Kho told Limsiaco, Deputy National Treasurer Eduardo Anthony Marino and Government Corporate Counsel Solomon Hermosura.
Kho added that PhilHealth funds should be used for the benefits of its members.
Earlier, Solicitor General Menardo Guevarra defended the fund transfer, saying there is nothing unconstitutional or illegal about the move.
Guevarra said the subject provision of the 2024 General Appropriations Act does not amend or violate provisions of Republic Act 11223 or the Universal Health Care Act and RA 10351 and RA 11346 or the Sin Tax Reform Laws as claimed by the petitioners in their plea before the SC.
He said Section 1(d) of the 2024 GAA is actually “a valid act of appropriation” and does not violate the people’s right to health.
The solicitor general said PhilHealth’s income was more than enough to cover the payment of benefit claims and operating expenses, and that the idle PhilHealth funds were “in excess of the funds needed for its maintenance and operations, including the payment for any outstanding claims for fiscal year 2023.”
