COA worried about PhilHealth sustainability over P4.75-billion net loss

Adrian Ayalin, ABS-CBN News

Posted at Jul 26 2018 06:59 PM

MANILA - The Commission on Audit (COA) has raised concerns over the sustainability of funds of the Philippine Health Insurance Corporation (PhilHealth) after the agency posted a net loss of P4.75 billion in 2017.

In its 2017 audit report on PhilHealth, the state audit agency said the net loss adversely affects the implementation of programs and projects as well as the “actuarial life of the agency consistent with the vision under the National Health Insurance Act of 2013 for a sustainable system of fund management.”

The report said PhilHealth, which is currently headed by Dr. Roy Ferrer as acting President and Chief Executive Officer, registered a negative P3.905-billion gross margin from operations with operating expenses at P6.583 billion, resulting in operating losses of P10.489 billion. 

Its income, which closed at P5.738 billion in 2017, is not sufficient to cover the net loss from operations pegged at P4.750 billion. 

The report also said comparative financial statements disclosed that the annual increase in benefit claims and operating expenses- an average of 20 percent and 10 percent respectively- outpaced the increase in premium contributions with 19 percent average increase from 2013 to 2017.

“The Premium Contributions under the current contribution rate will not be sufficient to cover all current PhilHealth claims and the future benefit availments, thus reduction in the actuarial life of the agency is imminent,” the COA said.

Government auditors said the inability of PhilHealth to avail of the government’s P37.06 billion allocation for indigents resulted in a “foregone income” of P3.2 billion from targeted beneficiaries of the National Household Targeting System of the Department of Social Welfare and Development.

Other factors also contributed to losses such as reimbursed amounts exceeding actual hospitalization costs, automatic membership of indigents upon payment of the P2,400 premium contribution, and failure to collect the P106-billion allocation from unprogrammed funds of the national budget. 

PhilHealth for its part told COA that “continuous billings, and letters to Congress and Senate for appropriation are being sent for funding.”

It said it has also implemented other measures such as the electronic mode of transmission of remittance reports of employers, implementation of monthly premium contributions of 2.5 percent to 2.75 percent for those with monthly salaries ranging from P10,000 to P40,000, and increased premium for indigents and senior citizens from the national budget. 

Earlier this month, PhilHealth said it was in "excellent financial health," citing an P11.6-billion surplus as of the end of April.