In the latest Supreme Court (SC) oral arguments on the transfer of the unused funds of Philippine Health Insurance Corporation (PhilHealth) to the Bureau of the Treasury (BTr), SC Associate Justice Antonio Kho Jr. stressed the need for a structural overhaul of PhilHealth, calling attention to its governance shortcomings.
His remarks inadvertently provide the strongest rationale for why the executive department transferred idle PhilHealth funds to the national treasury, a move authorized by Congress and justified by the corporation’s own inability to fully utilize its resources.
Lost in the debate over the fund transfer is the fact that the Department of Finance (DOF) would not have been able to tap the idle funds of PhilHealth if they were properly maximized in the first place. PhilHealth, after all, is one of many government-owned and controlled corporations (GOCCs) that the DOF was tasked to closely monitor. The department is mandated under Republic Act No. 11975, or the GAA 2024, which was approved by Congress, to “implement the sweep of the excess and idle funds” of GOCCs like PhilHealth to “finance the imposed appropriations in excess of what the executive branch had originally proposed.”
Short on results
Justice Kho himself pointed out that PhilHealth has failed to comply with the requirements of the Universal Health law, particularly at the board level. This failure has led it to become an organization that is long on funds but short on results.
The reality is that PhilHealth has historically received more money than it could spend. Its inefficient operations have resulted in massive accumulations of unutilized resources — proof that it lacks the absorptive capacity to handle the billions allocated to it.
To put it simply, if a financial manager repeatedly fails to maximize the funds entrusted to him, you don’t give him more money until he has proven that he can manage it properly. The same principle should apply to PhilHealth.
Returning billions to an institution with known inefficiencies before implementing much-needed structural reforms would only bring us back to square one: an agency sitting on billions of pesos, instead of using them to provide medical benefits to PhilHealth members.
What the most recent oral argument established is that the executive department’s decision to transfer PhilHealth’s excess funds was clearly a fiscally responsible act. It ensured that idle resources could be used elsewhere in the government’s priority programs, instead of stagnating within a system that has failed to deploy them effectively.
It bears stressing that, contrary to criticism, the move did not take away member contributions because only unused government subsidies were transferred. It should also be noted that these funds were used to cover the government’s health-related expenses, such as the allowances of health workers mobilized during the COVID pandemic.
The P60-billion question is not whether the unused funds of PhilHealth should be returned, but whether PhilHealth has earned the right to manage such vast resources without first proving that it can do so efficiently.
Justice Kho’s call for a corporate overhaul makes clear that, before any discussion on restoring funds takes place, organizational reforms must come first. Anything less would be an exercise in futility and a waste of the government’s limited resources. For me, it is a move so catastrophically misguided that it makes the Trojans accepting that wooden horse seem prudent by comparison. – Rappler.com