MANILA, Philippines – The Supreme Court on Tuesday, March 4, is tackling petitions against the Department of Finance’s (DOF) order for the Philippine Health Insurance Corporation (PhilHealth) to transmit P89.9 billion back to the National Treasury.
It’s the third day of oral arguments at the High Court. Here’s what has been discussed so far.
‘The common sense approach’
The government was using its “common sense” in tapping into unused funds of government-owned and -controlled corporations (GOCCs) to fund its infrastructure, health, education, and other key projects, Solicitor General Menardo Guevarra said.
This was in defense of the special provision in the 2024 budget, which allows the transfer of the remaining balance of GOCCs after a “review and reduction” of their reserve funds back to the government.
“Your Honors, the Congress’ inclusion of special provision number 1d in the General Appropriations Act of 2024 and the DOF issuance of Circular No. 003-2024 are the government’s common sense approach, again within legal bounds, to temporarily eke out the cash needed for the national government’s numerous priority programs,” said Guevarra on the first day of the oral arguments on February 4.
PhilHealth had P89.9 billion in unused funds, which were originally subsidies from the government. PhilHealth sources its funds through multiple avenues — premiums are either paid by members or are subsidized by the government for the indigent, senior citizens, and persons with disabilities, from annual appropriations from the Department of Health, from the government’s sin tax collection, among others.
While the government could have tapped other funding sources or considered borrowing money, Guevarra pointed to the country’s ballooning debt. The Philippines had a P16.05 trillion balance of payments deficit in 2024 — its highest since January 2014.
“Based on a population of 114 million in 2025, every Filipino — young and old, rich and poor, abled and disabled — is indebted in the amount of P139,000 each,” Guevarra said. “This is rather heavy. It is in this cash-starved context that Congress trained its sight on money that was there but was not being productively utilized.”
He added that the DOF “merely implemented the congressional directive.”
However, petitioners have argued that PhilHealth funds should not have been tapped to begin with.
‘Political negotiation’?
Reserve funds are for the state insurer’s future use — something like its emergency finances for rainy days. This is set by the PhilHealth board of directors based on their accumulated revenues from the year before.
Government Corporate Counsel Solomon Hermosura said that the law does not lay out requirements for the board to follow regarding its reserve funds. Board members rely on their “business judgement.”
“If I were in the PhilHealth board, I would not set a high reserve fund if I am confident that I can get political support for a bigger subsidy for PhilHealth,” Hermosura said on the first day of oral arguments.
“Because there is no limit to the subsidy that government can provide to PhilHealth, Your Honor. And if I may also mention, the liabilities of PhilHealth are guaranteed by the Republic of the Philippines.”
Supreme Court Associate Justice Amy Lazaro-Javier asked Hermosura to elaborate on his comment about subsidies being a “matter of political negotiation,” during the second day of oral arguments on February 25.
But since Hermosura failed to recall the exchange, Javier said she planned to bring up the political comment on the third day of discussions.
PhilHealth services still lacking
Meanwhile, Javier pointed out that PhilHealth’s reserve funds shoud have been “sacred” and “untouchable” in the first place.
Under Section 11 of the Universal Health Care (UHC) law, PhilHealth’s excess funds should be used to improve benefit packages and lower premium payments of paying members. It also prohibits the transfer of excess funds back to the national government.
Filipinos were supposed to have access to better health coverage with lower out-of-pocket expenses, thanks to the UHC. But as amici curiae or the “friends of the Court” pointed out, this has yet to become the reality for many:
- PhilHealth only covers about 10.2% of a patient’s hospital bill, said Sonny Africa, the executive director of Ibon Foundation. He pointed out that there are now more private hospitals compared to public health institutions, making healthcare more expensive.
- Out of 9,000 case-rate packages of PhilHealth, only 17 of these — the “Z benefit packages” — fully cover a patient’s treatment from diagnosis to case management, said Beverly Ho, a former undersecretary of the Department of Health (DOH).
- Only 11% of the 189 outpatient drugs the DOH considers as critical and necessary to primary care are covered by the state insurer, Ho said.
- PhilHealth only paid P122.4 billion worth of claims in 2023, Africa said. This is less than the P129.6 billion it shelled out for claims in 2022, and Africa pointed out that with inflation, the real value of PhilHealth’s coverage might be even less.
The implementation of the UHC was stalled because of the COVID-19 pandemic. PhilHealth Senior Vice President Renato Limsiaco Jr. also admitted that the state insurer had yet to settle all claims of hospitals and doctors before transferring funds to the National Treasury in 2024.
10 years to implement programs?
According to Guevarra, Section 11 of the UHC law was not violated since the state insurer had a 10-year period for the implementation of its programs.
“There is no inconsistency because as we speak, PhilHealth has been increasing its benefit packages even before special provision 1d came into effect and moreso after that special provision was enacted as part of the unprogrammed appropriations,” he said.
The government had to tap the excess funds of the GOCCs to fund projects under unprogrammed appropriations — which involve infrastructure beyond healthcare coverage.
“The judgment of PhilHealth to disburse its funds is limited by Section 11. That reserve funds, as it is named, is reserved and cannot be subject to the discretion of PhilHealth to be used for another purpose,” Javier said, adding that even the excess of the reserve fund is still covered by the provision.
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The state insurer had already returned P60 billion to the National Treasury before the High Court issued a temporary restraining order. On top of that, Congress also did not allocate subsidies for PhilHealth in 2025.
The Marcos government has insisted that the public need not worry over PhilHealth’s solvency as the administration is ready to support its programs. PhilHealth also has a corporate operating budget of P284-billion for 2025, but advocates have pointed out that this may not be enough. – Rappler.com