The Philippine Health Insurance Corp., commonly known as PhilHealth, needs a long-term plan to fix the agency’s serious systemic problem, the Department of Finance (DOF) said.
During a virtual Senate hearing on Wednesday, Sept. 8, Finance Secretary Carlos G. Dominguez III told lawmakers that among the problems hounding PhilHealth is its failed digitalization.
Dominguez, an ex-officio PhilHeath board member, said the absence of computerized system has been detrimental to its operations, particularly in servicing payments and claims.
The finance chief recalled an instance during one board meeting where PhilHealth officials argued over the P2 billion budget for computer system upgrade.
“There was a lot of objections and that I was telling them what the heck? You’re spending over P100 billion a year, what’s P2 billion to have a good system?” Dominguez asked.
In 2020, several PhilHealth officials resigned over an alleged overpriced computerization project worth P2.1 billion.
“Well, I don’t know [if it is a sweetheart contract] okay, but don’t object to spending the money for improving the system so that payments can be made, so that claims can be vetted quickly,” Dominguez said.
PhilHealth cannot fix its problem by waving a magic want, it is “a real serious problem with their system,” Dominguez noted.
“We will really face a serious problem and that problem is the fact that the collections are going to be lower than the payouts in a few years, and the capital will be quickly depleted. We have to really think about how to recapitalize PhilHealth,” Dominguez said.
He added that PhilHealth may also may revise its coverage to reduce expenses.
“Because of the COVID situation and its impact on employment, you had a drop in revenues. At the same time, you have an increase in expenditures. So, a real long term plan has to be put in place to return PhilHealth to a sustainable basis,” Dominguez said.
In August, the finance chief disclosed that PhilHealth was “struggling with their own systems to pay off their current debts” after contributions dwindled while expenses increased amid the pandemic.
PhiHealth incurred a P25.5 billion deficit as of June this year despite the national government’s “amply” subsidy amounting to P44.6 billion during the period, Dominguez said.
But despite the hefty deficit, the Cabinet official said that PhilHealth “so far I believe they can handle the situation” owing to its P164.1 billion in reserve fund.
Allowing PhilHealth to collapse due to runway debt and spending is not an option, Dominguez said, but “what will happen is some of the coverage might change.”