The PhilHealth Multibillion Irony
Great Britain’s iron lady Margaret Thatcher once said that “the trouble with socialism is that eventually you run out of people’s money.” This is what is happening today to one of the Philippine government’s pet projects: the so-called pro-poor, anti-poverty PhilHealth program created and envisioned to help the Filipino poor.
This publicly funded welfare program is now running out of money. Quickly. But isn’t this program funded by the government? Well, the reality is: the government is literally bankrupt and it can no longer finance this and other welfare programs without hurting our already sluggish economy.
Consider this latest media report:
The president of a group of more than 900 private hospitals on Wednesday said his group would no longer honor cards from Philippine Health Insurance Corp. if the state-owned company would not pay more than P2 billion it owed its members.
Rustico Jimenez, president of the Private Hospitals Association of the Philippines, said the government’s plan to phase out charity wards in public hospitals and enroll “the poorest of the poor” instead under PhilHealth was unsustainable given the state insurance company’s huge debt to its member hospitals.
“PhilHealth has simply ignored our pleas for them to settle their obligations,” Jimenez, a co-owner of the Parañaque Medical Center, said in a phone interview.
“We have been exacting payments from them for a long time.”
Earlier, Health officials led by Secretary Enrique Ona and PhilHealth president and chief executive Eduardo Banzon said they were getting closer to President Benigno Aquino III’s goal of universal health care for all.
But Jimenez said PhilHealth’s debts accumulated over the years could be even higher than the P2-billion estimate despite its reserves of more than P100 billion.
Oh, how cruel and heartless! How can the government phase out charity wards at public hospitals and instead enroll indigent patients under PhilHealth when it cannot even settle its multi-billion obligations with private hospitals?
Wait! Charity in public hospitals? How ironic. That charity is being funded by every taxpayer in this impoverished, protectionist country! There is no “charity” in public hospitals. There’s only forced welfare.
Also, how charitable is the current administration to cover everybody with its “universal health-care” vision when it cannot even settle its ever-increasing monetary obligations? How can the Aquino government cover more Filipinos when it merely relies on the power of taxation to fulfill its altruistic, welfare goals?
A high-ranking official was quick to dispel negative rumors by claiming that the program had P100 billion in reserves at the end of May, “although its premium collection was only P13 billion or lower than the P16.”
However the Aquino administration tries to downplay the real, actual status of the PhilHealth program, the reality is now this:
Jimenez, who revealed the extent of PhilHealth’s debt in a radio interview, asked what the government was doing with those reserves, which were at the same level in December 2011.
“Are these only for the SONA?” he said, referring to the yearly State-of-the-Nation Address in which the President enumerates the government’s achievements.
Jimenez said the Philippine Hospital Association faced the same problem but would not speak up because some of its members are government hospitals.
Jimenez said Mr. Aquino’s universal health care was a good program, but it needed to be properly funded.
So, why does the government plan to phase out the charity wards in public hospitals next year? I thought it’s all for publicly funded charity? It’s so ironic that the so-called pro-poor PhilHealth is now being seen as anti-poor by statist and leftist advocates of public welfare. Consider the following remarks from a statist doctor.
In a separate interview, Philippine Medical Association vice president Leo Olarte said the government shouldn’t pass the buck when it came to its obligation to provide free medical services to the poor.
He said it was wrong to phase out the charity wards in state-run hospitals next year.
“Not all Filipinos are covered by PhilHealth,” said Olarte who confirmed that there were hospitals and even doctors who had not yet been paid by PhilHeatlh for services rendered.
On Wednesday, Sean Velchez, lead convenor of the Network Opposed to Privatization, expressed outrage over Health Undersecretary Teodoro Herbosa’s announcement that the charity wards in public hospitals would be phased out next year.
Velchez disputed the government’s claim that the poor patients would not be made to pay.
“Poor patients are forced to shell out hard-earned cash to pay for medicines and laboratory fees even in public hospitals even though they are PhilHealth members,” Velchez said.
He said PhilHealth coverage was very limited and covered only a fraction of a patient’s hospital bill.
He said PhilHealth’s claim that it had 5.2- million poor beneficiaries enrolled was less than half of the estimated 11.1 million poor families in the country.
Well, it seems that these guys just don’t get it. The Aquino administration is phasing out those publicly funded charity wards because they want to cover more poor Filipinos.
Wait! Let me get things straight.
The Aquino administration that likes to talk about “sacrifice” and the “greater good” wants to cover more Filipinos under PhilHealth, which was designed to help the poor, when it cannot even settle its obligations with private hospitals under the guidance of the Philippine Medical Association, whose high-ranking officials strongly oppose the plan to phase out charity wards in public hospitals because “not all Filipinos are covered” by the program? Isn’t that so ironic and full of contradictions?
But it seems that the Aquino government has an ingenious plan. It seeks to privatize public hospitals. This looks like a good news to advocates of free market capitalism and privatization. However, don’t get easily fooled.
I certainly approve the privatization of public hospitals, including all government-owned and controlled corporations. But it seems that the government is trying to pursue privatization to cover more Filipinos under its PhilHealth program. It’s like you’re trying to sell some of your assets to get bankrupted in the end by your spendthrift habits.
Here’s a clearer illustration.
The Aquino regime wants to sell some or all public hospitals to perhaps acquire more funds or to “pass the buck”, as one PMA official said. Let’s say the government acquired more money (from the country’s cronies and oligarchs) after the privatization deal, the problem is it wants to cover more millions of enrollees. More PhilHealth enrollees means more public money and more cases of corruption. It’s as simple as that.
Lawmakers recently questioned the government’s plan to phase out charity wards.
“Why spend P12.6 billion for the distribution of PhilHealth cards when the same amount can be allocated to public hospitals, rural health units and barangay health centers so that they can directly provide services to indigents for free?” Gabriela Rep. Luzviminda Ilagan said.
She also raised the possibility that the PhilHealth cards would be used to win votes in next year’s mid-term elections.
The Palace will submit its proposed P2.006- trillion national budget for 2013 next week.
Under its budget proposal, the Health Department is asking for P56.8 billion of which P12.6 billion would go to PhilHealth premiums covering 5.2 million households.
Ilagan slammed what she called the Aquino administration’s skewed priorities.
“President Aquino’s thrust towards the privatization of government hospitals inevitably makes health services unaffordable, making it extremely difficult for poor families to access health services,” Ilagan said.
Bayan Muna party-list Rep. Teddy Casiño also assailed the government’s plan to phase out the charity wards.
“Phasing out charity wards is grossly inhumane,” he said.
“This will displace the poor patients, especially those who are not covered by the PhilHealth sponsored program.”
Oh yeah! Abolishing charity wards is “grossly inhumane” said a leftist lawmaker who should not be trusted with legislating our future. Again it seems that these welfare statists don’t just get Aquino’s political trick here. He wants to cover more Filipinos under his “universal health care” program.
Now here comes their emotional statistics to try to win the debate.
Government data show there are 42,997 charity beds in 703 government hospitals.
Casiño, citing an Asian Development Bank report, said six out of 10 Filipinos were dying without having any medical attention.
“This situation may worsen since most patients cannot afford the increasing charges in government hospitals,” he said, adding that nearly half of all health care costs were “paid out-of-pocket.”
“Even those covered by PhilHealth have to pay out of their pockets. Given the limited coverage of PhilHeath, the poor will be further disenfranchised of the right to health.”
Compared to the other Southeast Asian countries, the Philippines had one of the highest out-of-pocket expenses of 54.7 percent and one of the lowest government expenses at only 34.7 percent, Casiño said.
“Replacing charity wards with ‘PhilHealth wards’ is actually making the people pay for health services themselves,” he said.
It’s very clear from that news article that our politicians, people from the public health care sector and private medical practitioners all believe that the only solution to poverty, which is the reason why PhilHealth was created in the first place, and increasing number of Filipinos who can’t afford health care is Big Government or Government Welfare.
First, we have an executive branch that is determined to cover more Filipinos under PhilHealth by phasing out charity wards in public hospitals and privatizing public hospitals. The government can still retain those charity wards, not privatize public hospitals and end up being more bankrupt. Or: it can phase out charity wards, sell public hospitals and cover more millions of enrollees– the result is just the same: a higher level of bankruptcy. Both options are definitely NOT real solutions to our current status as a nation.
Again, the the trouble with welfare programs like PhilHealth is that eventually we run out of people’s money. And it is losing people’s money not only because of more people the program covers, but also because of more cases of corruption.
PhilHealth-related corruption was reported in the media in the past.
From this column: “Health Secretary Enrique Ona who serves as ex officio chairman of PhilHealth confirmed that a syndicate in connivance with some PhilHealth officials have diverted about P130 million in premium payments made by a major BDO company. Sec. Ona said an investigation is ongoing.”
From another columnist who supported the program:
Banzon took over as PhilHealth president in October last year, and immediately got together a new management team. By late November, his new team detected a scam that ripped off premium payments for PhilHealth, and by Dec. 7, 2011, he had created an investigation panel, designating a chief anti-fraud surveillance officer to report directly to him and the PhilHealth governing board. They have since called in the National Bureau of Investigation and the Anti-Money Laundering Council to help in the investigation. Banzon has declared “zero-tolerance for fraud.”
In November 2011, the PhilHealth Treasury department detected a discrepancy between the reported collections of one of its accredited banks and the actual cash supposed to have been remitted to PhilHealth. They discovered that employees of a multinational firm paid their PhilHealth premiums, but their check payments were never deposited to the PhilHealth bank account. The checks were diverted to the Tanauan branch of one of the nation’s largest commercial banks and were thereafter laundered through several other accounts.
The scam began around 2009 and stopped significantly when Banzon took over, and the amount siphoned off stands at P140 million and counting. It turns out that the PhilHealth database had been manipulated to conceal the non-payments. The first order of the day was thus to secure the integrity of PhilHealth’s computer database and to conduct internal investigations as swiftly as the law would allow. For the sake of transparency and due process, all fact-finding interviews were video-taped.
From this investigative report:
Today, various estimates show that Philhealth is still losing up to P500 million annually due to bogus claims. This amount can already cover additional 500,000 indigent families under a sponsored program scheme.
The continued abuse of the funds is also behind the limited coverage for new entrants to the labor force, since a new employee will have to contribute for at least nine months within the year of confinement before he or she could be entitled to benefits.
The problem persists because of government’s failure to prosecute any of the players involved in the scam.
These reports merely confirm the assessment of the Reproductive Health bill, which is another welfare program, I made two years ago that healthcare-related policies like PhilHealth breed corruption.
The system would corrupt the entire medical profession. Since RH services would be partly or even fully subsidized by the government and/or paid for by employers, hospitals might look at opportunities to get more patients or RH beneficiaries rather than focusing on quality health care. How much should a hospital charge for every RH care visit to be covered by Philhealth or a private company? How would the government or state regulators know whether a particular clinic or hospital mis-declare the number of its patients, its price, etc?
So, where do we go from here? Well, a Bigger Government, I suppose, that tries to cure problems with more failed policies and controls.
Here’s an update to this PhilHealth issue…
After certain leftist lawmakers, statist officials of the Philippine Medical Association, and ultra-leftist organizations voiced out their opposition to the plan to phase out charity wards in state-owned hospitals, Department of Health Secretary Enrique T. Ona clarified that there will be no phase-out of charity wards in government hospitals, only a change in name to PhilHealth wards.
The health secretary said charity wards would eventually be called PhilHealth wards because Philippine Health Insurance Corporation will cover the hospital expenses of indigent patients as part of government’s Universal Health Care program.
OK then… Let’s just wait till we hear the bad news.