Finance Secretary Ralph G. Recto defended the national government’s move to implement Congress’ mandate to redirect the Philippine Health Insurance Corporation’s (PhilHealth) excess and idle funds to critical health and social programs as not only within legal bounds but a moral and economic sound policy to benefit Filipinos.

“I stand before you, Your Honors, to humbly assert that the move to revert these excess funds is not only legal. But it is also economically sound and a moral duty. We cannot, in good conscience, allow funds to languish in bank accounts as our nation’s needs multiply daily,” Secretary Recto said during the fifth oral argument on the consolidated petitions challenging the constitutionality of the transfer.

“Not when the government is working non-stop to achieve its ultimate goal of cutting unemployment, creating more jobs, increasing Filipinos’ income, and bringing poverty down to a single digit or 9 percent by 2028,” he added.

A temporary and common sense approach

Secretary Recto stressed that the utilization of idle funds for greater use as mandated by Congress aligns with the Medium-Term Fiscal Framework to ensure the country’s macro-fiscal stability by reducing the fiscal deficit from a high of 8.6% of GDP in 2021 to 3.7% by 2028 while cutting national debt from 60.9% of GDP in 2022 to 56.3% in 2028.

This means consolidating all public resources so that they are mobilized and utilized to gain the maximum benefit and high multiplier effects for the economy and the Filipino people.

“With PhilHealth’s remittance, we raised more funds without raising taxes and adding more borrowings that the next generation will inherit. We protected the people without punishing them,” Secretary Recto said.

He likewise explained the principle behind the policy, emphasizing that this will help the country grow faster while it continues to recover from the pandemic as well as navigate ongoing geopolitical tensions.

“Just as what we did during the pandemic through Bayanihan 1 and 2, we see this as a Bayanihan 3—not funded by new taxes, but one funded by the funds already in our possession to help the economy recover faster,” the Finance Chief said.

Acting on a moral imperative

Secretary Recto also emphasized that the policy is a moral imperative, ensuring that not a single centavo from PhilHealth members’ contributions was touched while compelling the agency to further expand its benefit packages to reduce out-of-pocket expenses.

“The move is aligned with the medical principle of ‘do no harm’. No member contributions have been taken because the funds remitted back to the national government ay mga subsidiyang galing din sa gobyerno na nakatengga lang sa PhilHealth. To let billions sleep while our people suffer is not prudence—it is negligence,” he explained.

“Kung hindi natin nasilip ang mga sobra-sobrang pondo ng PhilHealth, malamang hanggang ngayon ay nanatili itong natutulog. Sa katunayan, ang hakbang na ito ay nagtulak sa PhilHealth na mas palawakin at pagandahin ang kanilang serbisyo sa mamamayang Pilipino. This is the long term effect of this decisive policy,” Secretary Recto added.

PhilHealth’s excess funds went directly to health-related projects

Meanwhile, Secretary Recto stressed that of PhilHealth’s PHP 60 billion remittance out of the PHP 89.9 billion excess government subsidies, 78% was used to finance critical health projects.

“The 60 billion pesos that was returned didn’t vanish—it paid frontliners, built hospitals, and gave the poor access to medicine. Every centavo remitted was converted into service. That is fiscal justice,” he said.

The largest chunk was the PHP 27.45 billion in payouts for the Health Emergency Allowances of COVID-19 frontliners.

Other critical programs funded were the Medical Assistance to Indigent and Financially Incapacitated Patients (PHP 10 billion); the Procurement of various medical equipment for Department of Health (DOH) hospitals, local government units (LGU) hospitals, and Primary Care Facilities (PHP 4.10 billion); Three DOH 
health facilities (PHP 3.37 billion); and Health Facilities Enhancement Program (PHP 1.69 billion).

The rest, or about PHP 13.00 billion, was used to fund government counterpart financing for foreign-assisted infrastructure and “social determinants for health” projects. These will accelerate the delivery of healthcare services to remote areas and enhance the health and well-being of Filipinos by ensuring food security.

PhilHealth is not bankrupt, it is sitting on nearly half a trillion pesos in cash

Secretary Recto dispelled claims that PhilHealth is bankrupt, clarifying that the confusion stems from its Insurance Contract Liabilities (ICLs), which the Commission on Audit (COA) flagged as inaccurate and unreliable.

The ICLs are not actual debts but merely provisions for future obligations based on flawed actuarial estimates.

More importantly, as a state health insurer, PhilHealth cannot and will not go bankrupt as its financial viability is fully backed by the Philippine government under the law.

“What is true, Your Honors, is that for years, PhilHealth was earning more revenues than its expenditures. [T]here was a lot of money sleeping in PhilHealth because of their low absorptive capacity, which was only about 58%,” Secretary Recto said.

PhilHealth’s accumulated net income has grown more than four times since 2019, from PHP 109.95 billion to PHP 464.27 billion pesos in 2023 while its average benefit claims expenses only amounted to an average of PHP 140 billion.

Despite PhilHealth’s remittance of PHP 60 billion, the agency is still left with PHP 498 billion of cash in its war chest as of 2024—more than enough to continue increasing its inpatient, outpatient, and special benefit packages over the next two years.

“To let billions sleep while our people suffer is not prudence—it is negligence,” Secretary Recto added.

Transfer of PhilHealth excess funds is legal and does not violate the right to health

The Finance Secretary reiterated the legality of the policy, which has been affirmed by the Office of the Solicitor General (OSG), the Office of the Government Corporate Counsel (OGCC), the Governance Commission for GOCCs (GCG), and the Commission on Audit (COA).

Moreover, the transfer of excess funds was approved by the PhilHealth board.

The Finance Chief also said the move does not violate the right to health.

“Your honors, we submit that the right to health isn’t about protecting idle funds. It is about delivering actual care. Because when we talk about the right to health, it is not solely about PhilHealth,” he stressed.

According to the Finance Chief, the right to health is also about building more hospitals and healthcare facilities, enhancing their operations, and providing more medical assistance to indigent and financially incapacitated patients, which are the DOH’s priority programs.

In closing, the Secretary assured the Supreme Court and the public of the DOF’s commitment to higher health spending and his personal resolution to public health.

“The DOF has been working hard to fulfill our duty to uplift the lives of Filipinos, ensuring a healthier and more prosperous future for all,” he said.

“It is our moral obligation to see the bigger picture, to not look the other way. And it is our cardinal duty to ensure that every peso collected will have the highest impact on the lives of every Filipino,” Secretary Recto added.