Does your Philhealth Contribution Help the Poor?

There has been this politically correct idea which attempts to rationalize private sector contribution to the Philippine national health universal coverage as having a charity effect of helping the underprivileged or the needy.

Let us examine if this claim is valid.

First what is PhilHealth?

From Wikipedia.org, (bold original)

The Philippine Health Insurance Corporation (PhilHealth) was created in 1995 with the aim of placing a renewed emphasis on achieving universal coverage. It is categorized as a tax-exempt, government-owned and government-controlled corporation (GOCC) of the Philippines, and is attached to the Department of Health. It states its goal as insuring a sustainable national health insurance program for all.

So the essence of Philhealth’s function is supposedly a “national health insurance program”

But does Philhealth’s concept of insurance match with the real definition of insurance?

Here is the defintion of Insurance from Wikipedia.org (bold original)

Insurance is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss. Insurance is defined as the equitable transfer of the risk of a loss, from one entity to another, in exchange for payment. An insurer is a company selling the insurance; the insured, or policyholder, is the person or entity buying the insurance policy. The amount to be charged for a certain amount of insurance coverage is called the premium. Risk management, the practice of appraising and controlling risk, has evolved as a discrete field of study and practice.

So the concept of insurance is the EQUAL transfer of risk from contributors in exchange for payments called as Premium.

If I do not make a claim today on my insurance coverage funded by my accrued premium payments, then my share of my claim to the company’s resources gets transferred to OTHER premium payers who are in demand of the use of resources for one reason or another. Insurance thus is a transfer of risk from ONE premium payer to OTHER premium payer/s where the insurer tries to profit from matching the distribution of assets and liabilities over time.

Let us find out if there is an EQUAL transfer of risk based on how Philhealth is funded?

Again Wikipedia.org, (bold original, italics mine)

Funding for the scheme varies based on the population covered, although the majority of funds flow from general taxation. Premiums for the formal sector are set by law to be up to 3% of monthly income. Premiums for both the poor and the informal sector are 1,200 pesos annually (about 25 USD). However, the cost of insurance for the poor is fully subsidized by the central and local governments. National government allocate more than 9 billion pesos annually to meet its three-year target.

Funding by population is as follows:

-Formal sector: Employer and the employee split the required premium 50/50%.

-Indigents: Central and local governments fully subsidize, with local governments contributing (on average) 25% of the premium and national government contributing (on average) 75% of the premium.

-Retirees: Lifetime free membership for those who are 60 years old and older and have paid 10 years worth of premiums during employment in the formal sector.

-Non-poor, Overseas Filipino Workers (OFWs), and others not eligible for other three categories: Premiums paid by individuals, referred to as the individual paying program (IPP).

Apparently there is NO equal transfer of risk as “premium” payments are mostly paid for or subsidized by taxes.

Who are covered by Philhealth’s programs? (italics mine)

PhilHealth coverage is theoretically available to the entire population. The enrollment process differs based on the population group. For example, all formal sector workers must enroll at the start of employment. The poor are identified and enrolled by the local government.

The population is tagged to one of the four major population categorizations:

-Formal sector

-Indigents that are financed by central and local governments

-Retirees (non-paying members) who have already paid 120 months of membership

-The individual paying program (IPP) for those not eligible for the other three categories

The benefits package is essentially the same for each population group. The exception is for indigents and the Overseas Filipino Workers (OFWs) who have additional outpatient primary care benefits (with the providers paid by capitation) however these benefits are available only through public providers.

However, the enrollment process for each population category differs. For the formal sector, employees are enrolled upon the start of employment. It is mandatory that all employees enroll in health insurance. No exceptions are allowed for the size of the company. For the poor, the local government determines “poorness” and enrolls those who are determined poor. For the rest of the population there is open enrollment—one can walk into a local enrollment office anytime to enroll.

Is Philhealth an insurance company?

No it isn’t. There is NO equal sharing of risk and thus is NOT qualified as an insurance company in the conventional terms.

Instead, Philhealth is a health coverage WELFARE program (verbally embellished by the term "insurance") funded mainly by taxpayers and complimented by an employment MANDATE (or as a form of tax on BOTH the employer and the employee).

So taxpayers get an additional whammy from a barrage of existing taxes: VAT, income, capital gains, estate tax, inflation tax among the many others. Of course, this is aside from Philhealth contributions which has been put in place in the name of universal health coverage.

The impression that taxes help the poor is deceptive. Taxes help the politicians and the bureaucracy which uses the poor as justification for coercive extraction of resources from the private sector. Taxes also serve as redistribution from productive use of resources towards consumption which diminishes investment and employment opportunities.

Aside, the welfare state promotes the culture of dependency and entitlement, as well as, reckless behavior which do not alleviate the position of the poor.

In reality, taxes help keep the “poor” poor

Does your contribution to Philheath fund the needy?

If we based this claim on coverage, then the rich, middle-class and most importantly the OFWs, whom has special treatment through “additional outpatient primary care benefits” have likewise been beneficiaries of everyone’s contribution.

So the claim that Philhealth benefits the poor is a BLATANT MISREPRESENTATION as the health welfare program’s coverage has been asymmetrically distributed, with a bias towards OFWs.

In fact, benefits are skewed AGAINST the poor based on access to Philhealth, let me repeat the last paragraph,

However, the enrollment process for each population category differs. For the formal sector, employees are enrolled upon the start of employment. It is mandatory that all employees enroll in health insurance. No exceptions are allowed for the size of the company. For the poor, the local government determines “poorness” and enrolls those who are determined poor. For the rest of the population there is open enrollment—one can walk into a local enrollment office anytime to enroll.

Because of the employment mandate, the formal sector has automatic enrollment-access while the “poor” will have to be screened by local politicians.

In short, access to Philhealth has been politicized and largely depends on the interests of local officials who may use Philhealth as means to secure votes or for other personal agenda.

The “poor” is, thus, not privileged under this TRANSFER or REDISTRIBUTION program.

Bottom line: Based on the above, the claim that private sector’s contributions to Philhealth have the “charitable” consequences to the poor is unfounded and baseless or propaganda from mouthpieces of the government.

Postscript: Accounts of corruption or malversation of funds or dipping on the coffers of the welfare institution aggravates the plight of the poor which underscores the waste and inefficiencies from such programs.