PhilHealth—probably taking seriously its stature as the national health insurance agency—calls the monthly dues that are remitted to it “premium contributions.”
Maybe, PhilHealth is simply adopting the term that the Government Service Insurance System is using in calling them. After all, they are both social insurance agencies, and like private insurance companies, they probably want to emphasize that the remittances they receive are insurance premiums.
The Social Security System, on the other hand, consistently avoids the word “premium” in its vocabulary despite being considered a social insurance scheme long before it got its present categorization as a social protection agency. Although these remittances are mandatory—and not voluntary—SSS simply calls them “contributions.”
Notably, the amount of benefits in both SSS and GSIS pension programs is based on paid contributions. The more contributions are paid—because of a high salary base and a longer contribution period—the higher the pension will be.
But PhilHealth’s premium contribution system entitles all to the same health insurance benefits after three contributions have been paid in the last six months prior to the month of availment.
PhilHealth premium contributions, in other words, are like taxes. Whether they are paid in the hundreds or millions of pesos, taxpayers enjoy or suffer the same quality of public service.
This lack of relationship between premium contributions and benefits—or absence of incentive to pay more—is manifested in its premium contribution system.
An employed member remits as premium contributions to PhilHealth 1.25 percent of his actual salary credit, which his employer matches for a total of 2.5 percent. The total remittance for him could be as low as P200 a month or P2,400 a year if he is earning P8,000 or less a month, and as high as P875 a month or P10,500 a year if his income is P35,000 or more a month.
Consequently, whenever their wages are increased, their contribution premiums are correspondingly increased but their benefits remain the same unlike in the SSS and GSIS programs where any increase in contributions brings about a corresponding increase in benefits.
These employed members end up carrying much of the burden in financing PhilHealth’s programs. Others pay token premium contributions.
Employers of “kasambahay” helpers pay entirely for them the minimum PhilHealth dues of P200 a month if they earn P5,000 or less a month.
Considered modern-day heroes, overseas Filipino workers were paying, before 2014, only P100 a month, but they now pay P200, still the minimum amount of contributions. Obviously, they are in a position to pay more to PhilHealth but they don’t. In fact, they don’t even pay income taxes.
Self-employed and individually paying members also contribute monthly P200 if they earn P25,000 or less a month, and P300 if their monthly income is above P25,000.
The premium contributions of the sponsored program members—who must be indigents—are paid for fully or partially by their sponsor local government units, private entities, legislators, and national government agencies at the same minimum P200 a month.
Without paying anything, pensioners and senior citizens are now entitled to PhilHealth benefits. They are financed by sin taxes and from their previous premium contributions, but this is a mystery to us.
This premium contribution system has slowly evolved under the PNoy administration, and it has resulted in a questionable if not unsound PhilHealth financial condition.
As disclosed on March 8 by PhilHealth board member Eddie Dorotan in the presence of Albay Gov. Joey Salceda—
“PhilHealth lost almost P1 billion last year…Payments of benefits to claimants reached P97 billion while earnings hit only P96 billion from PhilHealth’s share from sin tax, members’ contributions and yields from its investments.”
He explained this by also disclosing that “in the past two to three years, the company spent a large chunk of its financial pie for the enrollment of five million indigent Filipinos.”
Then he concluded—sounding dumb and not knowing what he was talking about—that PhilHealth “might have its last breath after 10 months.”
Sounding dumber, however, was how PhilHealth’s president Alex Padilla corrected his statement of doom. Citing PhilHealth’s reserve funds of P127 billion, and employing probably some weird mathematical techniques, he assured us that “it has funds that would take more than a hundred years to be consumed.”
Remember Executive Orders 201 and 203 that PNoy signed in March?
They increased significantly the pay of 1.4 million government workers this year and in the next five years. They have, however, created huge unfunded pension liabilities to GSIS, which only a full actuarial valuation could determine.
But these pay increases are favorable to PhilHealth, as they would result in a modest increase in premium contributions, and reduce PhilHealth’s funding deficit.
However, only those earning less than P35,000 a month would increase their premium contributions. Sadly for them, they’ll have no matching increase in their PhilHealth benefits.
The rest of us PhilHealth beneficiaries could not expect benefit increases, either, unless premium contributions—and sin taxes—are increased. This is the only way to increase PhilHealth’s benefits.