MANILA, Philippines — The Duterte administration’s budget restraint during the pandemic is creating funding holes in other public projects, including President Rodrigo Duterte’s flagship healthcare-for-all policy that now risks getting unfunded as revenues dry up.
To stop the “financial hemorrhage,” Ricardo Morales, president of Philippine Health Insurance Corp. (PhilHealth), the state health insurer, said on Friday the agency is now beginning to “identify which benefits we can suspend temporarily” while waiting for normalcy to return and premium collections to recover.
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The problem involved the ambitious universal healthcare law enacted last year and was poised for a pilot run this year until the coronavirus disease-2019 (COVID-19) pandemic happened. In turn, premium collections from members dropped, while a hike on monthly fees from overseas workers were halted in April following public backlash.
As a result, Morales is now projecting P100 billion in revenue shortfall beginning next year to 2024.
“Those life-saving benefits like dialysis, we cannot stop that,” he explained over ABS-CBN Channel. “But benefits for hip replacements, transplants that can be — it's not for me to say — elective, maybe we can delay that.”
Morales said the agency is left with no choice but to tap its reserves for now, helping keep the institution, which is also funding COVID-19 treatments, afloat. But the problem remains for universal healthcare, whose funding is mandated to mostly come from excise revenues on tobacco and alcohol that are projected to drop this year.
To make matters worse, Morales said some funds originally dedicated for UHC were already reallocated for pandemic response.
“The fiscal space is really very tight,” Budget Undersecretary Laura Pascua said in a text message.
'Sin' taxes decline
In 2018, health department data showed P71.2 billion of the government’s health budget came from sin tax collections, which from 2013 were getting a boost from legislation hiking taxes every year. The amount from excise levies in 2018 accounted for 43% of the P166.7 billion budget of both PhilHealth and the Office of Health Secretary.
But with 'sin' tax collections down 39% annually in the first five months, economic managers led by Finance Secretary Carlos Dominguez III are already finding ways to bridge the financing gap. Pascua said since for budgeting purposes, universal healthcare funding is based on sin taxes two years ago, the cash crunch is not expected to be felt until 2022 when 2020 revenues will be considered.
“So with all this development, there is a widening of the gap between expenditures and collection,” Morales said.
“We will be fine this year, but next year it is going to be challenging. So that's the picture,” he added. “That's why it's very important that we can restart the economy as soon as possible.”
Budget challenges, however, are not unique to universal healthcare. Throughout the pandemic and when the lockdowns started in March, the government has struggled to fund contingency programs that were not anticipated when the current P4.1-trillion outlay was crafted last year.
As a result, belt-tightening measures were imposed, leaving some projects unfunded. A supplemental budget authority from Congress would have been a long-term fix, but the government is firm it cannot ask for budget augmentation by only relying on more debts and without new revenues.
“We're still working on the solution. I think it's premature to bother the president when we will come to him with a problem,” the PhilHealth chief said.
“We should come to him with a solution. That has not yet been obtained. Too early to bother the president,” he added.