Stench at PhilHealth

PhilHealth, the blogger Heneral Lunacy pointed out, is a criminal enterprise posing as universal health care. Duh! Many government agencies are criminal enterprises posing as regulators.

Before throwing more money into PhilHealth, let us first deal with the systemic corruption and other ills of the agency. Let us also examine how PhilHealth is fulfilling its mandate for universal health coverage.

Rep. Stella Quimbo observed that our National Health Insurance Program (NHIP) “has failed to provide sufficient financial risk protection for Filipinos. PhilHealth coverage continues to be less than universal…”

The congresswoman, a health economist, also cited findings of gross mismanagement of public funds and pervasive systematic fraud within PhilHealth which has cost our people billions of pesos in losses. Among her examples: PhilHealth’s case rate system and its interim reimbursement mechanism (IRM) as likely mechanisms for fraud and/or corruption.

“We are in the midst of a social health insurance crisis,” the legislator declared. “PhilHealth has been suffering from a failure of leadership due to a lack of technical expertise at the helm.”

Speaking of expertise, President Duterte’s appointment of a former NBI director to head PhilHealth may aggravate the expertise problem. The appointee himself confessed he knows nothing about the job and he must learn quickly.

Maybe the appointment was made because he is from Davao and known to Duterte. Also, because the President thinks the PhilHealth problem requires someone with expertise in investigating crimes.

In a sense, the President may be right because people have been so scandalized at the brazenness of how PhilHealth executives colluded with private healthcare entities to defraud the system. And that has been going on for years.

Overpriced and too many cataract operations that seem impossible for one doctor to perform in a year… dialysis of patients who never had it… and many more such anomalies, criminal variants of public-private partnerships.

But going after the PhilHealth crooks is a full-time job. In the meantime, the system needs reform and must continue to serve the public.

Rep. Quimbo believes a massive overhaul of the current system is needed through the reorganization and privatization of PhilHealth. She is proposing legislation that grants power to the President to privatize any or all segments of PhilHealth, “in order to make these segments more effective, efficient, and innovative in the provision of social health insurance.”

She is calling for the creation of a transition management team to improve the management of PhilHealth and the NHIP, and help transition the corporation towards effective privatization.

Rep. Joey Salceda has other ideas. He doesn’t think we need to privatise PhilHealth, even if he concedes that “our health insurance system is sick.” He thinks “the vices of its administrators are emboldened and emphasized by PhilHealth’s own systemic faults.”

First of all, Joey says, “PhilHealth is not a medical institution. It is not an administrative agency. It is an insurance company, with government subsidy, a collection aspect, a claims and benefits distribution operation, and a reserve fund to administer.”

The problem, he says, is that the company is perceived as a “health institution,” when most of its operations have very little to do with medical science.

“Rarely has the president of PhilHealth been chosen from the insurance or the financial services industry. In fact, five of the past nine PhilHealth presidents since 2000, starting with now Health Secretary Francisco T. Duque, were doctors.

“To clean PhilHealth up, we will have to set up systems where PhilHealth’s general operations, its reserve fund, its claims and benefits distribution, and its collection activities are separately optimized.”

Rep. Salceda says that “the basic accounts of PhilHealth show that there, for the most part, the financial health of the company has been relatively in good shape, with premiums more or less matching benefits, and with the reserve fund consistently yielding a reliable flow of interest income.”

But, Salceda noted, “the reserve fund has been shrinking, even when PhilHealth has continuously posted a net income.” He described as exaggerated the claim of PhilHealth executives that PhilHealth will face a P90 billion shortfall this year, and a P110 billion shortfall in 2021.

Salceda wants the Bureau of Treasury to manage PhilHealth’s investment reserve fund to ensure that the best macroprudential standards are upheld. This also ensures that regular operations and reserve fund operations are not unduly commingled.

Moving forward, Salceda wants to tie premiums with income taxes withheld. That means that PhilHealth can significantly outsource its collection function to the Bureau of Internal Revenue. BIR can simply charge a collection fee from PhilHealth, instead of PhilHealth having to maintain full collection operations.

Rep. Joey observed that “the most glaring cases of fraud in PhilHealth appear to be in the management of claims and benefits. As with any insurance operation, the risk of insurance fraud is real and must be proactively managed by designing transparent and accountable systems.”

According to the Presidential Anti-Corruption Commission commissioner Greco Belgica, around P153 billion, or almost a third of PhilHealth claims since 2013, have been lost due to fraud. If this is true, Rep. Joey observed, PhilHealth’s losses due to fraud are around five to six times the global average.

But Rep. Joey believes “state insurance agencies can be reformed, citing the successful clean-up of the Government Service Insurance System (GSIS).

“While the GSIS runs several health and deathcare operations, it does not necessarily have executives from the healthcare sector. Instead, most of its executives have extensive experience managing banks and financial institutions. Its board is also not necessarily inter-agency, ensuring that board members are full-time decisionmakers whose sole and primary responsibility is to ensure the proper governance of the agency.”

Joey also wants a greater role for and oversight by the Secretary of Finance. He proposes that the Secretary of Finance be designated as chair of PhilHealth under a reformed governance model.

PhilHealth isn’t hopeless, but it must be fixed pronto. The corruption stench had been more than a whiff, Mr. President.

Boo Chanco’s e-mail address is [email protected]. Follow him on Twitter @boochanco