THE Supreme Court (SC) has ordered the National Government to return billions of pesos in excess funds taken from the state health insurer, a decision the executive branch says it will respect.
The high tribunal voided a 2024 budget provision and a finance department circular that authorized the transfer of P89.9 billion from Philhealth to the National Treasury. While Malacañang maintains the initial transfer was a legal attempt to use idle funds for public programs, it has pledged to abide by the directive to return the P60 billion already transferred.
Why does this ruling matter for the integrity of public health funds?
Violation of health care laws. The conflict centers on whether the government can use Philhealth’s savings for non-health projects. The court found that transferring these funds violated the Universal Health Care Act (UHCA). Under Section 11 of the law, Philhealth is required to maintain a reserve fund equivalent to two years of projected expenses. The law strictly prohibits transferring any portion of this reserve or its income to the National Government.
Mandate for excess funds. Instead of moving money to the treasury, the law dictates specific uses for any surplus. The high tribunal clarified that the purpose of these funds is to improve coverage for citizens, not to fund unprogrammed government appropriations.
“If the reserve funds exceed the ceiling, the excess must be used to increase benefits under the National Health Insurance Program (NHIP) and reduce members’ contributions. Section 11 also expressly provides that no portion of the reserve fund or its income may be transferred to the National Government or any of its agencies,” the SC said.
Government justification for transfer. Executive Secretary Ralph Recto said the administration merely complied with a congressional mandate in the 2024 General Appropriations Act. The intent was to utilize “sleeping” funds from government corporations to avoid new taxes or additional borrowing. Recto emphasized that Philhealth’s services were never impaired by the transfer and that the agency recently implemented its largest expansion of benefit packages.
“We believed then, and still believe, that the directive was a common-sense approach to optimize government coffers without resorting to additional borrowing or new taxes,” Recto said.
Grave abuse of discretion. Despite the government’s defense, the court ruled that the Department of Finance and legislative provisions committed “grave abuse of discretion.” By stripping Philhealth of its reserves, the government made it impossible for the agency to comply with the UHCA.
“The SC ruled that reallocating Philhealth’s supposed ‘excess reserve funds’ through Special Provision 1(d) and DOF Circular 003-2024 makes compliance with Section 11 impossible. These measures undermine the very nature of Philhealth funds as pooled resources for social health insurance, hinder the UHCA’s goal of delivering comprehensive and universal healthcare and ultimately violate the people’s right to health and to an affordable, sustainable and accessible public health insurance,” the court added.
Implications and next steps. The ruling reinforces the financial independence of Philhealth, but the legal process may continue. While the House of Representatives and Senate are moving to incorporate the repayment in the budget, the Office of the Solicitor General is reviewing the ruling and may file a motion for reconsideration.
Recto said President Ferdinand Marcos Jr. had already taken steps in September to restore the funds due to Philhealth’s improved performance. The administration reaffirmed its goal to maximize resources for public health.
“Our goal remains the same: to make every hard-earned peso of the Filipino taxpayer count — for our people, for their families and for their health,” he said. / TPM, PNA