Philippines: What does ‘zero-subsidy’ for PhilHealth mean?

Manila: PhilHealth, the state-owned health insurer, expected to get money from Filipino taxpayers to the tune of Php150.92 billion ($2.59 billion) during budget deliberations for the 2025 General Appropriations Act.

But the agency is swimming in cash. A PhilHealth spokesperson admitted to local media on Thursday (December 12) they have Php431 billion in "investible funds", which are parked in short-term, money-making investments.

Lawmakers, who control the country’s pursestrings, are puzzled why the agency asking for more money. But Philippine law mandates that certain parts of the taxes must be used to prop-up PhilHealth. It's a conundrum. And a wakeup call.

Here’s what you need to know

What is happening?

PhilHealth will not receive government subsidies in the proposed 2025 national budget.

PhilHealth official requested a budget of Php150.92 billion for 2025 to cover the premiums of 25.28 million "indirect contributors".

The request was struck down. Instead, the National Expenditure Program earlier cut the agency’s budget to Php53.13 billion; the Senate's 2025 General Appropriations Bill reduced it further to Php47 billion.

Now, a fiery clash has erupted over the proposed “zero-subsidy” for PhilHealth in the 2025 Philippine national budget.

PhilHealth charges members for health coverage; for example OFWs who earn more than Php60,000 must pay Php21,000 ($434.23) for annual PhilHealth coverage.

While opposition senators said cutting off PhilHealth from the national budget is potentially “unconstitutional”, Senator Cynthia Villar said: “PhilHealth should be sued for being unhelpful,” echoing the frustration of many citizens over its services.

Why zero-subsidy for PhilHealth?

The Bicameral Conference Committee (composed of Senators and Congressmen) were frustrated at the ballooning and “underutilised” reserve fund of PhilHealth currently estimated at Php600 billion ($10.3 billion).

Sen. Grace Poe, the budget sponsor, is also unhappy with PhilHealth.

She cited that besides having a massive reserve fund, PhilHealth also has sufficient funds for its annual operating expenses, including salaries of its executives.

She explained that PhilHealth must first utilise its $10.3 billion reserve funds, instead of expecting more government subsidies. The opposition senator blamed the PhilHealth executives for the “inefficiency” in fund utilisation.

Is the zero-subsidy move a reflection of the lawmakers' frustration over PhilHealth, or a gambit to prod its executives to work harder?

PhilHealth spokesperson Israel Paras told local radio Mega Manila: "If this (zero subsidy) will be the final outcome of our GAA (General Appropriations Act), we want to assure and ensure our members that their benefits will not be affected, as well as our aggressive enhancement and expansion of all our benefits." 

What did lawmakers do?

The powerful Bicameral Conference Committee (“Bicam”) deliberating on the 2025 national budget redirected the funds to other government agencies with more pressing needs.

Senate President Francis Escudero echoed frustrations over PhilHealth’s idle funds.

What were the concerns raised over zero-subsidy?

Hontiveros, however, criticised the “zero-subsidy” decision, arguing it is “unfair” and “potentially unconstitutional” — as reserve funds are meant for emergencies and future obligations, not for regular operations.

What is a subsidy?

A “subsidy” is taxpayers’ money given to a state-owned agency such as PhilHealth, to allow it to meet its contractual obligations.

What makes zero-subsidy potentially “unconstitutional”?

Senator Hontiveros pointed out that PhilHealth Charter, Sin Tax Law, and Universal Healthcare Act mandate that a portion of taxes must be allocated to PhilHealth – irrespective of surplus funds.

She clarified that reserve funds are designated for emergencies or future commitments, not for covering premiums of “indirect contributors”.

The budget controversy intensified in 2024 when the Department of Finance (DOF) reclaimed Php89.9 billion ($1.54) in PhilHealth reserves, citing a legal provision in the 2024 General Appropriations Act allowing the reallocation of “idle funds” for more efficient use.

What did critics say?

Critics warn the move could undermine universal healthcare, leaving millions vulnerable without adequate health insurance support.

The issue continues to divide lawmakers, stakeholders and the public.

PhilHealth premium for Filipino expats: What the law says

Under Philippine law, every Filipino expatriate worker must pay a 3 per cent monthly premium to the Philippine Health Insurance Corporation (PhilHealth) from 2020.

By law (Republic Act No. 11223, or the Universal Health Care Act) monthly premium rate would increase from 4.5 per cent in 2023 to 5 per cent in 2024.

The increase in PhilHealth premiums covers all overseas Filipinos, including their dependents.

For example, those earning Php10,000 per month are expected to add Php50 — from Php450 to Php500 — in monthly premiums.

As for Filipino domestic workers, they must pay $124 per year, or $12 per month, for PhilHealth coverage starting 2020.

How much is PhilHealth contribution for members of the “informal economy”

Members of the informal economy include street vendors, seasonal wage earners, etc.

In 2024, the contribution is 5 per cent of their income, with a minimum and maximum payment. This means that the amount paid by informal economy members is fixed if they earn under Php10,000 a month.

There's a cap on how much they pay in contributions which starts to apply for workers who are paid Php100,000, or more, per month.

What much is PhilHealth coverage for dialysis?

PhilHealth now provides coverage for up to 156 hemodialysis sessions annually for patients diagnosed with chronic kidney disease (CKD) as per Circular No. 2024-0014.

The maximum financial protection offered is Php990,600 ($16,989) per year, with each session costing up to Php6,350 ($108.87).

This initiative aims to eliminate co-payments for essential dialysis services, easing the financial burden on patients while supporting their treatment needs.

What is the 'PhilHealth Z' benefit package?

Under the Z Benefit Package, specific benefits are provided to cover the costs of kidney transplants and coronary-artery bypass graft (CABG) surgery.

This includes pre-transplant evaluation, the transplant procedure itself, and post-transplant care.