THE 2025 National Budget allocates zero subsidies for PhilHealth, with officials justifying the decision by citing the agency’s supposed substantial pool of unused financial reserves. In light of this decision, PhilHealth will be receiving no additional subsidy from the government’s 2025 national budget.

Beyond the question of institutional effectiveness, the defunding of the nation’s largest public health agency calls into question the state’s prospects for the country’s healthcare system.

Balancing the budget

The move was justified by Department of Finance (DOF) Secretary Ralph Recto, who cited that the agency had Php 280 billion in reserve funds, a surplus budget of Php 150 billion from its previous year, and more than Php 400 billion in investments.

Recto stated that these funds would be sufficient to cover PhilHealth’s operating costs, assuring that the DOF would ensure the proper allocation of the agency’s budget, given its surplus.

On the other hand, lawmakers such as Senator Risa Hontiveros expressed concern over the said government’s decision. According to her, the decision would deny vulnerable Filipinos access to health care, as contributions for the poor will now have to be shouldered by ordinary citizens rather than the government.

Following Hontiveros’ statement, advocacy groups such as Social Watch Philippines stated that the zero budget decision would be an abandonment of the country’s goals of universal healthcare.

Other experts, however, are convinced that the decision to take away PhilHealth’s budget is sound.

Kenneth Hartigan-Go, MD, a senior research fellow at the Ateneo Policy Center, said the real issue lies in the agency’s refusal to use their savings. He shared that the zero-budget decision is the government’s way of forcing PhilHealth to do a better job and address its many financial inefficiencies.

According to him, the lack of a budget will have no actual impact on PhilHealth. He explained that there is no way to know that vulnerable Filipinos will be negatively affected by the decision since not enough time has passed to observe its effects. He also noted that if PhilHealth supposedly could not operate given the lack of a budget, then members of PhilHealth’s leadership would have resigned.

Furthermore, Hartigan-Go argued that questioning whether the budget cut would impact the sustainability of universal healthcare in the Philippines is futile, as PhilHealth lacks a concrete “playbook” for implementing such a system.

“It’s been nearly six years and we are still struggling to implement universal health care. So over the six years with the money of PhilHealth, universal healthcare has not yet been implemented,” he remarked.

Plagued with inefficiencies

Prior to any budget cuts, the agency has constantly been spotlighted due to allegations of corruption. The persistent issues within the agency—from financial mismanagement to numerous inefficiencies—have long raised concerns about the institution’s ability to effectively deliver healthcare services.

While officials argue that PhilHealth has an ample amount of financial reserves, its history of fraudulent schemes suggests deeper governance failures that heavily impact the country’s healthcare systems.

Despite growing healthcare needs across the country, the Commission on Audit has reported large pools of unused funds in PhilHealth, raising questions about why these funds are not being reinvested into healthcare services. The issue is further heightened with government hospitals expressing their concerns about the delays in benefit disbursements.

As of 2024, government hospitals are waiting for Php 14.8 billion in unpaid claims, with about Php 6.7 billion overdue for at least two years. Such delays place financial strains on hospitals and force some to suspend PhilHealth benefits for patients.

The misallocation of resources—such as excessive spending on administrative costs—has also faced heavy criticism, as these funds could have been allocated toward healthcare benefits.

Moreover, outdated administrative systems hinder the efficiency of the agency’s services. With redundant documentation requirements and inefficiencies in digital infrastructures, processes are slowed down—causing delays and frustrations among patients and healthcare providers.

With these inefficiencies, smaller hospitals become more vulnerable to the neglected payment from PhilHealth, having to scale down operations or even close due to the delay in reimbursements. Hartigan-Go expressed that there are small ones “fully dependent on PhilHealth to survive,” meeting a greater risk with such a decision.

While the extent to which fund mismanagement stems from poor governance and structural flows remains unclear, he expressed concerns about what people should pay attention to—not the zero-subsidy, but PhilHealth’s inefficiency augmented by the private health sector.

Bearing the Costs

Beyond exposing PhilHealth’s institutional efficiencies, the policy move also raises concerns about its profit-driven model, which ultimately subsidizes private healthcare. “The government has not explicitly framed the zero-subsidy as a move toward privatization, but its downstream effects could push the system in that direction,” says Juhani Capeding, MD, a health researcher and public health physician.

Following this, Dr. Hartigan-Go emphasizes that the responsibility for inefficiencies and high costs in healthcare service delivery extends beyond government support alone. In his view, PhilHealth’s current funding model creates a system where the promise of subsidized care is undermined through conflicting priorities.

He points out that government doctors, who often double as private practitioners, collect additional professional fees. This not only increases overall costs for patients but also shifts the focus away from affordable, patient-centered care.

According to him, PhilHealth’s funding issues extend to a broader concern: the industry’s focus on profit over public welfare. Rather than PhilHealth’s commercialized insurance-based system, Hartigan-Go proposes a tax-based approach that ensures targeted state financing for the poor while eliminating conflict of interest in a system where public funds end up supporting private sector practices.

Conversely, Dr. Capeding emphasizes that privatization is not an essential problem in healthcare delivery. Rather, it is the lack of a coordinated public health system. He criticizes Philhealth’s financial priority for treatment-centered hospital care, emphasizing preventive services in primary care as the foundation for sustainable health and financial outcomes.

Thus, Dr. Capeding highlights the centrality of the public sector, explaining that while the private health sector drives competition toward improving healthcare services, this poses the risk of widening disparities for people who cannot afford private care. Instead, he advocates for a primary care-focused public healthcare system.

Ultimately, the zero-subsidy policy appears to be a mere symptom of a deeper, systemic issue in the country’s healthcare landscape. As experts emphasize, the challenge is not only about funding mechanisms but also about the fundamental role of the government in ensuring equitable access to care and services.

As the tension between public and private interests deepens, the greater challenge then lies in realigning its priorities and ensuring institutions remain accountable to the public good. Until then, the future of accessible healthcare in the Philippines remains hanging.