**2.2 PhilHealth: the national health insurance corporation and its informal sector programme**

The country's national health insurance program was instituted in 1995, with health funds carved out from the social security system for employed workers who paid in monthly contributions towards health, work accident, life insurance, and pensions since 1969. The Philippine Health Insurance Corporation (PhilHealth) absorbed and managed health insurance funds and progressively overtook other health

insurance schemes, such as those for overseas Filipino workers for their families left behind, those covered by charitable agencies, and its name is synonymous with the national health insurance programme.

In the late 80s to 90s, Medicare, the health insurance programme attached to the private social security system (SSS), was involved in working with organised groups, mostly community groups, some on rotating savings schemes, who were enjoined to include health insurance coverage as a benefit to members. Technical assistance and material support for operating systems were provided by the Medicare programme, through the German aid programme (GTZ) called SHINE. When the Indigent Programme got into good momentum, many of the groups were incorporated in the LGU sponsorship, others closed.

PhilHealth instituted a voluntary contribution scheme in early 2012 targeting informal employment workers belonging to cooperatives or those organised through non-government organisations (NGOs) through the organised groups programme. The institution made various efforts to gather these groups, providing incentives to the savings associations, cooperative banks, or non-government organisations to collect funds from members, advance or loan members their premium payments in 2017. When group collectors were no longer willing to collect, organised member groups thus reverted to individually paying membership. It was reported in 2014 that dropout rates or regular non-payment of premiums were two-thirds of the membership in the individual economy scheme (as the informal sector programme has been renamed) [6].

PhilHealth has other member categories, aside from those in formal employment. The 'sponsored member' group is the largest, comprising 50% of membership in 2015. Sponsored members are those who enjoy full state or other state agencies' subsidies for premiums. The biggest group of sponsored members belongs to the beneficiaries of the government's conditional cash transfer (CCT) programme. In this cash transfer programme, a means test is utilised to target the deserving beneficiaries who are considered poor through 24 sets of proxy variables of income and well-being variables. Other sponsored members, including retirees and pensioners (aged over 60), are considered lifetime members and non-paying. Under the new UHC Act, sponsored members are fully protected by the no-balance-billing policy. This policy mandates that as long as there are public hospital wards available, these members cannot be charged with other expenses exceeding their PhilHealth benefits.

In 2015, sponsored members comprised 50% of PhilHealth membership, followed by 30% from the formal sector, 9.5% from the retirees or lifetime members. The balance, or around 10%, was from the informal and self-employed members. This share has gone up to 18% according to a 2020 study [7].

The idea of public-organised groups' partnerships in funds collection has been pioneering [6]. The problems related to the informal sector programme of PhilHealth can be traced to the following—(1) relatively unaffordable premiums for its target informal sector groups; (2) lack of systems to verify membership with contributions and thus smoothen authorisations at the time of use; (3) low level of benefits and substantial out-of-pocket expenses; (4) learning by doing approach that lacked consultation and evidence-based studies which led to policy confusion for implementors; and (5) a complex financial management system which made funds tracking unwieldy. PhilHealth experienced fund deficits arising from its expansion of coverage to other sponsored members, diversification to non-hospital-based benefits, and other fund management issues. The fund which reported a surplus for much of its existence [8] suffered deficits when subsidies overtook member payments as the dominant revenue source [9]. Media reported on anomalies involving the PhilHealth Board's

### *National Health Insurance, the Informal Sector, and Elements of a New Social Contract… DOI: http://dx.doi.org/10.5772/intechopen.103720*

authorisation of across-the-board payroll bonuses to employees. This was eventually ruled by the highest court to be illegal and without proper authorisation [10].

This assessment can apply to the whole PhilHealth programme; notwithstanding strides taken in continuing efforts to increase coverage and improve equity [11]. Benefits have been bolstered as well with the inclusion of other outpatient benefits, including costly procedures, such as dialysis and cataract operations, and catastrophic care packages, such as Z benefits [12]. These gains were obtained at the cost of financial weakening and other administrative setbacks, which caused delays in payment to providers and heightened the lack of trust and other credibility issues with stakeholders [13].
