As the country’s national health insurer, the Philippine Health Insurance Corporation (PhilHealth) plays a critical role in promoting accessible and affordable health services under the Universal Health Care (UHC) Act. Despite achieving near-universal coverage and shifting from fee-for-service to all-case rates in 2013, PhilHealth continues to account for a relatively small share of national health expenditure, while out-of-pocket (OOP) spending remains high. This study examines the PhilHealth share ratio (PSR), defined as the proportion of PhilHealth reimbursements to the total revenues of government health facilities. The PSR serves as an indicator of purchasing strength and financial risk protection rather than a rigid performance target, as variation across hospital levels and revenue structures precludes the use of a fixed benchmark. As part of broader efforts to enhance financial protection, PhilHealth aims to cover 70–80 percent of hospitalization costs under the UHC Act and the zero-balance billing policy, compared with current effective levels of 40–50 percent. While this target is measured at the patient level, higher support is expected to translate into higher facility-level PSRs.
Using financial data and stakeholder perspectives from 26 facilities across five geographic clusters, this study compares periods before (2011–2013) and after (2014–2020) the implementation of all case rates. The findings show that while PSRs increased following the transition to all-case rates, they began to decline after 2016 across most facility types. Level 1 hospitals consistently recorded the highest ratios, while rural health units and city health centers exhibited the lowest. The post-2016 decline reflects the interaction of fixed case rates with rising total facility revenues driven by increased government funding and other income sources, which reduced PhilHealth’s relative contribution. During this period, case rates remained largely unchanged despite rising service complexity, inflationary pressures, and higher indirect costs. Policy adjustments, such as the expanded no-balance billing, further constrained provider flexibility, while the COVID-19 pandemic disrupted service delivery and altered revenue composition.
These results highlight structural limitations in current funding mechanisms that hinder effective financial risk protection. Despite insurance coverage, patients still shoulder nearly half of total medical expenses, particularly for medicines and supplies. Continued reliance on a retrospective payment model weakens purchasing leverage and constrains progress toward UHC goals. The study recommends transitioning to prospective global budgeting, institutionalizing standardized revenue monitoring (including PSR tracking), and better integrating insurance reimbursements with government subsidies. These measures aim to reduce revenue fragmentation, align payments with actual cost structures, and strengthen PhilHealth’s strategic purchasing role. Achieving UHC goals requires a substantial increase in PhilHealth’s support, especially in primary care. PhilHealth’s ongoing efforts to expand reimbursements and reassess computation of payment rates, accounting for both direct and indirect costs of health services, may help justify appropriate global budget allocations. Strategic purchasing through prospective budgeting models may help reduce OOP spending while enhancing financial protection, equity, and sustainability within the Philippine health system.
