Questions that the Finance secretary and former Finance secretaries must answer
The former secretaries of Finance recently expressed their support for Finance Secretary Ralph Recto’s move to secure P90 billion from the Philippine Health Insurance Corp./ (PhilHealth) and P110 billion from the Philippine Deposit Insurance Corp. (PDIC). The former secretaries focused on the difficulty of mobilizing revenue to finance crucial government projects and the opportunity costs of leaving funds dormant. However, we must consider the critical matters that they have missed, if we are to evaluate from a responsible public finance perspective the action taken by Secretary Recto.
First and foremost, PhilHealth and PDIC are insurance corporations. They are organized for very specific purposes. PhilHealth was organized to “provide health insurance coverage and ensure affordable, acceptable, available and accessible healthcare services for all citizens of the Philippines.” The PDIC, on the other hand, is mandated to “provide deposit insurance coverage for the depositing public and help promote financial stability.”
The funds of these institutions should be solely used for their intended purposes. For PhilHealth, the fund is from premium payments of members. The National Government is responsible for paying the premium of indigents, senior citizens, Pantawid Pamilyang Pilipino Program (4Ps) recipients, persons with disabilities, Sangguniang Kabataan officials, and the unemployed. Is it appropriate to divert resources intended for social insurance to funding other government programs? As financial technocrats, shouldn’t we protect the integrity of our social health insurance and ensure it effectively serves its intended purpose?
The former secretaries also emphasized “the heavy responsibility the DoF (Department of Finance) bears in funding the nation’s dreams and aspirations for the Filipino people.” The former secretaries should be reminded that a functioning social health insurance program is part of our aspirations. Taking away PhilHealth funds to finance other government projects clearly minimizes the value of the health of the Filipino people. While we recognize the importance of public projects that can strengthen our economy and ensure long-term gains, shouldn’t we also uphold equity and social justice? Removing the funds from PhilHealth ultimately passes the burden of financing our social health insurance program mainly to the working classes, who as direct contributors, are required to pay PhilHealth premium. All contributors expect better health insurance coverage, but they are only getting a pittance from PhilHealth.
Part of responsible public financing is also scrutinizing how this lack of available funds for crucial government projects happened. These “crucial government projects” were placed by the members of the Congressional bicameral conference committee under the unprogrammed appropriations of the 2024 budget. Unprogrammed appropriations imply that these projects are not a priority and can only be funded if there is surplus revenue. If these projects are vital for economic growth, if these projects are indeed crucial, why did not Congress prioritize them? In truth, Secretary Recto is the best person to answer that because during the budget deliberation, he was a congressman and a member of the bicameral conference committee.
The bicameral conference committee also made notable increases in the budget of the House of Representatives (P12 billion), Senate (P2 billion), and the Department of Public Works and Highways or DPWH (P173.89 billion). The increase in the DPWH budget is primarily for flood control and convergence programs, which include roads and multipurpose buildings. Is it sound financial management to further increase the budget of DPWH when its disbursement rate for flood control projects is only at 58%, as was revealed in a Senate hearing?
And what was the extra P12-billion budget of the House of Representatives and the P2-billion budget of the Senate for? We don’t know, because the bicameral conference committee deliberation is the most opaque of all the legislative processes in the country. No livestream, no publicly available minutes, no accountability. Nevertheless, before signing the endorsement letter, the former Finance secretaries could have asked Secretary Recto this information.
Given the limited budget and the already low disbursement rate of DPWH, the clouded increase in the DPWH during the bicameral conference committee meeting raises questions. Why are resources being funneled into expanding the budget of DPWH — for that matter, the budgets of the House of Representatives and the Senate — when “crucial projects” are left wanting?
The former secretaries also mentioned the opportunity costs of unused funds. The opportunity cost that is worth emphasizing is the loss in productivity and contribution to the economy resulting from failing to meet the health needs of the population. Wouldn’t it be more beneficial to have a healthy, active population driving economic growth?
As we navigate the complexities of fiscal policy, we must ensure that the hard-earned money of taxpayers is allocated transparently and effectively. The transfer of the funds of PhilHealth, PDIC, and other GOCCs to the National Government is not responsible public financing. Public finance management asserts the allocation of funds for priority development projects. These projects should not have been set aside to give away to pork barrel insertions.
How can we call prioritizing pork barrel spending and discretionary projects over vital social programs responsible public financing?
Cielo Magno is a trustee of Action for Economic Reforms, the co-Chair of the Open Governance Partnership, and is an associate professor at the University of the Philippines School of Economics.