Republic of the Philippines
HOUSE OF REPRESENTATIVES

Quezon City {3 ‘- RECEIVED @
Y= are: HAY iy
SEVENTEENTH CONGRESS :
First Regular Session x
HOUSE BILL N08

Introduced by Honorable Michael L. Romero and Enrico A. Pineda

EXPLANATORY NOTE

National healthcare insurance programs differ both in how the money is
collected, and in how the services are provided. In some countries, payment is
made by the government directly from tax revenue. The collection is
administered by government. in other countries a similar system of compulsory
contributions is made, but the collection is administered by non-profit
organizations set up for the purpose.

The United States uses a single-payer health care setup. The provision of services
may be through either publicly or privately owned health care providers.

An alternative funding approach is where countries implement national health
insurance by legislation requiring compulsory contributions to competing
insurance funds. These funds (which may be run by public bodies, private for-
profit companies, or private non-profit companies), must provide a minimum
standard of coverage and are not allowed to discriminate between patients by
charging different rates according to age. occupation, or previous health
status.

There are other countries are largely funded by contributions by employers and
employees to sickness funds. With these programs, funds come from neither the
government nor direct private payments. These funds are usually not for profit
institutions run solely for the benefit of their members. Usually characterization is
a matter of degree: systems are mixes of these three sources of funds (private,
employer-employee contributions, and national/sub-national taxes).


In addition to direct medical costs, some national insurance plans also provide
compensation for loss of work due to ill-health, or may be part of wider social
insurance plans covering things such as pensions, unemployment, occupational
retraining, and financial support for students.

National schemes have the advantage that the pool or pools tend to be very
large and refiective of the national population. Health care costs, which tend to
be high at certain stages in life such as during pregnancy and childbirth and
especially in the last few years of life can be paid into the pool over a lifetime
and be higher when eamings capacity is greatest to meet costs incurred at
times when earings capacity is low or non-existent. This differs from the private
insurance schemes that operate in some countries which tend to price
insurance year on year according to health risks such as age. family history.
previous illnesses, and height/weight ratios. Thus some people tend to have to
pay more for their health insurance when they are sick and/or are least able to
afford it. These factors are not taken into consideration in NHI schemes. In
private schemes in competitive insurance markets, these activities by insurance
companies fend to act against the basic principles of insurance which is group
solidarity.

This House Bill seeks to protect the interest of both patients and insurance
companies, the government shall establish an equalization pool to spread risks
between the various funds. The government may also contribute to the
equalization pool as a form of health care subsidy.

ICO A. PINEDA



Republic of the Philippines
HOUSE OF REPRESENTATIVES
Quezon City

SEVENTEENTH CONGRESS
First Regular Session

5526

HOUSE BILL NO. __

Introduced by Honorable Michael L. Romero and Enrico A. Pineda

AN ACT

TO RATIONALIZE THE NATIONAL HEALTH INSURANCE PROGRAM,
TO INCREASE ITS ACCUMULATED RESERVE FUNDS, TO INCREASE
THE PROGRAM'S BENEFITS, PROVIDING STIFFER PENALTIES FOR
VIOLATORS, TO AUGMENT THE HEALTH FACILITIES
ENHANCEMENT PROGRAM, AND FOR OTHER PURPOSES

Be it enacted by the Senate and House of Representatives in Congress
Assembled:

SECTION 1. Declaration of Policy — It is hereby declared the policy of the
State to create and implement an integrated and comprehensive approach to
health development which shall endeavor to make essential goods, health and
other social services available to all the people at affordable cost and to

provide free medical care to paupers.

Towards this end, the State shall provide comprehensive health care
services to all Filipinos through a socialized health insurance program that will
prioritize the health care needs of the underprivileged, sick, elderly, persons with


disabilities (PWDs), women and children and provide free health care services to
indigents.

The state shall hereby assure that all citizens of the Republic of the
Philippines shall be covered by the National Health Insurance Program. In
accordance with the principles of universality and compulsory coverage
enunciated in Section 2(b) and 2(I) of RA10606. The implementation of the
Program shall ensure sustainability of coverage and continuous enhancement
of the quality of service:

Provided, That the Program shall be compulsory in all provinces. cities and
municipalities nationwide, notwithstanding the existence of LGU-based health

insurance programs:

Provided, further, That the Corporation, Department of Health (DOH),
Local Government Units (LGUs), and other agencies including Non
Governmental Organizations (NGOs) and other National Government Agencies
(NGAs) shall ensure that members in such localities shall have access to quality
and cost-effective health care services.

SECTION 2. Financial Management.— The use, disposition, investment,
disbursement, administration and management of the National Health
Insurance Fund, including any subsidy, grant or donation received for program
operations shall be governed by applicable laws and in the absence thereof,
existing resolutions of the Board of Directors of the Corporation, subject to the
following limitations:

(a) All funds under the management and control of the
Corporation shall be subject to all rules and regulations applicable
to public funds.


(b) The Corporation is authorized to charge to the various funds
under its control the costs of administering the Program. Such costs
may include administration, monitoring, marketing and promotion,
research and development, audit and evaluation, information
services, and other necessary activities for the effective
management of the Program.

The total annual costs for these shall not exceed the sum total of the
following:

(1) Three percent (3%) of the total premium contributions
collected during the immediately preceding year;

(2) Three percent (3%) of the total reimbursements or total
cost of health services paid by the Corporation in the
immediately preceding year; and

(3) Four percent (4%) of the investment earings generated
during the immediately preceding year.

The period for implementation of the cost ceiling provided
under this section shall not be later than three (3) years from
the effectivity of this Act during which period, the total annual
cost shall not exceed the sum total of the following:

(i) Four percent (4%) of the total contributions;
(il) Four percent (4%) of the total reimbursements: and

(iii) Four percent (4%) of the investment earnings
generated during the immediately preceding year.


SECTION 3. Reserve Funding — The Corporation shall set aside a portion of
its accumulated revenues not needed to meet the cost of the current year's
expenditures as reserve funds:

Provided, That the total amount of reserves shall not exceed a ceiling
equivalent to the amount actuarially estimated for three (3) years projected
Program expenditures:

Provided, further, That whenever actual reserves exceed the required
ceiling at the end of the Corporation's fiscal year, the excess of the
Corporation's reserve fund shall be used to increase the Program's benefits,
decrease the member's contributions, and augment the health facilities
enhancement program of the DOH.

The remaining portion of the reserve fund that are not needed to meet the
current expenditure obligations or used for the abovementioned programs shall
be placed in investments to earn an average annual income at prevailing rates
of interest and shall be known as the ‘Investment Reserve Fund’ which shall be
invested in any or all of the following:

(a) In interest-bearing bonds, securities or other evidences of
indebtedness of the Government of the Philippines. or in bonds, securities,
promissory notes and other evidences of indebtedness to which full faith
and credit and unconditional guarantee of the Republic of the Philippines
is pledged;

(b) In debt securities and corporate bonds issuances:

Provided, That such securities and bonds are rated triple ‘A’ by
authorized accredited domestic rating agencies:


Provided. further. That the issuing or assuming entity or its
predecessor shall not have defaulted in the payment of interest on any of
its securities and that during each of any three (3) including last two (2) of
the five (5) fiscal years next preceding the date of acquisition by the
Corporation of such bonds, securities or other evidences of indebtedness.
the net eamings of the issuing or assuming institution available for its
recurring expenses, such as amortization of debt discount and rentals for
leased properties, including interest on funded and unfunded debt, shall
have been not less than one and one quarter (1.25) times the total of the
recurting expenses for such year:

Provided, further, That such investment shall not exceed Eight
percent (8%) of the investment reserve fund;

(c) In interest-bearing deposits and loans to or securities in any domestic
bank doing business in the Philippines:

Provided, That in the case of such deposits, this shall not exceed at
any time the unimpaired capital and surplus or total private deposits of
the depository bank, whichever is smaller:

Provided, further, That said bank shall first have been designated as
a depository for this purpose by the Monetary Board of the Bangko Sentral
ng Pilipinas (BSP);

(d) In preferred stocks of any solvent corporation or institution created or
existing under the laws of the Philippines:

Provided, That the issuing, assuming, or guaranteeing entity or its
predecessor has paid regular dividends upon its preferred or guaranteed


stocks for a period of at least three (3) years immediately preceding the
date of investment in such preferred or guaranteed stocks:

Provided, further, That if the stocks are guaranteed the amount of
stocks so guaranteed is not in excess of fifty percent (50%) of the amount
of the preferred common stocks as the case may be of the issuing
corporation:

Provided, furthermore, That if the corporation or institution has not
Paid dividends upon its preferred stocks, the corporation or institution has
sufficient retained earings to declare dividends for at least three (3) years
on such preferred stocks and in common stocks of any solvent
corporation or institution created or existing under the laws of the
Philippines in the stock exchange with proven track record of profitability
and payment of dividends over the last three (3) years; and

(e) In bonds, securities, promissory notes or other evidences of
indebtedness of accredited and financially sound medical institutions
exclusively to finance the construction, improvement and maintenance of

hospitals and other medical facilities:

Provided, That such securities and instruments are backed up by the
guarantee of the Republic of the Philippines or the issuing medical
institution and the issued securities and bonds are both rated triple ‘A’ by
authorized accredited domestic rating agencies:

Provided, further. That said investments shall not exceed ten percent (10%)
of the total investment reserve fund.

As part of its investments operations, the PHIC may hire institutions with valid trust
licenses as its extemal local fund managers to manage the investment reserve


fund, as it may deem appropriate, through public bidding. The fund managers
shall submit annual reports on investment performance to the PHIC.

The Corporation shall set up the following funds:

(1) A fund to secure benefit payouts to members prior to their becoming
lifetime members;

(2) A tund to secure payouts to lifetime members; and

(3) A fund for any optional supplemental benefits that are subject to
additional contributions.

A portion of each of the above funds shall be identified as current and kept in
liquid instruments. In no case shall said portion be considered part of invested
assets.

Another portion of the said funds shall be allocated for lifetime members within
six (6) months after the effectivity of this Act. Said amount shall be determined
by an actuary or pre-calculated based on the most recent valuation of
liabilities.

The PHIC shall allocate a portion of all contributions to the fund for lifetime
members based on an allocation to be determined by the Philippine Health
Insurance Corporation (PHILHEALTH) actuary based on a pre-determined
percentage using the current average age of members and the current life
expectancy and morbidity curve of Filipinos.

The PHIC shall manage the supplemental benefits and the lifetime members’
fund in an actuarially sound manner.


The PHIC shall manage the supplemental benefits fund to the minimum required
to ensure that the supplemental benefit payments are secure.

SECTION 4. Contributions— All members who can afford to pay shall
contribute to the Fund, in accordance with a reasonable, equitable and
progressive contribution schedule to be determined by the Corporation on the
basis of applicable actuarial studies and in accordance with the following
guidelines:

(1) Members in the formal economy and their employers shall continue
paying the same monthly contributions as provided for by law until such
time that the Corporation shall have determined a new contribution
schedule:

Provided, That their monthly contributions shall not exceed five percent
(5%) of their respective monthly salaries.

It shall be mandatory for all government agencies to include the payment
of premium contribution in their respective annual appropriations:

Provided, further, That any increase in the premium contribution of the
national government as employer shall only become effective upon
inclusion of said amount in the annual General Appropriations Act (GAA).

(2) Contributions from members in the informal economy shall be based
primarily on household earnings and assets. Those from the lowest income
segment who do not qualify for full subsidy under the means test rule of
the DSWD shall be entirely subsidized by the LGUs or through cost sharing
mechanisms between/among LGUs and/or legislative sponsors and/or
other sponsors and/or the member, including the national govemment:


Provided, That the identification of beneficiaries who shall receive subsidy
from LGUs shall be based on a list to be provided by the DSWD through
the same means test rule or any other appropriate statistical method that
may be adopted for said purpose.

(3) Contributions made in behalf of indigent members shall not exceed
the minimum contributions for employed members.

(4) The required number of monthly premium contributions to qualify as a
lifetime member may be increased by the Corporation to sustain the
financial viability of the Program:

Provided, That the increase shall be based on actuarial estimate and
study,

SECTION 5. Penal Provisions — Any violation of the provisions of this Act,
after due notice and hearing, shall suffer the following penalties:

(a) Violation by an Accredited Health Care Provider — Any accredited
health care provider who commits a violation, abuse, unethical practice
of fraudulent act which tends to undermine or defeat the objectives of
the Program shall be punished with a fine of not less than One hundred
thousand pesos (100,000.00) but not more than Two hundred thousand
Pesos (200,000.00) or suspension of accreditation from six (6) months to
the whole term of accreditation, or both, at the discretion of the
Corporation:

Provided, That recidivists may no longer be accredited as a participant of
the Program;

(b) Violations of a Member - Any member who commits any violation of
this Act independently or in connivance with the health care provider for


purposes of wrongfully claiming NHIP benefits or entitlement shall be
punished with a fine of not less than Fifty thousand pesos (50,000.00) or
suspension from availment of NHIP benefits for not less than six (6) months
but not more than twelve (12) months, or both, at the discretion of the
Corporation.

(€) Violations of an Employer —

(1) Failure/Refusal to Register/Deduct/Remit the Contributions - Any
employer who fails or refuses to register employees, regardless of
their employment status, or to deduct contributions from the
employee's compensation or remit the same to the Corporation
shall be punished with a fine of not less than Twenty Five thousand
pesos (P25,000.00) multiplied by the total number of employees of
the firm.

Any employer or any officer authorized to collect contributions
under this Act who, after collecting or deducting the monthly
contributions from his employee's compensation, fails to remit the
said contributions to the Corporation within thirty (30) days from the
date they become due shall be presumed to have
misappropriated such contributions.

(2) Unlawful Deductions - Any employer or officer who shall deduct
directly or indirectly from the compensation of the covered
employees or otherwise recover from them his own contribution on
behalf of such employees shall be punished with a fine of Twenty
Five thousand pesos (25,000.00) multiplied by the total number of
affected employees.


If the act or omission penalized by this Act be committed by an
association, partnership, corporation or any other institution, its
managing directors or partners or president or general manager, or
other persons responsible for the commission of the said act shall be
liable for the penalties provided for in this Act.

(3) Misappropriation of Funds by Employees of the Corporation -
Any employee of the Corporation who receives or keeps funds or
property belonging, payable or deliverable to the Corporation, and
who shall appropriate the same. or shall take or misappropriate or
shall consent, or through abandonment or negligence shall permit
any other person to take such property or funds wholly or partially,
shall likewise be liable for misappropriation of funds or property and
shall be punished with a fine not less than Fifty thousand pesos
(P50,000.00) nor more than One hundred thousand pesos
(100,000.00).

Any shortage of the funds or loss of the property upon audit shall be
deemed prima facie evidence of the offense.

(d) Other Violations — Other violations of the provisions of this Act or of the
rules and regulations promulgated by the Corporation shall be punished
with a fine of not less than Fifty thousand pesos (50,000.00) but not more
than One hundred thousand pesos (P100,000.00).

All other violations involving funds of the Corporation shall be governed by
the applicable provisions of the Revised Penal Code or other laws, taking
into consideration the rules on collection, remittances, and investment of
funds as may be promulgated by the Corporation.


The Corporation may enumerate circumstances that will mitigate or
aggravate the liability of the offender or ering health care provider,
member or employer.

Despite the cessation of operation by a health care provider or
termination of practice of an independent health care professional while
the complaint is being heard, the proceeding against them shall continue
until the resolution of the case.

The dispositive part of the decision requiring payment of fines,
reimbursement of paid claim or denial of payment shall be immediately
executory.

SECTION 6. Oversight Provision- There is hereby created a Joint
Congressional Oversight Committee to conduct a regular review of the NHIP
which shall entail a systematic evaluation of the Program's performance,
impact or accomplishments with respect to its objectives or goals.

The Oversight Committee shall be composed of five (5) members from the
Senate and five (5) members from the House of Representatives to be
appointed by the Senate President and the Speaker of the House of
Representatives. respectively.

The Oversight Committee shall be jointly chaired by the Chairpersons of the
Senate Committee on Health and Demography and the House of
Representatives Committee on Health.

The National Economic and Development Authority (NEDA), in coordination with
the Philippine Statistics Authority (PSA) and the National institutes of Health of the
University of the Philippines (UP-NIH) shall undertake studies to validate the
accomplishments of the Program. Such validation studies shall include an


assessment of the enrollees’ satisfaction of the benefit package and services
provided by the Corporation. These validation studies, as well as an annual
report, on the performance of the Corporation shall be submitted to the
Congressional Oversight Committee.

The Corporation shall annually transfer 0.0025% of its income in the previous year
for the purpose of conducting these studies.

SECTION 7. Implementing Rules and Regulations — Within sixty (60) days
from the effectivity of this Act, the NHIC. in coordination with the DOH, shall issue
the necessary rules and regulations for its effective implementation.

SECTION 8. Periodic Reports - The National Health Insurance Corporation
(NHIC) shall submit periodic reports on its findings and make recommendations
on actions to be taken by Congress and Senate and the appropriate
department, and in order to carry out the objectives and mandates of this Act.

SECTION 9. Automatic Review - Every two (2) years after the effectivity of
this Act, an independent review panel composed of experts to be appointed
by the President shall review the policies and programs in the NHIC shall make
recommendations, based on its findings, to the President and to both Houses of
Congress.

SECTION 10. Repealing Clause. All laws, executive orders, issuances, rules
and regulations inconsistent with this Act are hereby amended, repealed or
modified accordingly.

SECTION 11. Separability Clause. |f, for any reason or reasons, any portion
or provision of this Act shall be held unconstitutional or invalid, the remaining
provisions not affected thereby shall continue to be in full force and effect.


SECTION 12. Effectivity Clause. This Act shall take effect fifteen (15) days
after its publication in any newspaper of general circulation.

Approved,