Philippine Health Insurance Corporation

Financial Condition and Financial Reporting of the Philippine Health Insurance Corporation

By: Dani Rose Salazar


This paper aims to: (1) to assess the financial condition of PHIC amidst upsurge in membership, increasing claims and rising cost of medical treatments using publicly available financial statement data, and (2) to determine whether PHIC’s financial reporting practices comply with the Philippine Financial Reporting Standards (PFRS). The review and evaluation of the presentation and valuation of financial statement elements and the disclosure in the accompanying notes revealed an understatement of reported liabilities, inadequate disclosures on the relevant risks regarding financial instruments, and misclassification of deposit accounts.  The financial statements analysis showed that (1) the government had a history of underpaying the premium dues of its sponsored members; and (2) members in the formal economy sector had consistently subsidized the benefits of the other sectors.  PHIC’s future ability to perform its mandate is threatened by the increasing medical cost ratio, rising utilization, benefit claims that grow at a faster rate than premium contribution and decreasing interest rates on its investments.  Scenario analysis indicated that without immediate corrective adjustments, the National Health Insurance Program (NHIP) is not sustainable in the medium to long term.