Will more heads roll?

The entry of Dr. Edwin M. Mercado as the new president and chief executive officer (CEO) of the Philippine Health Insurance Corp. (PhilHealth) could not come at a more auspicious time. Mercado replaced Emmanuel Ledesma Jr. who got unceremoniously booted out from his post amid questions principally over PhilHealth’s financial management. Mercado formally took his oath before President Ferdinand “Bongbong” Marcos Jr. (PBBM) last Feb. 4 at Malacañang Palace.

PBBM’s appointment of a new PhilHealth head started a chain of key changes in the mid-term of his administration, including Cabinet posts. Subsequently, PBBM named Vivencio Dizon as his “acting” secretary of Department of Transportation vice Jaime Bautista and appointed former broadcast journalist Jay Ruiz as “acting” secretary of the Presidential Communications Office replacing Cesar Chavez.

Ledesma’s exit came after no less than Department of Health (DOH) Secretary Teodoro Herbosa publicly expressed dismay that PhilHealth needed change in management from the top. PhilHealth is a government-owned and -controlled corporation (GOCC) under the immediate supervision of the DOH. As such, the health secretary sits as chairman of the PhilHealth Board.

Ledesma’s woes took a turn for the worse late last year after complying with directives from the Department of Finance (DOF) to implement the transfer of P89.9 billion of its “excess” funds to the National Treasury. In October last year, however, the Supreme Court (SC) issued a temporary restraining order (TRO) on the petition that sought to stop the transfer of these PhilHealth funds.

Push came to shove after the 19th Congress gave PhilHealth under Ledesma’s watch “zero” subsidy in the 2025 budget. In fact, SC Associate Justice Amy C. Lazaro-Javier, during oral arguments of the petitions against DOF’s fund transfer directive, expressed fear that PhilHealth may not be able to fully serve its members because of this. PhilHealth is supposed to be the principal recipient of government collections from so-called “sin” taxes under the Universal Health Care (UHC) Law.

More than PhilHealth’s grappling with overreach into its finances by other branches of government, Mercado assumed office amid dengue outbreaks. As dengue cases are rising across the country, it did not take long for Mercado to immediately step up to the plate and approved all outpatient emergency services, including suspected dengue cases that are now covered at PhilHealth-accredited hospitals nationwide.

Such pro-active stance of Mercado beckons more meaningful reforms at PhilHealth, especially since he will be bringing to the table his wisdom and experience from his 35 years of hospital management. Mercado’s impressive curriculum vitae shows he finished his Doctor of Medicine degree at the University of the Philippines in 1987 and then completed his Master of Medical Sciences in Global Health Delivery at Harvard Medical School in 2023. He also has an Executive Master’s in Healthcare Administration from the University of North Carolina.

Mercado previously served as the vice chairman of the Mercado General Hospital/Qualimed Health Network which has since expanded into a national chain of health care facilities that includes four general hospitals, six multi-specialty clinics, two surgery centers, 150 primary care corporate clinics, a college for paramedical professionals and a physician practice group.

In the backdrop is the perennially high out-of-pocket payments (OPP) of Filipinos for their health care needs. A recent study commissioned by the Unilab Center for Health Policy (UCHP) showed OPP remains at about 45 percent of the country’s total health expenditure, or THE for short. PhilHealth is supposed to help address this problem. Unfortunately, PhilHealth has made little progress as its own share in the country’s THE is still below 14 percent, way below the ideal 30-percent target.

Simply put, the UCHP study on the 30-year health expenditure of the Philippines showed that for every P100 spent on health care, P45 comes from the citizens’ wallets. This is less than P14 from PhilHealth, P30 from the national and local governments and the rest from private health insurers.

But I’m optimistic that Mercado will be able to pull it off with his vast experience in the health care field. His published studies on the cost of per-member payment for global coverage of in-patient services and the use of artificial intelligence (AI) as an assistive tool for community health workers to deliver primary care surely comes in handy for him. There are also successful UHC models that he can look at, including our country’s neighbor and fellow developing nation like Thailand.

Since 2002 when Bangkok started its UHC program, Thailand has seen better health care program deliveries for its people, including the measly 30-baht contribution for every hospital visit, free medicines for 16 common ailments, easier access to primary care services even in its rural areas and out-of-pocket spending at less than 10 percent.

Thailand has also adopted digitalization and artificial intelligence to promote better identity verification and timely reimbursement. In a recent forum, Dr. Nolnabhas Yaemsaard from Thailand highlighted the role of Diagnosis Related Groups (DRG) as a payment system in the success of the Thai health insurance system. The Philippines’ UHC law of 2019 already mandates PhilHealth to shift to DRG and yet six years later, PhilHealth is stuck with “case rates.”

The Philippines can learn from these experiences on who should administer DRGs. PhilHealth is currently vested with the mandate of raising premiums, defining benefits and paying for them. This may be the opportune time to review such an arrangement.

Having been in the management team of health care providers for the majority of his career, Dr. Mercado knows the nuances of PhilHealth-hospitals dealings. He should be able to leverage his experience, the learnings from successful models abroad and the evidence-based studies available to reform PhilHealth and hopefully make the state insurer more responsive to the demands of the country’s UHC goals.

The new PhilHealth president and CEO surely has his work cut out for him.

Thus, expectations on Mercado are high, that he will do his best to ensure equitable access to quality medical care and leverage technology to strengthen health systems, particularly in financial management and primary care mandates of the PhilHealth.

After Ledesma, Bautista and Chavez, will more heads roll?