August 5th, 2025
In his 2025 State of the Nation Address, President Ferdinand Marcos Jr. made a bold and morally urgent commitment: that no Filipino should leave a government hospital with unpaid medical bills. This promise of Zero-Balance Billing was not presented as a distant goal, but as an immediate directive to health agencies. To deliver on it, we must first confront the scale of the problem. According to the 2024 Philippine National Health Accounts, total health spending reached ₱1.56 trillion. Of this, ₱666 billion, or 42.7 percent, came from out-of-pocket payments by households. This is far above the global benchmark of 10 percent and remains the single largest source of financial distress among Filipino families seeking care.
Reducing this burden must begin with prevention. In 2024, the country already spent ₱748.8 billion on primary healthcare. This includes services delivered at barangay health stations, outpatient clinics, and preventive benefits under PhilHealth’s Konsulta program. These are powerful instruments when deployed effectively. Conditions such as diabetes, stroke, and hypertension can be intercepted early, preventing expensive hospitalizations. If primary care is expanded and health-seeking behavior is strengthened through campaigns funded by sin tax revenues, the country can conservatively avoid ₱100 to ₱150 billion in hospital costs each year. This is the single most cost-effective way to narrow the gap.
Even with strong prevention, a substantial amount of out-of-pocket costs will remain. This is where public financing must carry the burden. PhilHealth must expand its benefit payments and adjust its case rates to reflect actual hospital costs. The Medical Assistance for Indigent and Financially Incapacitated Patients program must be scaled and distributed based on need. Local governments, which are constitutionally mandated to deliver basic health services, must also contribute. If these instruments are coordinated, the public sector can realistically absorb around ₱360 to ₱400 billion of annual health expenditures. After prevention and public coverage, we estimate a residual gap of around ₱120 to ₱150 billion that must still be closed.
One immediate and feasible action is to enroll all Job Order and Contract of Service workers as PhilHealth-sponsored members. These workers number over one million nationwide and are among the most financially vulnerable public sector personnel. At an annual contribution of ₱5,760 per worker, fully subsidized by the employer, this would generate over ₱5.76 billion in additional PhilHealth revenue. It would also eliminate one of the most glaring gaps in coverage. This is well within the means of local governments. According to the Bureau of Local Government Finance, LGUs currently sit on ₱726 billion in cash balances, including general, special, and trust funds. A joint directive from the Department of Budget and Management, the Department of the Interior and Local Government, and PhilHealth can activate this measure immediately.
To further close the gap, the government must pursue revenue strategies that align with public health goals and require no new legislation. A ₱10 increase in cigarette excise, a ₱3 per liter tax on sugary drinks, and a levy on ultra-processed food could raise ₱30 to ₱40 billion annually. The most immediately actionable source of new funds, however, is online gaming. Rather than banning the activity, the state can regulate and tax it more effectively. Without enacting a new law, the Philippine Amusement and Gaming Corporation can impose higher licensing fees, transaction-based surcharges, and compliance charges. With proper enforcement, this can generate ₱5 to ₱10 billion annually. Government should also require PAGCOR and the Philippine Charity Sweepstakes Office to contribute fixed amounts to a national Zero-Balance Billing Fund to replace the inconsistent system of individual medical assistance.
Other financing reforms should also be activated. LGUs can be required to earmark at least 2.5 percent of their National Tax Allotment for health protection. This alone could yield ₱25 billion annually. A solidarity surcharge on luxury goods, such as high-end cars, watches, and club memberships, can generate another ₱5 to ₱8 billion. Vape imports, digital transactions, and online platform activities can be taxed under existing agency powers. Most importantly, the government must lift the salary cap on PhilHealth contributions. At present, high-income professionals pay the same amount as middle-income workers. Removing or significantly raising the income ceiling would make contributions more progressive and generate an additional ₱3 to ₱5 billion each year.
These measures, taken together, can produce between ₱90 to ₱120 billion in new annual revenue. Combined with cost avoidance from prevention and increased public financing, the country can realistically eliminate 80 to 85 percent of household out-of-pocket health spending. The remaining amount can be narrowed through better targeting, more efficient procurement, and tighter program delivery. The President’s call for Zero-Balance Billing can be fulfilled. It is not an abstraction. It is a solvable equation. What is required now is fiscal decisiveness, agency coordination, and the moral clarity to ensure that no Filipino ever goes broke just to get well.
Joey Sarte Salceda