MANILA, Philippines—The health maintenance organization (HMO) sector’s bottom line shrank by two-fifths to P4 billion as of end-September as bigger expenses, including COVID-19-related claims, outpaced slower revenue growth.
In a statement on Tuesday (Dec. 28), Insurance Commissioner Dennis Funa said the total net income of 28 HMO players slid 40.9 percent from P6.8 billion during the first nine months of last year.
Funa said HMOs’ expenses jumped 11.9 percent, while revenues inched up 2.6 percent year-on-year to P39.3 billion during the first nine months of 2021.
End-September total expenses (including income tax) climbed “because of the increase in health care benefits and claims by 23.7 percent from P19.2 billion in 2020 to P23.8 billion in 2021,” Funa said.
Earlier Insurance Commission (IC) data had shown that the HMO sector paid a cumulative P3.9 billion in COVID-19-related claims since the pandemic began last year until June this year. HMO payouts accounted for almost half of the P8.3-billion total claims due to the deadly coronavirus as of June 2021.
On revenues, Funa attributed the slight year-on-year rise to the 2.9-percent growth in membership and enrollees’ fees, plus 46.4-percent growth in administrative services and processing fees.
The industry group Association of Health Maintenance Organizations of the Philippines Inc. (AHMOPI) had explained to the Inquirer that while their mostly corporate clients retained HMO memberships, the pandemic-induced economic slump had slowed new sales.
Last November, Funa told the Inquirer that the year-on-year drop in the HMO industry’s net income since the end of the first half of 2021 was “a display of strong commitment to its clientele” amid the prolonged pandemic.
Despite a smaller bottom line, the HMO sector continued to reinforce its financial defenses with growth rates of 27.6 percent year-on-year in assets (to P63.2 billion as of September), 17.2 percent in equity (to P15.2 billion), and also 17.2 percent in capital stock (to P3.2 billion).
Liabilities rose 31.2 percent year-on-year to P47.9 billion due to huge increases in the so-called administrative services only (ASO) fund, deferred tax liability, health plan liabilities, as well as unearned membership fees or advance payment of fees for HMO services not yet provided, Funa said.
TSB