Most HMOs seen compliant with new capital requirements

MANILA, Philippines —  A majority of health maintenance organizations can adhere to a proposal to raise the minimum paid-up capital, with only eight HMOs suggested to merge in order to comply.

On the sidelines of the Philippine Life Insurance Association’s 74th anniversary Tuesday evening, Insurance Commission (IC) chief Reynaldo Regalado said the agency is still waiting for comments from the industry on the proposed revision in the minimum capitalization, financial capacity and other regulatory requirements for HMOs.

He said initial assessment showed that only eight out of the 24 licensed HMO firms as of the first quarter of 2024 would be affected.

“A majority would be compliant. We don’t even need to issue this, but of course we want the public to see that they have this much capital that can cover them,” Regalado told reporters.

“Based on our studies, I think there are seven (or eight) providers which will be affected,” he said.

IC has issued a draft circular calling for an increase in the prevailing minimum paid-up capital requirement to P50 million for existing HMOs and P100 million for new ones by yearend.

Existing domestic HMOs must have a minimum paid-up capital of at least P10 million.

A quick look at IC data showed that these eight firms include Wellcare Health Maintenance Inc. (P33 million), Asian Care Health Systems Inc. (P25 million), IMS Wealth Care Inc. (P20.6 million), Carewell Health Systems Inc. (P17.5 million), Health Plan Philippines Inc. (P17 million) Dynamic Care Corp., MetroCare Health Systems Inc. and Optimum Medical and Health Care (P10 million each).

Among the HMOs, Medicard Philippines Inc. has the highest capital base at P3.45 billion followed by Maxicare Healthcare Corp. at P1.85 billion.

“Others are already there (high capital base). So we have a lot of big ones. In fact, a great number of life insurance companies have their own HMOs,” Regalado said.

“We just have to set that clear so that people are more reasonably covered. It’s really a health protection gap that we need to cover,” he said.

As to the HMOs which cannot comply, the IC commissioner committed to help them adjust with the new regulation.

“Maybe they can merge. We are very open because these HMOs have existing coverage and we have to take care of the public. So the adjustment has to be clearly set out,” Regalado said.

Based on the IC circular, the capital will be raised again to P100 million for existing and new HMOs by end-2025.

After that, further hikes will be done every three years which means that the  minimum paid-up capital should be P200 million by 2028, P350 million by 2031 and P500 million by 2034.

Community-based and cooperative HMOs will maintain a paid-up capital equivalent to 50 percent of what is prescribed for a regular HMO.