DESPITE many people having lost their jobs or had their salaries slashed due to the pandemic triggered economic downturn, health insurance companies decided that the time was ripe to hike up health premiums by up to 30% this year.
According to the Health Magazine, both the insurance companies and regulator, Bank Negara Malaysia (BNM) had declined to comment on the matter.
However, the decision drew ire from several quarters and decided to take both to task for their insensitivity to the people’s predicament, leaving policyholders in a lurch.
The Federation of Malaysian Consumers Association (Fomca) president Datuk Marimuthu Nadason described the 30% premium hike as shocking and atrocious.
“Not at this critical time when the whole nation is facing a pandemic and financial crisis. Many policyholders have lost their jobs and some have taken pay cuts.
“We predict that there will be many cases where the policy will lapse, and there is also a possibility that many cannot pay the premiums,” said Marimuthu.
He said that many policyholders will be denied the right to use their medical cards just because they had not updated their premiums.
Marimuthu urged insurance companies to follow the banks’ example, by providing a moratorium on premium rate hikes for at least a year.
“They should not collect premiums from policyholders who have lost their jobs or taken pay cuts.
“Banks are giving moratorium where consumers who have taken loans can defer their payment, unlike insurance companies.
“Although both conventional banks and the insurance industry fall under the purview of BNM, why did the latter give the approval for a moratorium to banks and did not impose it on medical insurers too?” the consumer advocate asked.
Parti Sosialis Malaysia (PSM) chairperson Dr Jeyakumar Devaraj said he was not surprised at the latest premium hike.
“Health insurance should ideally be run by a not-for-profit trust with community-rated premiums (not risk-rated). The Government should step in to pay insurance premiums for the people who can’t afford it, like how our Social Security Organisation (SOCSO) is structured,” he stated.
Whether the steep hike in premium was justified, Jeyakumar said health insurance run by for-profit corporations is not justified and fundamentally flawed.
“You can’t tinker with it and make it better. You got to replace it.
“It’s not the right way to try and protect a community from the economic effects of falling ill. Strengthen the public healthcare system so that people can depend on it and not need to hedge their bets by taking private insurance,” the former MP replied.
Soaring medical inflation?
For a long time, insurance companies have always argued on soaring medical inflation as a justification to increase premium rates.
For example, the 2020 Global Medical Trends Survey by Willis Towers Watson found that Malaysia ranked among the highest in Southeast Asia in terms of expected increases in medical costs. The survey projected medical spend to rise from 11.6% in 2019 to 12.6% in 2020.
Another report by Aon’s 2019 Global Medical Trend Rates Report cited Malaysia’s cost of medical care as having risen above the global average in recent years and experienced double-digit medical inflation at 13.6% in 2019, an increase from the 12.4% in 2018.
However, Marimuthu cast aspersions on the studies, saying most of them were conducted by the insurance companies themselves without having a third party verifying the data provided.
“Looking at last year, there were not many claims made by policyholders as the Association of Private Hospitals of Malaysia (APHM) has stated that was a drop in in-patients at all private hospitals.
“In other words, the insurance companies should take this into consideration before imposing the hike. Furthermore, all patients who were COVID-19 positive were taken to Government hospitals, and indirectly there would have been fewer claims or pay-outs in claims by insurance companies.”
On medical inflation, Jeyakumar said private doctors and private hospitals were no angels either in the whole scheme of things.
“Many of them mark up prices and over-investigate and over-treat when there is a third-party payer. Medical treatment should not be provided by for-profit-parties, whether insurers or doctors.
“There is too much conflict of interest, and there is a severe asymmetry in information. Patients have great difficulty in discerning when their doctor is over-treating,” he said.
Costs have skyrocketed
Meanwhile, the Association of Private Hospitals of Malaysia (APHM) president Datuk Dr Kuljit Singh said private hospitals had always tried to keep costs low to the patients as much as they can.
“People may think they have a lot of income. But it is not as much as we believe because we have a lot of expenditure to keep the hospitals up to a particular standard, including upgrading.
“We try to reduce our cost to the patient and though it may look very high, it is already low enough, and we cannot go any lower than that,” he was reported saying.
Kuljit said medical costs were rising as most healthcare products purchased, including by the Government are from foreign nations.
“Hardly anything is manufactured in Malaysia, except for gloves or maybe personal protective equipment (PPE), but medication and equipment are all from Europe and the US.
“The cost is also going higher. With the exchange rate of US$1 to RM4 in the last 10 years, equipments coming from those nations are getting expensive.
“If we look at the Government’s budget, they spend billions of ringgit to keep healthcare growing. In fact, their budget has been going up for the last 10 years,” Dr Kuljit remarked. – March 26, 2021
