NEWS that medical insurance premiums will be increased by up to 30% this year should be seen as a clear warning unless some form of urgent reform is undertaken within the private healthcare sector, said Galen Centre for Health & Social Policy.
In its release on Jan 17, the centre says the cost of healthcare will continue to move beyond the reach of the average Malaysian.
“Alarmingly, Malaysia’s healthcare system is increasingly resembling what is experienced in the United States rather than the UK’s National Health Service after which it was modelled.
“Already Malaysia is the only country in Southeast Asia and one of only two countries in the Asia Pacific which experienced double-digit medical inflation last year at 13.6%, an increase from 12.4% in 2018. In fact, the general inflation rate in 2019 was around 2%,” said its CEO Azrul Mohd Khalib.
He says the reality is that rising premiums are caused by insurance companies passing on the escalating costs of being diagnosed and receiving treatment in private healthcare facilities and charges imposed by third-party administrators, to policyholders.
“The increase in non-communicable diseases, more people living longer and advances in medical treatment are contributing to this inflation. But while this also occurs in other countries in the region, they do not experience the kind of crippling cost increases that we do. Why is that?” he asked.
Currently, less than 30% of the Malaysian population have some form of insurance against catastrophic illnesses like cancer. Even fewer have the right kind of health insurance without depending on their employers.
This recent news will cause existing policyholders to reduce their coverage or drop out altogether as they may not afford the higher premiums, said Azrul.
“This is neither good nor sustainable for both private healthcare providers and the health insurance industry. There must be a compromise between all parties involved to keep costs under control,” he emphasised.
He added that disruptive innovation is needed in this area of the healthcare sector.
“The status quo is unacceptable. Malaysia is overdue to urgently put into place a social health insurance (SHI) framework which would pool funds and risks across the population, and ensure those in need of medical coverage are able to receive it. In this case, it would also help act as competition to private health insurance and as a moderating influence on the costs imposed by private healthcare providers. People could opt out of SHI if they already have existing insurance or prefer their existing arrangement.”
Azrul hoped that with disruption and competition from social health insurance which caps payouts to private healthcare providers at more reasonable and transparent levels, the escalating healthcare costs can finally be brought under control.
“It could act as a cost-containment mechanism without sacrificing quality or access. After all, the policyholders of social health insurance would potentially be far more in number to those with private insurance,” he added.
According to data from the General Insurance Association of Malaysia, total health expenditures in 2018 reached RM60 bil. Nearly 52% of that amount was paid by the government, while 32% of it was paid by individuals through private insurance, corporations and other agencies.
Research by Fitch Solutions showed that healthcare services for the ageing population in the country will increase, with 15.3% of Malaysians set to reach 65 years and above by 2030.
Health Minister Datuk Seri Dr Dzulkefly Ahmad said in June last year, the aim was to build an efficient healthcare financing system involving the government, private sector and insurance companies. This system will help Malaysians receive proper treatment despite their financial setbacks. – Jan 17, 2020
