HEALTH insurance policyholders in the country seem to be the hardest hit when it comes to price hikes.
For the second time in three years, health insurers have seen it fit to increase their premiums by a hefty 20% or more.
This comes after a similar repricing exercise in 2021 which saw 20%-30% increases during the height of the COVID-19 pandemic and economic downturn. And there has been no response from the insurance industry’s regulator Bank Negara Malaysia (BNM), according to The Health newspaper’s latest edition.
Life Insurance Association of Malaysia (LIAM) CEO Mark O’Dell explains that medical inflation and premium increases were part and parcel of global issues.
“This consistent increase over the years has been due to multiple reasons, including medical inflation and the post-pandemic elective surgery uptake which are two big reasons,” he was quoted as saying.
While insurers were very active in trying to contain costs, providers were not actively controlling costs for insured patients, according to O’Dell. Policy plan designs which are changing also do not encourage patients to be conscious of costs as most plans today pay nearly 100% of the hospital bill.
Who’s at fault?
However, Association of Private Hospitals Malaysia (APHM) president Datuk Dr Kuljit Singh noted that private hospitals had implemented strategies to manage the effects of escalating premiums.
While cost-effective practices such as using generic medications and efficient technologies were embraced, balancing affordability and sustainability was challenging.
In this regard, the ear, nose & throat (ENT) specialist underscored the continuing tug-of-war between insurers seeking cost-effective solutions and healthcare providers advocating for patient choice and maintaining quality care standards.
Federation of Malaysian Consumers Associations (FOMCA) president Datuk Dr Marimuthu Nadason challenges the narrative of insurers attributing the premium hikes to medical inflation and rising private hospital charges.
“The real problem is the lack of price controls on medicines and medical devices. While doctors’ fees are regulated, they are often bundled with treatment, medicines and hospital charges. There is often a lack of transparency in disclosure and worse still, the prices charged are exorbitant.”
He described the considerable rise in insurance premiums as “unjustified”. The overloaded public healthcare system often pushes consumers towards private healthcare where prices are unregulated, resulting in exorbitant bills.
Justifying premium re-pricing
LIAM O’Dell explained that on-going medical claims witnessed a considerable surge with a notable 28% increase in 3Q 2023 compared to the same period in 2022. This follows a substantial 34% hike in 2022.
“The medical insurance policy becomes unsustainable when the premiums collected are insufficient to cover the expected claims expenses,” he asserted.
BNM declined to respond if it had approved this latest premium repricing. This leaves a critical regulatory perspective unaddressed in the on-going dialogue on the sustainability of health insurance protection in Malaysia.
According to BNM’s 2019 Annual Report, the re-pricing of medical and health insurance (MHI) products is a significant concern affecting 4.5 million policies between 2016 and 2019.
The consequence of this re-pricing is an affordability crisis as more expensive premiums render coverage increasingly unaffordable for a significant portion of the population.
This phenomenon is exacerbated by what the Report terms the “buffet syndrome” wherein policyholders seek to maximise the value of their premiums without considering associated costs, contributing to the upward spiral of healthcare expenses.
Striking a balance
Generali Insurance Malaysia Bhd CEO Fabrice Bernard explained that with Malaysia’s medical care costs exceeding the global average, the company aimed to balance comprehensive coverage with controlled premium increases.
To keep premiums affordable, diverse plans are offered, catering to different needs and budgets. “But of course, consumers play a role in this, too,” opined Bernard who is also the country head of Generali Entities in Malaysia.
“We continuously educate them on how to minimise their medical expenses by living a healthy lifestyle, taking regular screenings and vaccinations, visiting our panel providers for the best treatment and price, and understanding the necessity of the recommended treatments to avoid being overcharged.”
The Health had also reached out to several insurance companies for comments. AmMetLife Insurance Bhd and Great Eastern Life Assurance (Malaysia) Bhd declined to comment while Prudential Assurance Malaysia Bhd, AIA Bhd, Hong Leong Assurance Bhd, Tokio Marine Life Insurance Malaysia Bhd and Manulife Insurance Bhd did not respond.
Need for transparency and engagement
O’Dell underscored the industry’s active collaboration with regulatory bodies like BNM and stakeholder engagement and advocated for a collective effort involving the government, regulators, private hospitals and consumers to address the issues of medical cost and premium inflation.
He said understanding the necessity of every medical procedure and opting for cost-sharing measures can also promote responsible medical and health insurance usage, reducing the pressure on premium increases.
Marimuthu wants BNM and the Health Ministry (MOH) to establish a regulatory mechanism for private hospital prices.
“Bank Negara should also mandate insurance companies to disclose the variables used in determining a premium and how insurance premiums are calculated.”
Dr Kuljit proposes a strong public-private partnership involving government, insurers and private hospitals to create a sustainable healthcare financing structure.
Acknowledging the survival needs of each stakeholder, he suggested allowing those who can afford it to continue paying premiums for premium care while also implementing collaborative efforts to provide affordable options for those in need.
Meanwhile, policyholders with health insurance claims disputes can take their grievances to the Ombudsman for Financial Services (OFS). The OFS did not respond to The Health’s queries on its dispute-handling processes and resolution timeframes.
However, based on its 2022 Annual Report, it resolved 48% of the disputes within six months from the registration date while 69% of the disputes were pending six months and below as of Dec 31, 2022. That could mean the remaining disputes could take more than six months to over a year to resolve. – Feb 26, 2024
