Kuala Lumpur, 17 January 2020 — The recent news that health insurance premiums will be increased up to 30 per cent this year should be seen as a clear warning that unless some form of urgent reform is undertaken within the private health sector, the cost of healthcare will continue to move beyond the reach of affordability 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 the Southeast Asia region and one of only two countries in the Asia Pacific which experienced double digit medical inflation last year at 13.6 percent, an increase from 12.4 percent in 2018. In fact, the general inflation rate in 2019 was around 2 percent,” said Azrul Mohd Khalib, Chief Executive of the Galen Centre for Health & Social Policy when commenting on the news.
“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?”
“Currently, less than 30 percent of the Malaysian population are having some form of insurance which provides financial protection 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 policy holders to reduce their coverage or drop out altogether as they may not afford the higher premiums. This is neither good nor sustainable for both private healthcare providers and the health insurance industry. There must be compromise between all parties involved to keep costs under control,” Azrul emphasised.
“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 coverage 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 private healthcare providers imposed costs. People could opt-out of SHI if they already have existing insurance or prefer their existing arrangement.”
“Perhaps with disruption and competition from social health insurance which caps payouts to private healthcare providers at more reasonable and transparent levels, can the escalating healthcare costs be finally brought under control. It could act as a cost-containment mechanism without sacrificing quality or access. After all, the policy holders of social health insurance would potentially be far more in number to those with private insurance.”
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