Kuala Lumpur, 23 January 2026 — The Galen Centre for Health and Social Policy agrees with the Health Minister Datuk Seri Dr Dzulkefly Ahmad that the proposed base medical and health insurance/takaful (MHIT) plan revealed yesterday will not be sufficient to rein in rising medical inflation. The base MHIT plan, which is being positioned as a national solution to affordability pressures and medical inflation in private healthcare under the RESET strategy, treats symptoms, does not address the need for fundamental private healthcare reforms, but tells the public that it aims to transform private health insurance and takaful offerings.

“The current design of the Base MHIT as outlined in its White Paper, is heavily dependent on the participation of private health insurance and takaful (ITOs) players and voluntary premium payments by the public. It risks creating a false sense of security, widening inequities in access to care, and shifting costs back onto patients, especially households already strained by rising living costs. Strangely, for a product aimed to raise the “floor” or set the minimum standard for base MHIT coverage, it also compares poorly against existing similar health insurance products already in the market,” said Azrul Mohd Khalib, Chief Executive of the Galen Centre for Health and Social Policy.

Does the base plan provide “meaningful” coverage?

“The Base MHIT concept is not intended to cater for every strata of Malaysian society. However, it aims to be a standardised, affordable entry-level product for Malaysians currently uninsured or struggling with premium hikes. However, affordability cannot come at the expense of meaningful coverage.”

“An annual limit of RM100,000 (RM150,000 above age 60) may cover many routine admissions, but it will not reliably protect families from complex or prolonged conditions such as  cancer, major cardiovascular events, kidney failure, complicated infections, or multi-disciplinary rehabilitation, which can rapidly exceed basic limits, particularly if care is required across multiple episodes or months.”

“What happened to everyone below the age of 31 and those between the ages of 36 and 60? Are they being excluded from this base plan?” Azrul asked,

“A quick review of existing plans on the market also show that comparable health insurance products are already present, cost less, and have similar or better cover than what is being proposed under the base MHIT plan. Imposing deductibles between RM10,000 and RM15,000 for the Standard-plus plan while providing an annual policy limit of RM 300,000 is not competitive. With no yearly cap to deductibles and co-payments, repeated health episodes will be financially catastrophic. The White Paper is also clear that the initial listed premiums are subject to review and repricing.”

“It is also startling to see dengue and respiratory tract infections such as pneumonia being proposed for outpatient treatment under this plan. Hospitalization, particularly for those of high risk, is considered the standard of care and is key to manage possible severe, life-threatening complications that can arise rapidly.”

“The risk is that Malaysians purchase the plan believing they are protected, only to discover that they are underinsured when illness strikes, forcing them back into out-of-pocket payments or public hospital queues.”

Cost shifting rather than cost control

“The Base MHIT’s capped coverage, deductibles, and co-payments may reduce insurer and takaful exposure. However, it risks shifting costs back to patients without addressing the root drivers of medical inflation, including weak or absent regulation of pricing, limited disclosure of fees, variation in clinical practice, rising costs of medical consumables, technology and expertise, increasing domestic and international demand, leading to escalation of hospital billing. Insurance premiums do not exist in a vacuum.”

“Without stronger consumer protection bodies such as a Private Healthcare Commission to oversee health insurance premiums and private healthcare charges, the plan may unintentionally normalise higher out-of-pocket spending as a “new standard,” undermining the goal of affordability. Those enrolled in the base MHIT product will eventually end up in the public healthcare system,” Azrul pointed out.

A plan focused mainly on hospitalisation is a missed opportunity

“Malaysia’s healthcare burden is driven increasingly by chronic diseases such as diabetes, hypertension, heart disease, kidney disease, stroke, and obesity. Outcomes are determined by primary care, early intervention, diagnostics, rehabilitation, and long-term management, not only hospital admissions.”

“Yet the base MHIT plan remains heavily anchored to inpatient and hospital-based care, with limited emphasis on comprehensive outpatient pathways and clear linkages with primary care facilities such as GP (general practitioner) clinics. A truly meaningful insurance reform must strengthen preventive care and chronic disease management, not treat hospitalisation as the central “value proposition.”

Co-payments and “network tiers” can penalise patients for system failures

The plan introduces a tiered network design, where out-of-network care incurs a 20% co-payment with an additional cap per disability, while in-network options carry lower cost-sharing. This approach assumes that patients can always access appropriate care within the “preferred” network of hospitals.

In reality, access is constrained by geography, capacity, waiting times, specialist availability, and hospital readiness, especially outside major urban centres or regions such as the Klang Valley. Malaysians should not be penalised through higher co-payments simply because the network does not include a suitable facility near them, or because critical services are unavailable where and when they are needed. This raises concerns of unequal access, where patients in less-served areas may systematically pay more for the same medical need.

How should we measure success?

• Regaining protection: The base MHIT plan may be more attractive to those with existing insurance policies struggling with rising premiums, but may not attract those without insurance to begin with. As previously predicted, the repricing exercise caused more than 340,000 policies to be surrendered or terminated in 2024 and 2025. Getting those previous policyholders to sign on to the base MHIT and regain their coverage would be a major achievement.

• Those over 60 years of age: This group are particularly vulnerable. The proposed premiums in the base MHIT plan are not within their affordability. Cash subsidies should be offered to those over 60 and the unemployed who are seeking assistance under the Social Security Organisation’s (Socso) employment insurance system to co-pay for their premiums.

• ITO participation: The smaller ITOs will likely opt-out of participating in this plan due to the dilution of the risk pooling and involve only the larger multinational insurance companies which have larger resources and margins. There needs to be incentives for them to participate.

• Existence of a Private Healthcare Commission: A dedicated body needs to be established to implement clearer consumer safeguards and protections on exclusions, claim adjudication, premium repricing practices, portability rights, and hospital charges.

“The base MHIT plan can potentially introduce positive disruption into the private healthcare space. However, it  must not become a low-cost instrument that transfers financial risk away from the system and onto families. Malaysia needs meaningful reforms that expand real protection, improve access, and enforce fair pricing, not products that provide affordability only by limiting what Malaysians can actually claim,” said Azrul.