Blueprint for Affordable and Sustainable Medical Insurance in Malaysia

In Malaysia, the steep increase in medical insurance premiumsremains a pressing issue. Many individuals have been forced to give up their policies, while others must reassess their coverage to ensure affordability. This rise in premiums stems frommultiple factors, including rising healthcare costs, annual medical inflation, overutilisation, increased claims post-pandemic, overcharging by healthcare providers, and fraudulent claims. 

Despite Bank Negara Malaysia’s (BNM) direction to limit premium increases to 10% for policyholders, some health insurers have not fully complied with the interim cap, which raises concern over rising premiums and charges of private hospitals. 

To further curb premium increases, co-payment measures were introduced by BNM as an option, where policyholders can reduce their monthly payments by covering a certain percentage or a fixed amount of hospital bills per year. However, as this concept is relatively new in the country, many remain hesitant as it necessitates setting aside funds for unexpected medical expenses.

Medical Insurance and Healthcare

Most recently, BNM has been working with Ministry of Health and Employees Provident Fund to develop basic health insurance, as well as value-based healthcare on takaful products. 

Addressing these challenges and ensuring sustainability requires a collective effort from policyholders, the government, and healthcare providers. How can we ensure that healthcare, a fundamental necessity, remains both affordable and sustainablefor all Malaysians? 

Responsible Usage and Implementing Healthier Habits

While medical insurance is designed to protect policyholders, it is fundamentally a business model where private insurance companies and agents derive income and profit. Hence, it operates on a shared-risk system, where excessive claims contribute to rising premiums. While many claims are legitimate, policyholders can play a role in managing costs by seeking second opinions and opting for cost-effective treatments without compromising care. Understanding policy terms is also crucial in preventing disputes and ensuring informed decisions about available treatments. 

With heart disease being responsible for 15.1% of deaths in Malaysia, it is one that is preventable through lifestyle changes. By adopting a proactive approach through healthier habits and routine screenings, policyholders can help mitigate the costs of insurance premiums by minimising claims. This benefits not only individuals and their families but also strengthens the overall sustainability of the insurance system.

Regulation, Incentives and Public Healthcare Reform

Our government also plays a crucial role in ensuring fair and stable insurance premiums. One effective strategy already in place is promoting preventive healthcare through tax incentives for screenings, vaccinations, and active lifestyle habits. Insurance providers can complement these efforts by collaborating with health organisations and hospitals to incentivise policyholders who maintain healthy habits, such as achieving daily step goals or undergoing regular health screenings. 

Furthermore, enforcing medical billing transparency by standardising treatment costs and  regulating medical inflation can prevent overcharging and discrepancies. For instance, implementing price controls on essential drugs and treatments can help curb excessive costs. It is also crucial for hospitals to prioritise patient care with quality treatment alongside financial sustainability, fostering long-term trust.

It is also essential to strengthen public healthcare services and resources. Without the needed enhancements, an overflow of patients into public hospitals may overwhelm the system. To ensure that quality healthcare remains accessible to all, balancing the needs of both public and private healthcare systems is crucial.

Adopting and Adapting

To achieve a more sustainable insurance system, Malaysia can learn from international best practices. An example would be Singapore’s universal healthcare system, which integrates three different components that encourage saving for routine care, insurance for larger expenses and funding from the government to support those in financial need. 

Germany’s hybrid public-private insurance model is also anotherexample to consider, as it requires employer and employee contributions to statutory health funds. This method helps to ensure affordability while maintaining flexibility, as individuals earning below a certain threshold are insured by public insurance, while higher earners have the option of private insurance. The shared financial responsibility helps prevent excessive costs and ensures comprehensive coverage for all legal residents.

Implementing similar strategic reforms in Malaysia will take time and effort, but ensuring affordability and accessibility to healthcare must be a national priority. Malaysia’s rising insurance premiums demand a coordinated effort from policyholders, the government, and healthcare providers. By learning from global models and adapting various strategies to Malaysia’s healthcare landscape, we can work towards a fairer, more transparent, and sustainable insurance premium for all.

Rubana Vighnesvaran and Hanna Yahya

Rubana Vighnesvaran and Hanna Yahya serve as Programme Directors for the Diploma in Business and Diploma in Accounting, respectively, at the School of Diploma and Professional Studies, Taylor’s College. With over a decade of experience in the education sector, Rubana and Hanna bring a wealth of experience with their expertise in curriculum innovation and programme management. Rubana’s strategic vision has enhanced learning experiences for business education, while Hanna’s passion for developing future-ready accounting professionals drives her focus on critical thinking and practical skills.

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