Lifting healthcare spending

GOVERNMENTS around the world have to always grapple in deciding how best to spend their money.

One important area of expenditure is healthcare.

Rising healthcare spending per capita has been reflected in a significantly healthier population, according to a report by the Organisation for Economic Co-operation and Development (OECD) titled “Healthcare Systems: Getting More Value For Money.”

In Malaysia’s case, it is currently spending less on public healthcare, accounting for 2.59% of gross domestic product (GDP) in comparison to the benchmark of upper-middle income countries that range between 4% and 5% of GDP, according to Health Minister Khairy Jamaluddin.

Other major economies such as the United States and China spent 18.8% and 5.3% of GDP, respectively, on healthcare in 2020, according to OECD statistics.

Malaysia also forks out less than its neighbouring country Singapore, which spent about 5.9% of GDP on healthcare in 2021, according to Singapore’s health ministry. The ministry expects Singapore to spend about 9% of GDP on healthcare by 2030.

Manokaran: As Malaysia is expected to become an ageing nation, higher spending is important to achieve a healthy ageing society.

With the current emphasis on healthcare reforms, Khairy has called for Prime Minister Datuk Seri Ismail Sabri Yaakob to gradually increase the much needed public healthcare expenditure to 5% of GDP. This would mean a 100% increase in the healthcare budget.

The Health Minister disclosed that the Prime Minister has also given his commitment to increase Malaysia’s public healthcare expenditure to ensure that the country has a world standard public health system in the future.

A higher allocation for the ministry would be reflected in the upcoming Budget 2023, scheduled on Oct 7.

Thus far, under Budget 2022, the Health Ministry received the second largest allocation of RM32.4bil after the Education Ministry amid the Covid-19 pandemic.

But can the country afford to increase its health expenditure with the prevailing economic and fiscal environment?

PwC Malaysia deals partner of economics and policy Patrick Tay Soo Eng puts it this way: “I would ask, can Malaysia afford not to?”

He says talent and human capital is key to a country’s prosperity and a good healthcare system maximises life expectancy and productivity of the people.

“As a starter, raising 3% to 5% of GDP should be done in a well-thought-out manner, as it would involve trade-offs in terms of cutting back on other spending.

“There is also a need to address inefficiencies and ineffectiveness in how the current 2.59% of GDP is spent,” he tells StarBizWeek.

“Part of the answer is improving the effectiveness and efficiency of the existing spending.

“Administrative efficiency, creating the right ecosystem and putting the right assets in place to support our hardworking doctors and nurses will be key to maximising benefits of any health spending,” he explains.

Meanwhile, he cautions that the healthcare sector must not tolerate dubious practices in procurement.

“Transparency and accountability, as well as introducing competitive pressures in supply markets, will help us maximise value for money in healthcare expenditure,” he says.

Given the federal government debt of RM1.05 trillion and debt service charges of RM43.1bil in 2022, economist Manokaran Mottain says increasing healthcare spending would cause further burden on the country’s fiscal deficit.

And in order to curb the fiscal deficit and increase healthcare expenditure, he notes that the government would need to cut on existing subsidies given to the public.

“We may not be able to achieve a significant increase in healthcare expenditure in the upcoming budget, given the fiscal environment.

“However, as Malaysia is expected to become an ageing nation, higher spending is important to achieve a healthy ageing society,” he reckons.

Nevertheless, Deloitte South-East Asia Life Sciences and Health Care leader Kavita Rekhraj points out that it is important for the government to view healthcare expenditure as an “investment” rather than an “expense”.

She adds that “time and time again, it has been demonstrated that increase in healthcare spend raises the quality of lives and drives creativity and productivity in the workplace, leading to further economic development.”

As many countries continue to fight and recover from the Covid-19 pandemic, Rekhraj says the government’s funding should focus on the need to protect the underlying population health, fortify the foundations of health systems and strengthen the country’s healthcare professionals on the frontline.

“The fundamental effort is to build resilience through additional financing and investment across the ecosystem,” she points out.

Rekhraj: It is important to drive a culture of being a healthy nation, with the onus on the population to take care of their health and well-being.

Aside from increasing the healthcare budget, Rekhraj believes patients should also have access to tools that help them achieve their wellness and health goals.

“It is important to drive a culture of being a healthy nation, with the onus on the population to take care of their health and well-being.

“Driving consistent messages on healthy eating, exercise and mental well-being – not just in the form of messaging but working with stakeholders across the ecosystem – is important.

“For example, the government can provide affordable healthy food alternatives, create a culture of exercise across all ages and have a holistic and concerted drive towards a mindset of being a healthier nation,” she explains.

To have better health outcomes, Rekhraj says it is key for the government to provide the necessary regulatory framework to enable stakeholders across the healthcare ecosystem to leverage innovations using artificial intelligence, machine learning to optimise the vast amounts of data, drive efficiencies as well as provide better consumer experiences around health.