KUALA LUMPUR: Malaysia needs a whole-of-nation approach to address the rising cost of healthcare, which has led to more expensive premiums for insurance and takaful policyholders.
This risks pushing those unable to afford the rising premiums toward the already overburdened public healthcare system.
Bank Negara governor Datuk Seri Abdul Rasheed Ghaffour highlighted that key stakeholders are continuing to work on strategies to manage medical inflation and ensure sustainable access to medical and health insurance/takaful (MHIT).
He was speaking at a media briefing for the release of the central bank’s 2024 annual report, alongside the economic and monetary review and the financial stability review for the second half of 2024.
Bank Negara has projected healthcare and medical costs to rise by 15% this year, compared with 10% globally and 11% in the Asia-Pacific region.
Healthcare costs in Malaysia grew by 15% in 2024, exceeding the global and Asia-Pacific averages of 10%, driven by factors including the rise in non-communicable diseases, advancements in medical technology and investments in medical equipment and treatments, compounded by a weaker currency.
According to the central bank’s annual report, between 2021 and 2023, the total cost of MHIT claims increased by 73%, far surpassing the 21% growth in MHIT premiums collected.
The more frequent utilisation of medical services has been further compounded by the high costs of hospital supplies and services (HSS), which remain unregulated and show wide variation across hospitals.
HSS currently constitutes 59% to 70% of private hospital bills.
Premium adjustments have become more significant post-Covid-19 as insurance and takaful operators (ITOs) adjust their premiums to reflect the increase in average costs, utilisation of healthcare services over the years and the rise in medical claims.
The annual report shows that, in 2024, around 9% of policyholders experienced a premium increase of more than 40%, with another 61% saw a hike of about 20%.
“Ensuring MHIT remains accessible over the long-term requires addressing the root cause of the rising medical cost, which requires a whole-of-nation approach.
“To this end, the central bank is working with key stakeholders including the Finance Ministry, Health Ministry, ITOs, private hospitals and consumer groups to implement key initiatives guided by five strategic thrusts,” Abdul Rasheed said.
In a foreword to the briefing, he stated that while the country’s healthcare system remains one of the most accessible in the world, recent challenges have highlighted capacity constraints and issues with the uneven distribution of resources among the public and private healthcare sectors.
He emphasised the need for sustainable and equitable financing in the healthcare system and noted that “rising medical costs, amid subdued wage growth in 2024, have exacerbated cost of living issues for some households”.
Meanwhile, Bank Negara has projected Malaysia’s economy to grow by 4.5% to 5.5% this year, driven by sustained domestic demand, supported by private consumption, private sector investments, continued progress in public sector infrastructure projects and adjustments to civil service wages.
Abdul Rasheed said that while export growth could moderate in the face of more severe trade restrictions and geopolitical conflicts, household spending and robust private sector investment expansion should support overall growth.
Bank Negara also estimated global growth to expand by 2.8% to 3.3% on the back of positive labour market conditions, moderating inflation, easing monetary policy and the global technology upcycle.
As for inflation, the central bank has projected headline inflation for this year to average between 2% and 3.5%, with core inflation, stripped of energy and food items, expected to average between 1.5% and 2.5%.
Abdul Rasheed said inflation is expected to trend higher but remain manageable due to the upcoming implementation of the RON95 subsidy rationalisation, the expansion of the sales and service tax to cover more items and services, and the revision of the minimum monthly wage to RM1,700 from RM1,500.
He also pointed out that monetary policy would continue to focus on maintaining price stability to support sustainable economic growth.
“Domestic monetary and financial conditions will remain supportive of financing needs amid sustained economic expansion.
“Credit demand will be driven by positive prospects of domestic growth and income,” he said, adding that despite the potential risks from external developments, the country’s financial markets remain resilient and well-positioned to preserve orderly market conditions.
Bank Negara has kept the benchmark overnight policy rate at 3% since May 2023.
The current account surplus is projected to range between 1.5% and 2.5% of gross domestic product this year, supported by a higher goods surplus and a lower services deficit.
Factors supporting the current account balance include the continued technology upcycle driving demand for electrical and electronic exports, improving inbound tourism and travel receipts, and higher inward income repatriation.
The economy grew by 5.1% last year, driven by a 5.1% growth in private consumption, a 12% rise in total investments and a return to positive growth in exports, which increased 8.5%.
Headline inflation in 2024 moderated to 1.8%, down from 2.5% in 2023.
