PETALING JAYA: The proposed diagnosis related group (DRG) payment model for private hospitals in Malaysia is seen as working hand-in-hand with the government’s plans to encourage more affordable basic health insurance products.
The mentioning of DRG and affordable basic health insurance products together in the Budget 2026 speech also points to the roles private hospitals and life insurers are jointly undertaking in an era of persistent rising medical inflation.
During the tabling of Budget 2026 last Friday, it was announced that RM60mil would be set aside by the government and industry players to provide basic health insurance products for Malaysians.
Prime Minister Datuk Seri Anwar Ibrahim said the government also plans to offer various incentives to encourage Malaysians to obtain insurance policies.
To encourage greater insurance participation, Anwar said the personal tax relief of up to RM3,000 for life insurance or takaful premiums for individuals and their spouse would be extended to cover children.
With the rise in medical premiums, experts said the extension of coverage is a good move, although they added that an expansion of the tax relief amount on this front would be a more effective way to counter the steep rise in insurance fees.
The Life Insurance Association of Malaysia (Liam) said the extension to include life insurance protection for children was a welcome move that would encourage parents to insure their kids at a young age.
“This incentive will encourage parents to plan early for their children’s financial security. Purchasing life insurance for children is generally more affordable and ensures continued coverage into adulthood, regardless of future health conditions.
“The incentive also increases the penetration rate of life insurance which currently stands at 45%, meaning only four out of 10 Malaysians have life insurance protection,” said Liam chief executive Mark O’Dell.
