KUALA LUMPUR: Individuals with pre-existing medical conditions will be offered coverage under the base medical and health insurance/takaful (MHIT) plan, Health Minister Datuk Seri Dr Dzulkefly Ahmad says.
Dzulkefly said the government is concerned about the high number of individuals (more than 340,000 from January 2024 to June 2025) who have chosen to forego their health insurance due to substantial premium increases by insurance companies.
“It was difficult for us and we fought very hard for this – yes pre-existing medical conditions are covered under the MHIT plan,” Dzulkefly told StarBiz at the Forum Ekonomi Malaysia 2026 (FEM2026).
He also explained that the diagnosis-related group (DRG) model will eventually be implemented at all private hospitals nationwide after a delay to 2027.
“It will definitely be implemented together with the MHIT plan – this has to be done,” he said.
The DRG is a hospital payment and classification system that groups patients with similar diagnoses, treatments and expected resource use into the same category and then pays the hospital a fixed amount per case, not per service.
“I must stress that the overarching principle or objective of the healthcare reforms under the RESET strategy is to achieve a value-based healthcare system. If it was a fee-for-service, it has now got to be fee-for-health outcomes.
“This is where DRG will have its role to play to get the private sector (in this),” Dzulkefly said at the FEM2026’s panel discussion titled “Healthcare Reforms: Towards Equitable, Affordable and Quality Healthcare”.
He said this would also reduce inefficiencies in getting to precise decisions for any medical condition. “It is to move to fee-for-health outcomes. The insurance reforms must be seen as part of the entire healthcare reforms,” he added.
Another thrust to the RESET strategy is the electronic medical records (EMR) system, which provides data for the soon-to-be revamped healthcare system, he noted.
“This data helps to build up precision medicine and eventually precision public health with big data. This RESET strategy moves it from a model of seeking-healthcare to real health-care.
“This is where the primary healthcare players including the clinics and general practitioners play a key role as well,” Dzulkefly said.
He noted the main aims of the base MHIT product is to make it affordable, sustainable and viable. This would be launched together with the other initiatives, including the EMR and DRG as well.
“If, say, the billing charges (by private hospitals) remain inconsistent without DRG, then there will be a problem with policyholders being slapped with exorbitant charges, which would be passed on to the insurance companies that would then threaten us with increased premiums.
“We have called on insurance companies to exercise restraint to face this in the course of the next few years and not just resort to drastic increments in premiums,” Dzulkefly said.
Additionally, he noted that the unbridled increase is also seen by private hospitals.
“This is why it is important for the government to step in – and this base MHIT product is an alternative to middle income earners to have continued access to private healthcare.
“Meanwhile, the DRG will help to ensure no hospital would overcharge – this would also require private hospitals to share data so we can build the billing algorithms. The private hospitals are already working with us on this,” he added.
Dzulkefly also expressed concerns on the medical inflation rate of 15% in 2024 which was above the Asia-Pacific average of 10%, noting that this was “disturbing and concerning”.
“Also, the high number of health insurance cancellations in 2024 and 2025 is very disturbing, as it would mean a higher burden and would overstretch public healthcare facilities,” he said.
Meanwhile, TVM Capital Healthcare’s operating partner Ramesh Rajentheran said there is also a need to ensure any DRG implementation would not lead to other issues cropping up.
“In other countries, when DRG was introduced, we saw outcoding happening –which then resulted in code inflation – who will police all these?
“When we set fee schedules for doctors, in other countries we see overprescribing,” Ramesh said at the panel session.
Outcoding in DRG is to assign a diagnosis or procedure code that puts a patient into a higher-paying DRG than is clinically justified.
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