PETALING JAYA: The success of the base medical and health insurance/takaful (MHIT) plan to be rolled out early next year depends on whether the government can pair the plan with structural cost controls on hospitals, says MBSB Research.
It pointed out that without the integration, the base plan would become too expensive for the public.
“Moving forward, the success of this reset will depend on the government’s ability to enforce clinical governance and the industry’s willingness to embrace value-based care,” it said.
The base MHIT plan, a key component of the Reset strategy announced last March, represents part of the government’s initiative to recalibrate the private healthcare ecosystem by offering standardised no-frills medical coverage at a more affordable premium.
While healthcare experts had been receptive to reforms in the private healthcare system as costs soared, with insurance and takaful premiums rising in tandem, they had also suggested that there should be strict monitoring to ensure the base plan works.
The Finance Ministry addressed this criticism “by pointing out that the plan’s deductibles and copayments are a deliberate tool to inject transparency and discipline into the private healthcare market”.
A notable shift in the base MHIT plan’s offering involves the coverage of pre-existing conditions announced by the Health Ministry.
“This is a significant departure from the current Malaysian insurance market, where such conditions are almost universally excluded or lead to outright coverage denial,” it said.
MBSB Research has maintained a “positive” recommendation on healthcare stocks, but cautious over the earnings impact.
It placed IHH Healthcare Bhd
and KPJ Healthcare Bhd, both major hospital operators, under review.
For IHH, the research house maintained a “neutral” call and target price (TP) of RM8.25 while KPJ, also with a “neutral” call, had a TP of RM2.76, noting that the base plan’s rollout in 2027 signalled a shift from a price-driven to a volume-driven growth model.
“While the transition to diagnostic-related group payments and enhanced price transparency will inevitably compress margins on itemised billing, the influx of newly insured patients is expected to boost hospital occupancy rates across Malaysia,” it added.
It expected IHH to face lower revenue intensity, as the base plan may only cover essential care that yields lower margins.
“However, to maintain returns, IHH has the potential to create a standardised base MHIT plan packages that would be cost-effective to deliver but high in volume due to higher expected demand,” it said.
It said KPJ would be the main beneficiary of the base plan given the company’s domestic focus.
