High premium malady needs remedy

SKYROCKETING medical insurance payments are hurting Malaysians badly, forcing some to seek public assistance and even cancel their policies which have become too costly.

Much more needs to be done to treat this festering financial wound because whatever measures now are simply not working.Insurance companies have turned their nose up at the suggestion to not raise medical insurance payments by 40% to 70%. This means the industry is headed in the way of the education sector where escalating fees have made it unaffordable for many Malaysians.

Who is at fault? On the surface, the culprit seems to be the hospitals. The fees and costs in some cases seem excessive and with much profit to be made.

That cost is transferred to the insurance companies and onto medical insurance cardholders via higher premiums.

As if to justify the higher premiums, the Life Insurance Association of Malaysia, prompted by Bank Negara, has said that from mid-2025, it will publish procedure costs at private hospitals. This is to show what hospitals are charging for consumables such as bandages and rubber gloves.

The private hospitals have responded by saying they want to be engaged in “collective transparency.”

Actually, the private hospitals need not be involved because patients and insurance companies are given the itemised bill, so they will know the charges.

Why do basic consumables cost so much? It is hoped that the review will provide some clarity.

One reason is the interest of private equity companies that have invested in hospitals and seek high returns in the quickest time.

In addition, some of the recent hospital deals tended to be on the rich side, such as IHH Healthcare Bhd’s purchase of Island Hospital in Penang for RM3.92bil to gain exposure in the northern part of the country.

As a result of these deals, it has become necessary to recoup the cost of acquisitions through high returns, thus the surge in medical inflation.

According to AON Insurance Brokers, medical inflation in Malaysia this year is estimated to rise by 15%, compared with an overall inflation rate of 1.9% in October.

Malaysia has the second highest medical inflation rate in Asia-Pacific. It’s not exactly an enviable position for the average person.Medical inflation in Malaysia has worsened in recent years.

It is estimated at between 8% and 12% these days compared to between 8% and 9% from 2013 and 2018. These rates are way higher than the rise in the consumer price index during those periods.

The scary thing is that Malaysia’s medical inflation rate has been rising way faster than even the United States where it is estimated to be 8% this year. It was 5.8% to 6.4% between 2013 and 2023.

It is common knowledge that medical fees in the United States are prohibitive and the monthly insurance premiums can be exorbitant – not something that Malaysia should emulate.

Another issue is the availability of hospital beds. It is said that in 2022, Malaysia had about 45,000 beds in government hospitals while the private sector had 17,000 beds.

The private sector, encouraged by the lucrative medical business, will surely want to accelerate the rollout of beds at the expense of the government sector which has funding constraints.

This can have a telling impact on Malaysia as society ages, exacerbating the pressure on finances that many will struggle with post-retirement.

Higher medical fees will only push more silver-haired Malaysians towards the public sector which needs to ensure it can handle the potential deluge of patients.

One fix will be a national insurance programme, which the government is said to be working on. Hopefully that programme will ensure that public hospitals are fully-funded.

This can also give private companies an incentive to contribute to the scheme instead of depending on private insurance. This will result in Malaysians benefiting from a better-funded public healthcare system.