PETALING JAYA: The government’s new Base Medical and Health Insurance/Takaful (MHIT) framework promises more affordable private healthcare coverage, but experts warn that without strict regulation of profit-driven insurers and hospitals, the reform may offer limited relief to the very groups it aims to help.
The Base MHIT framework, released by Bank Negara on Thursday, introduces a standardised, voluntary insurance product aimed at Malaysians who are uninsured or facing steep premium hikes.
While not intended as a universal health insurance scheme, it is positioned as a baseline option to reset expectations around coverage, pricing and benefits in the private insurance market.
Health systems specialist Dr Khor Swee Kheng described the framework as an important foundation for broader reform, even as he cautioned against expecting immediate results.
“The Base MHIT is not and cannot be a magic solution for decades-long structural issues,” said Dr Khor, who is also chief executive officer of Angsana Health.
“But it sets the foundation for other non-MHIT reforms and helps build stronger fundamentals for the insurance industry.”
He noted that active participation from insurance and takaful operators would be critical to ensuring the framework succeeds in expanding access to coverage among the M40 and B40 groups.
“If insurers compete transparently and robustly to build innovative products, this can increase access while also strengthening the industry by enlarging the risk pool and reducing adverse selection,” he said.
Public health medicine specialist and former Health director-general Datuk Dr Zainal Ariffin Omar said the intent behind the Base MHIT was commendable and long overdue, particularly for disadvantaged groups who struggle to afford private coverage.
However, “the implementation is very challenging,” he said.
“The biggest difficulty lies in the fact that the framework depends on business entities in both the insurance and healthcare sectors, which are fundamentally profit-driven. This involves insurance companies and private healthcare providers, and they operate on profit motives.
“That is why strong government control and regulation are absolutely critical.”
Affordability remains a central concern. While the RM50 monthly premium highlighted in public messaging applies to the Standard-Plus Plan, Dr Zainal Ariffin noted that this option comes with a high deductible of RM10,000 to RM15,000 and is designed mainly for catastrophic coverage.
“The core Standard Plan carries higher premiums, estimated at RM80 to RM120 a month for those aged 31 to 35, with costs rising significantly for older age groups.”
He also raised sustainability concerns for senior citizens, pointing out that premiums for those in their mid-70s and above could run into several hundred ringgit a month.
He cautioned that using Employees Provident Fund savings to pay insurance premiums could undermine retirement adequacy over the long term.
From an equity perspective, Dr Zainal Ariffin said the Base MHIT could help ease pressure on overcrowded public hospitals by offering middle-income Malaysians a clearer pathway into private care.
“However, reliance on risk-rated premiums means older and sicker individuals would continue to face higher costs, potentially limiting uptake among those who need coverage the most.”
Economist and policy specialist Dr Geoffrey Williams questioned whether the framework can realistically curb medical inflation without direct price regulation.
“You cannot solve medical inflation with a private insurance scheme, even if it follows a government product design. There will still be medical inflation unless prices are regulated, and that is not part of this scheme.”
Williams noted that the voluntary nature of both the product and insurer participation means uptake will largely depend on market dynamics, with some consumers potentially switching to cheaper plans without fully understanding coverage limitations.
“The lower-cost options have thinner margins, lower annual limits and more exclusions. People may believe they are well-covered, only to find they face significant out-of-pocket costs when coverage ends,” he said.
Williams also cautioned that the annual coverage limits may be insufficient for major treatments while remaining excessive for minor care, increasing the risk of underinsurance and higher out-of-pocket spending.
