Viability of mandatory national health insurance in Malaysia

ACCESS to quality healthcare has long been a pressing concern in Malaysia, with underpinning challenges ranging from rising medical costs to unequal distribution of resources, as highlighted in the Health Ministry’s Health White Paper 2023.

To address these challenges, proposals for significant reforms, such as the implementation of a mandatory national health insurance scheme, have emerged.

This proposed scheme aims to ensure equitable access to healthcare services and improve the overall health outcomes of Malaysians while addressing the existing gaps in the healthcare delivery.

In deliberating this transformative policy, it is crucial to examine its potential benefits, concerns, and implications for individuals, healthcare providers, and the country as a whole.

Challenges to public healthcare in Malaysia: Malaysia currently provides a low-cost public healthcare system that offers universal and wide-ranging services. With a two-tier system encompassing both public and private healthcare services, the country has made significant strides toward achieving universal health coverage.

Nonetheless, sustainability remains a challenge. The escalating cost of healthcare services, driven by factors such as medical inflation and the recent Covid-19 pandemic, has intensified the pressure on the government to increase its spending on national health.

Despite efforts to provide universal coverage with low-cost healthcare, concerns arise about the potential compromise of the quality of services delivered, leading to poor health outcomes. The strain on the public medical system often results in delayed access to treatment, prompting individuals with greater purchasing power to turn to private healthcare options.

This further exacerbates the disparity between those who can afford private healthcare and those who rely on the public sector, thereby contributing to inequalities in health outcomes.

The government has implemented several policies in an effort to address congestion and cost pressures. For instance, citizens are entitled to withdraw funds from their Employees Provident Fund savings in Account 2 to cover medical expenses. Additionally, the government incentivizes the purchase of private health insurance by offering income tax relief to subscribers.

To assist those in need, the establishment of the Medical Assistance Fund provides medical aid to individuals with limited financial resources.

Furthermore, since 2011, the government has mandated medical insurance for foreign workers through the "Foreign Worker Hospitalisation and Surgical Scheme".

Despite these efforts, Malaysia's healthcare system remains predominantly taxpayer funded. While it aims to provide affordable and accessible care, the public healthcare system often experiences overcrowding and delays. Limited resources and uneven distribution can lead to disparities in access, and concerns have been raised about the consistency and effectiveness of services.

Private healthcare services have supplemented the existing system, allowing individuals to voluntarily opt out of public services. Private hospitals and clinics provide various medical services and are often preferred by individuals seeking more personalized care or specialised treatments.

However, these private healthcare services are often more expensive compared to public healthcare. Consequently, private healthcare services are typically reimbursed by private health insurance or paid directly by patients.

Although private health insurance is available for purchase, the majority of the population does not possess such coverage. The National Health and Morbidity Survey (NHMS) 2019 found that 78% of Malaysians lacked private health insurance, with 43% citing affordability as the primary obstacle.

Is Malaysia ready for mandatory social health insurance? In 2009, the Health Ministry proposed an initiative called "1Care for 1Malaysia", which aimed to establish a system for mandatory social health insurance contributions.

Mandatory social health insurance serves as a stable financing mechanism with the capacity to pool risks and allocate funds to the health sector.

In theory, making participation mandatory is crucial for the success of such insurance as it helps to address issues related to the selection of higher-risk individuals and also ensure broader participation.

Although the initiative gained approval as part of the 10th Malaysia Plan (2011–2015), it faced significant opposition after concerns were raised about the potential financial burden it would impose on Malaysians.

Since mandatory health insurance does require individuals to regularly pay premiums, it can indeed be perceived as a burden, particularly for those with limited resources or low incomes. However, valuable lessons can be drawn from other countries regarding the equitable distribution of the payment burden among the insured, employers, and the government.

For instance, in Taiwan's National Health Insurance (NHI) system, premiums are calculated based on monthly incomes. Low-income households receive full government contributions, relieving them of the financial burden entirely. In the case of an average household (Category 1), the individual would typically pay approximately 30% of the premium while the organisation would contribute around 70%. This makes NHI premiums generally more affordable compared to private insurance available in the market.

Taiwan's single-payer NHI system covers the entire population, ensuring that all residents have access to healthcare services regardless of their income or employment status. This approach allows the government to subsidise the low-income group while allocating funds for investments in medical technology and other healthcare needs.

Conclusion: The perception of mandatory social health insurance as a burden may have been more prevalent in the past. However, the Covid-19 pandemic has significantly shifted the healthcare landscape. This complex and fast-moving crisis has taught us the importance of improving preparedness for future shocks.

Mandatory social health insurance serves as an alternative means to provide for universal health insurance coverage while the existing government funds can be strategically invested towards the public healthcare system.

The pandemic has redefined the significance of public health investment, emphasising the benefits of pre-investing in infectious disease prevention and transmission control rather than relying solely on reactive measures to mitigate health crises.

DR ONG SHEUE-LI and DR SONIA KUMARI SELVARAJAN

Universiti Malaya

DR FOO Lee-Peng

Tunku Abdul Rahman University of Management and Technology

and SIM WHY JEAN

Research analyst,

Institut Masa Depan Malaysia

Content keywords: Healthcare system, Health Ministry, Health White Paper 2023, national health insurance