Private health financing challenges

I REFER to the article by Daniel Khoo entitled “Private hospitals, insurers stirred as claims rise” (The Star, Sept 30; online at and the letter by the Federation of Malaysian Consumers Associations (Fomca), “Wanted: A body to oversee health insurance payouts” (The Star, Sept 25; online at

The escalating cost of medical services in Malaysia has become a growing concern, exacerbated by factors such as general price inflation, a weakened ringgit, and disrupted supply chains, including a human supply chain as, reportedly, we also face a shortage of nurses in private hospitals.

If the financial burden faced by patients is of concern, private hospitals could consider taking on the credit risk. After confirming patients’ health insurance status and, if necessary, their credit rating, private hospitals could proceed with necessary treatments and later claim back the hospital bills from private insurers, sparing patients from immediate financial strain. Patients would only be responsible for any outstanding amounts after the insurance claim is settled.

Private health insurers, on the other hand, should increase transparency in their selection and decision-making processes. The claim assessment process also needs improvement to be more consistent, efficient, and user- friendly for patients and healthcare providers.

Adequate medical knowledge among claims processors is essential, as medical insurance claims differ significantly from life or motor insurance claims, and unwarranted rejections can cause undue financial and emotional stress to suffering patients.

Furthermore, the lack of portability between private health insurance products discourages patients from seeking better alternatives, particularly when faced with premium loading or exclusions due to illness.

To be fair, there is a dispute handling mechanism in place for private health insurance payouts; for instance the complaint department of private insurers as the first line, Ombudsman for Financial Services, and even Bank Negara Malaysia. What is more urgently needed for the insured is directions on how to navigate this complex dispute handling process. This is perhaps where Fomca, consumer associations, and other NGOs could provide assistance to the insured, especially given the suspected low health insurance literacy levels in the local population.

Ultimately, multistakeholder collaboration is essential for effective private healthcare financing regulation. This includes active involvement from the Health Ministry and Bank Negara Malaysia.

The Health Ministry should closely monitor the quality of healthcare and fee charges in private hospitals, while both entities must ensure consumer rights are protected, especially regarding affordability and sustainability.

It may be debated whether allocating more attention and resources to regulate private health insurance is justified, given its relatively small contribution of 8% to total health expenditure.

However, this depends on the role we envision private health insurance playing in our national healthcare system. If we persist with the current risk-rating, voluntary, and supplementary nature of private health insurance, it will continue to have only a minor role in healthcare financing.

Although the recently tabled Health White Paper did not specify a healthcare financing mechanism and the role of private health insurance, the Health Ministry did acknowledge the need for it to play a greater role in the governance and stewardship of private health insurance alongside Bank Negara Malaysia to address issues such as insufficient service coverage and premium and claim escalation.

Bank Negara Malaysia’s recent “Exposure Draft on Medical and Health Insurance/Takaful Business” (available at is also a positive step towards addressing some of these critical issues.

Addressing the challenges in private health financing truly requires the collaboration of multiple stakeholders to protect the interests of patients and ensure the sustainability of our healthcare system.


Petaling Jaya

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healthcare , insurance , sustainable , financing


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