Do not compare basic plan with premium insurance

THE proposed base Medical and Health Insurance or Takaful (MHIT) plan has been criticised for offering limited coverage and lacking competitiveness. Such assessments, however, are relying on an inappropriate comparison.

The base MHIT plan is not designed to rival comprehensive private medical insurance products. It is a baseline policy instrument intended to provide affordable and standardised health protection for Malaysians who are uninsured or struggling with rising insurance premiums. Its effectiveness should be evaluated based on whether it improves financial protection and access, rather than whether it matches premium insurance plans.

The base MHIT plan addresses the financial risk of large and unpredictable medical bills by pooling risk and limiting health- related financial shocks that can destabilise household finances.

Criticism focusing on deductibles and coverage caps overlooks a fundamental trade-off in insurance design. Affordability and benefit generosity cannot be maximised at the same time.

A plan intended for broad participation must incorporate cost- sharing mechanisms to keep premiums within reach of middle- and lower-income households.

In this context, deductibles are not a weakness but a necessary feature to sustain affordability.

The base MHIT plan is voluntary and complementary. It does not replace the public healthcare system, nor does it restrict individuals from purchasing more comprehensive private insurance if they wish. Instead, it fills a critical gap between public healthcare and high-end private coverage by offering a basic safety net for those previously excluded from medical insurance.

Health financing systems work best when they are layered.

Public healthcare ensures access, basic insurance protects against financial shocks, and supplementary insurance offers greater choice and comfort. The base MHIT plan strengthens this structure by raising the minimum level of protection available.

The relevant question is therefore not whether the base MHIT plan is the most generous insurance option available, but whether it improves the existing landscape of health protection.

Judged on this basis, it represents a meaningful and economically sound step towards greater financial resilience and inclusivity in healthcare.

ASSOC PROF DR MUHAMMAD IRWAN ARIFFIN

Department of Economics, Kulliyyah of Economics and Management Sciences,

International Islamic University Malaysia