A THINK tank has expressed concern over Negara Malaysia’s (BNM) requirement for insurers and takaful operators (ITOs) to introduce co-payment features in their new medical and health insurance and takaful (MHIT) products by the third quarter of this year.

Galen Centre for Health & Social Policy CEO Azrul Mohd Khalib said such a move could potentially increase hardship among households, expose them to the risk of financial catastrophe, and still fail to address the problem of high healthcare inflation.

Azrul was responding to Deputy Finance Minister Lim Hui Ying’s announcement during the Dewan Rakyat Special Chamber session on July 1 where she said the move is one of the measures to deal with the sudden increase in premiums or contributions for MHIT products.

He said the main reason for taking health insurance is to protect individuals from the high cost of healthcare, whereby the insurance acts as a “safety net” and safeguard against catastrophic health expenditures, which is defined as exceeding 40% of household income.

“By introducing a co-payment feature which will eventually replace existing products, insured patients could face large out-of-pocket payments beyond their means in the case of a major illness,” he remarked in a statement on Friday (July 5).

“Ironically, it could create the very situation which individuals expect to be protected from by having health insurance.”

Citing the buffet syndrome which had been used as one of the main arguments to justify this policy, Azrul said while there were certainly patients who abuse their insurance plans, it does not make sense to take a blanket approach to integrate co-payment to curb this.

The buffet syndrome is used to define actions by consumers who seek to maximise the value of their premiums without considering associated costs, contributing to the upward spiral of healthcare expenses.

“No one wants to get a chronic illness such as kidney failure, cardiovascular disease or cancer just to utilise their insurance coverage.

“No one chooses to get unwell, seriously ill, or incapacitated due to a catastrophic condition. Not all doctors prescribe expensive treatments and not all full rider policyholders submit large claims,” Azrul emphasised.

“There are definitely patients who abuse their insurance plans, but does it make sense to take a blanket approach to integrate co-payment to curb the buffet syndrome?”

Healthcare inflation

According to BNM’s directive, effective September 1, 2024, ITOs will also not be allowed to design new MHIT products without the minimum co-payment feature.

Questioning if this would address the problem of high healthcare inflation, Azrul pointed out that at 12%, healthcare inflation in Malaysia is approximately five to six times higher than the general inflation rate, and is among the highest in the Asia-Pacific region.

“What is the real cause of this inflation? Malaysia, like many upper middle-income countries, is experiencing an increase in the demand for healthcare due to an increasing proportion of the population who are above the age of 60.

“More people are living with three or more chronic illnesses, and is in need of better and improved quality of care.

“The medical bills imposed by providers such as private hospitals continue to not be regulated and it had been noted that the difference in fees imposed by private hospitals for patients paying out-of-pocket and those utilising an insurance policy can be 100% more expensive for those with a medical card.

“Insurers are forced to pay what has been charged. How does this make sense or even tolerated? The vast difference in bills is likely contributing to higher insurance premiums and costs, more than the buffet syndrome.”

According to Azrul, over-consumption can definitely be cause for blame, but so can over-charging, resulting in patients and policyholders paying rapidly escalating fees and premiums over time.

“Will co-payment address the problem of overcharging such as for the use of a wheelchair, a pillowcase, or three-ply masks. What are we doing about regulating these charges imposed by private medical facilities?” Azrul asked.

He said ironically the introduction of co-payments could result in people cancelling their insurance policies, electing to take their chances with the public healthcare system, and actually increasing the demand and load in government clinics and hospitals.

“This would be a tragedy and reverse the gains made over the past decade in insurance coverage. For the moment, this policy is not retrospectively applicable to those who have existing policies, but this could change,” he remarked.

“There is also the issue of quantum. Will these co-payments be capped? Will there be a maximum annual co-payment amount for policyholders? BNM’s February 2024 policy document leaves that critical decision to insurers.

“Will patients be forced to tap into their Employees Provident Fund savings to pay their co-payments if they lack the money? What if they cannot pay? What happens then?” - July 5, 2024 

https://focusmalaysia.my/co-payments-will-cause-jump-in-out-of-pocket-payments-but-fail-to-address-healthcare-inflation-says-think-tank/