PETALING JAYA: Bank Negara's recent plan to introduce co-payment options for medical and health insurance has been questioned by a health professional.

International Islamic University Malaysia (IIUM) medical officer Dr Muhammad Yassin Ikbaal said in a statement on Saturday (July 20) that while the move was to curb medical cost inflation, it posed significant risks to the accessibility and affordability of healthcare for Malaysians, especially in lower income groups.

Below is his statement in full:

Medical insurance co-payment plan: Are the rakyat at risk of financial strain?

As a medical professional, I am concerned about the recent plans by Bank Negara Malaysia (BNM) to introduce co-payment features in medical and health insurance products. While this aims to curb medical cost inflation, it poses significant risks to the accessibility and affordability of healthcare for the average Malaysian, especially to the B40s and M40s group, potentially leading to financial hardship and decreased utilization of necessary medical services.

The introduction of co-payments requires patients to pay a percentage of their medical expenses out-of-pocket, in addition to their insurance premiums. For instance, with a 5% co-payment on a RM50,000 hospital bill, a patient must pay RM2,500. This is a substantial burden for many families, especially those already struggling with high living costs. Such additional expenses can deter individuals from seeking necessary medical care, potentially leading to worsened health outcomes and higher long-term costs. With Malaysia’s medical cost inflation at 12.6% in 2023, significantly higher than the global average, the risk of financial catastrophe for many households is real.

BNM’s rationale behind co-payment features is to promote more responsible use of healthcare services, curb overconsumption, and reduce fraudulent claims. By having a cost-sharing mechanism, patients might be less likely to undergo unnecessary procedures, thus helping to control healthcare costs.

A 2020 study by Actuarial Partners Consulting for Life Insurance Association of Malaysia (LIAM), Persatuan Insurans Am Malaysia (PIAM), and Malaysian Takaful Association (MTA) indicated that making co-payment features compulsory in insurance plans might contravene anti-competition laws. The study suggested that policyholders are often willing to pay higher premiums to avoid co-payments, highlighting the importance of offering options rather than mandating a single approach. Despite this, BNM has mandated co-payment features, potentially limiting consumer choice and affecting competition within the market.

Other countries that have implemented co-payment systems have faced similar challenges. For example, in the United States, co-payments are a common feature of health insurance plans. However, studies have shown that co-payments can lead to reduced utilization of necessary medical services, especially among lower-income individuals, resulting in poorer health outcomes and higher overall healthcare costs due to delayed treatment.

In contrast, some European countries have managed to balance co-payments with measures to protect vulnerable populations. For instance, in Germany, co-payments are capped, and exemptions are available for low-income individuals and those with chronic illnesses. These safeguards help to ensure that healthcare remains accessible while still addressing the issue of overconsumption of medical services.

Implementing a co-payment system in Malaysia without adequate safeguards could lead to several setbacks:

1. Increased Financial Hardship: Without caps on co-payments or exemptions for vulnerable populations, many Malaysians could face severe financial hardship. This is particularly concerning for the B40 and M40 groups, who may already be struggling to afford healthcare.

2. Overburdened Public Healthcare System: If private healthcare becomes unaffordable due to high co-payments, more people might turn to the already overstretched public healthcare system. This could lead to longer wait times, reduced quality of care, and increased pressure on public health resources.

3. Reduced Insurance Uptake: High out-of-pocket costs could discourage people from purchasing health insurance,

4. Potential for Increased Medical Debt: Families unable to afford co-payments might incur medical debt, leading to long-term financial instability and reduced overall economic well-being.

To mitigate these potential negative impacts, several measures could be considered:

1. Implement Caps on Co-Payments: Setting maximum limits on co-payment amounts can prevent excessive out-of-pocket expenses.

2. Provide Exemptions for Vulnerable Groups: Exemptions or reduced co-payments for low-income individuals and those with chronic illnesses can help maintain access to necessary healthcare services.

3. Increase Transparency in Medical Billing: Clear and transparent billing practices can help prevent overcharging and ensure that patients understand their financial responsibilities.

4. Strengthen Public Healthcare Funding: Enhancing the capacity and funding of public healthcare facilities can help absorb any increased demand resulting from changes in private healthcare affordability.

5. Value-Based Healthcare: Health Minister Dr Dzulkefly Ahmad has advocated for private hospitals in Malaysia to adopt value-based healthcare to curb medical cost inflation and improve health outcomes. This approach shifts from a pay-for-service model to a pay-for-outcome model, which can enhance payment effectiveness and health outcomes without fueling inflation due to uncontrolled procedure costs.

In conclusion, while co-payment plans may help address some issues in the healthcare system, their implementation must be carefully managed to avoid placing undue financial strain on Malaysian families. Safeguards such as caps and exemptions are essential to ensure that healthcare remains accessible and affordable for all. Additionally, adopting value-based healthcare can further enhance the effectiveness of payments and health outcomes, providing a balanced approach to managing healthcare costs and improving overall public health.

Dr Muhammad Yassin is a junior doctor and healthcare reform advocate.

https://www.thestar.com.my/news/nation/2024/07/20/doctor039s-concern-over-co-payment-plans-for-health-insurance