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
Created by savemalaysia | Sep 06, 2024
Created by savemalaysia | Sep 06, 2024
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Created by savemalaysia | Sep 06, 2024
Created by savemalaysia | Sep 06, 2024
I think the Junior Doctor needs to see the bigger picture and check his facts before rambling.
For example, B40 ownership of private medical insurance is not significant, for the simple reason that their low household income of 2k per month, 3k per month, 4k - nearly all of that if not more goes to the basic necessities of life like food, petrol, clothes, etc and there's not enough leftover to buy private individual medical insurance. The realities is that if hospitalization is required, they go to government hospitals where the services are free. The segment impacted will be the M40s and the T20s who owns these individual private medical insurance policies.
My contacts in the insurance industry tells me that the financial situation in the medical insurance pools is at crisis levels already. Many of the companies have been losing monies in these insurance pools for nearly 3 years in a row now. They have tried to pass the higher claims costs to customers, but it didn't seem to have worked. The claims outweighs the premiums received, the shareholders have to bear the costs of administration expenses, staff salaries, all operating expenses and pay their distribution commissions ... the shareholders are worried because they are bleeding continuously.
The root cause seems to be the increase in private hospital utilizations and higher prices charged by these private hospitals to the insurance companies. Anecdotes are if you have an insurance policy, these private hospitals will suddenly give you more diagnostic tests, higher end treatment, better quality drugs that costs more because in the past, the insurance companies bear 100% of all of these costs if you have an insurance policy. And these private hospital profits keep rising each year.
And they tell me BNM has tried everything. The private hospitals raise their charges every year. But the insurance companies find it conflicting to do the same thing to their customers every year. Instead, they increase prices only once every few years and as a result, those insurance pools keep gradually losing monies.
The root cause is also the design of the benefits of these policies. Many of the coverages are "as charged". Hospital supplies. Drugs. Operating theatre. etc. The private hospitals and their highly paid doctors have discretion on what choices to recommend to patients. Of course, once the insurer foots 100% of the bill, the patient should get the best, the one with the highest margins to the hospitals.
So, I don't blame BNM at all or the insurance companies. We need to get to the root cause as to why the insurance medical pool keeps losing monies for past years. My friend tells me this won't get better this year, insurance companies are projected to continue to lose monies in their medical pool. Soon, he said we will enter into an insurance crisis.
So, BNM has to intervene and this is their intervention. Totally understand the doctors wants the best for their patient, but what if the best treatment comes at prohibitively expensive cost where the medical insurance pool loses monies and insurers have no choice but to pass on the higher costs back to the customers? Is this sustainable? Why can't MOH cap the treatment costs of these private hospitals which sounds to me like the root cause in the first place? Why must these private hospitals charge so much to patients when they have insurance, vs no insurance?
1 month ago
BLee
Very well written, got a question; is 'introduce co-payment options for medical and health insurance' is an option for the general public? Every year, I am 'burning' few $k hoping Not to make any claim. Saving of 1 or 2 $k over several years, will it able to pay the difference in co-payment if required? It all boil down to affordability...and a good policy.
1 month ago