PETALING JAYA: A plan to gradually raise premiums for medical insurance is only a superficial solution to a deeper problem and fails to address core issues, says a national consumer group.

“The move does little to address the systemic flaws that allow private hospitals and insurance and takaful operators (ITOs) to exploit healthcare as a profit-generating industry, often at the expense of Malaysian consumers,” said Federation of Malaysian Consumers Associations (Fomca).

It was commenting on interim measures proposed by the industry and accepted by Bank Negara Malaysia to keep premium hikes at a minimum and to spread out the price rises over three years.

Also included among measures was a special provision for policyholders aged 60 to enjoy a one-year pause in premium hikes.

“The industry recognises the sensitivity of the situation and remains committed to assisting policyholders and participants during this transition,” said a joint statement by the Life Insurance Association of Malaysia (LIAM), the Malaysian Takaful Association (MTA) and General Insurance Association of Malaysia (PIAM).

It said operators would spread out the changes in premiums over a minimum of three years.

“This measure will remain in place until the end of 2026,” it said, adding that the hikes could not be held back for long.

The statement said the interim measures were unsustainable in the long term as ITOs already have to bear the financial loss in the meantime.

“Policyholders and participants are advised to check with their insurer or takaful operator on details of their MHIT plan,” said the statement.

Fomca, however, said the proposed cap on premium increases was merely a stopgap measure that masks the larger issue of excessive profits for the ITOs, driven by insufficient government control and regulation of the private healthcare sector.

“Insurance premiums have risen sharply in recent years. These increases burden consumers, especially those reliant on private healthcare due to limitations in the public healthcare system,” it said.

It urged the government to have greater responsibility in regulating the private healthcare sector, including pricing mechanisms for healthcare services and insurance premiums.

“It is high time that medical insurance policies were regulated to ensure it meets the needs of the population rather than serving as a profit-oriented product,” it said.

Fomca also called on the government to increase public healthcare expenditure to at least 5% of the nation’s gross domestic product, in line with the World Health Organisation’s recommendations.

https://www.thestar.com.my/news/nation/2024/12/21/its-just-a-stopgap-measure-says-fomca