Expert Moots 5pc Salary Contribution For Social Health Insurance

In Indonesia, social health insurance contributions are shared between employee and employer, and civil servant and government.

KUALA LUMPUR, August 7 — A professor suggested today a 5 per cent contribution from workers’ salaries for any social health insurance that may replace Malaysia’s tax-financed public health system.

Syed Mohamed Aljunid, a health economics professor at Universiti Kebangsaan Malaysia (UKM) who previously helped Indonesia launch its national health insurance in 2014, said a 5 per cent contribution from workers for social health insurance was required in the neighbouring country.

In Indonesia, civil servants’ social health insurance contribution comprises 2 per cent from their salary, while the government pays the other 3 per cent, whereas private sector workers contribute 1 per cent from their salary, with the remaining 4 per cent paid by employers.

“In my experience in Indonesia, Vietnam and the Philippines, nothing beyond 5 per cent,” Syed Mohamed told a roundtable on health care financing at the People’s Health Forum organised by several non-government organisations and people at Universiti Malaya here. 

Dr Chee Heng Leng from health activist group Citizens’ Health Initiative, however, cited a 2009 World Bank study by Adam Wagstaff that found replacing a tax-financed health system with social health insurance would increase per capita health spending by 3 to 4 per cent without corresponding improvement in health outcomes.

The study, according to her, found that certain health interventions like breast cancer prevention worked better in a tax-based health care system. Formal employment also dropped by 8 to 10 per cent under a social health insurance system because job contracts were made informal to avoid employers’ health insurance obligations. 

“Is it feasible for Malaysia to switch to social health insurance? Will it automatically lead to increased health funds?” Dr Chee questioned, claiming that the Finance Ministry may reduce health allocations under the national budget if Malaysia adopts social health insurance.

“Will the public accept another ‘tax’ because they have to pay? It’s no longer just general taxation, it’s a visible tax. I think this is the main reason for the lack of outcome from various successive social health insurance schemes proposed over the last 30 years.”

But Syed Mohamed disputed claims that social health insurance would cost more than a tax-financed health system, pointing out that Malaysia did not provide many services for unmet demand.

“You can imagine, poor people who will never be able to go to hospital, now they can go to hospital and everyone is covered and no one is excluded,” he said.

He also said Indonesia previously spent 1.5 to 2 per cent of their gross domestic product (GDP) on health, but increased health spending to 3.5 to 4 per cent of the GDP after introducing social health insurance.

“They managed cost better now than before. Hospitals cannot charge simply to the patient. They have to follow government tariffs,” said Syed Mohamed. “If hospitals charge higher than the tariff, they’ll be shut off from the provider list.”

Health Minister Dzulkefly Ahmad hinted last June that Pakatan Harapan may adopt social health insurance to replace Malaysia’s increasingly unsustainable public health care system that’s financed primarily by general taxation, rather than by increasing health allocations under the national budget.

Malaysia only spends 4.5 per cent of its GDP on health, comprising 2.3 per cent and 2.2 per cent from the public and private sectors respectively. The recommended spending for an upper middle income country like Malaysia is between 6 and 6.5 per cent of the GDP, ideally 7 per cent.

Barisan Nasional tried unsuccessfully in 2011 to move Malaysia towards a social health insurance system called 1Care that was modelled after the United Kingdom’s National Health Service (NHS).

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