Galen Moots Opt-Out Social Health Insurance Amid Rising Premiums

National health insurance will pool funds and risks across the Malaysian population.

KUALA LUMPUR, Jan 17 — The Galen Centre for Health and Social Policy today proposed a social health insurance programme that allowed Malaysians to opt out if they preferred private insurance.

Galen CEO Azrul Mohd Khalib said a national health insurance scheme could pool funds and risks across the population, after reports that insurance companies in Malaysia would be raising their medical insurance premiums this year by as much as 30 per cent, in response to medical inflation and rising hospitalisation costs.

“Perhaps with disruption and competition from social health insurance, which caps payouts to private health care providers at more reasonable and transparent levels, can the escalating health care costs be finally brought under control,” Azrul said in a statement.

“It could act as a cost-containment mechanism without sacrificing quality or access. After all, the policy holders of social health insurance would potentially be far more in number to those with private insurance.”

According to Aon’s 2019 Global Medical Trend Rates Report, Malaysia was the only country in Southeast Asia and the only other country in Asia Pacific (besides Pakistan) that was projected to experience double-digit medical inflation in 2019, hitting 13.6 per cent compared to 12.4 per cent in 2018. The 2019 projected medical inflation rate was almost 5.7 times that of the general inflation forecast of 2.4 per cent.

The report didn’t explain the factors driving Malaysia’s medical inflation, but listed hospitalisation as the most important element in medical plan costs globally at 90 per cent.

Azrul pointed out that insurance companies were passing on the escalating costs of diagnosis and treatment in private medical facilities, and third party administrator charges, to policyholders.

“Alarmingly, Malaysia’s health care system is increasingly resembling what is experienced in the United States rather than the UK’s National Health Service after which it was modelled,” he said.

Azrul also noted that less than 30 per cent of Malaysians have health insurance, with even fewer having their own personal medical insurance, as opposed to being on their employer plans.

Higher medical insurance premiums, he said, would cause policyholders to either reduce their coverage or drop out altogether.

“This is neither good nor sustainable for both private health care providers and the health insurance industry. There must be compromise between all parties involved to keep costs under control.”

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