Future Proofing The Malaysian Health Care System: Is Social Health Insurance The Answer? – Chua Hong Teck

In a national social health insurance scheme, everyone needs to contribute to a dedicated fund to finance health care services.

There have been many discussions and suggestions to future-proof the health care system, since the health minister brought up this issue in his 2022 new year message to the Ministry of Health (MOH) staff.

He said that the country must future-proof the health care system in light of the Covid-19 pandemic. There will be many more shocks, stresses, and challenges to the health care system in the future, and Malaysia must be ready to face them.

He also mentioned this again in Parliament recently, where he said that a white paper will be tabled in November to get the support of both sides of the political divide.

The white paper was proposed to reform the health care system, including its financing. He said that adequate allocation for the MOH is essential for the country to face any unforeseen challenges.

He emphasised that the health care system should be future-proofed even with any change of government. Some details were given on the health care financing proposal in his keynote speech at the Public Health Thought Leadership Dialogue, organised by School of Public Health, National University of Singapore on June 2, 2022.

He again mentioned on July 8 that social health insurance will be one of the financing proposals in the white paper. Some of the challenges and reasons to reform the present health care financing model include inadequate federal funding (2.6 per cent of GDP or 9.2 per cent of public sector expenditure in 2020), high out-of-pocket expenditure (34.5 per cent of total health expenditure), and a dual public and private health care system (delivery and financing).  

To future-proof the system and make financing adequate and sustainable, the minister proposed a tax-funded system and a combination of co-payments and social health insurance (SHI) in a pool to finance the health care system.

This single dedicated fund proposal looks similar to the 1Care social health insurance proposal mooted by the MOH in 2010. The main aim of the proposal is to increase the amount of public health care expenditure to about 5 to 6 per cent of GDP. 

In a national social health insurance scheme, everyone needs to contribute to a dedicated fund to finance health care services. It is envisaged that the government, employers, employees, and others will contribute to this fund. However, there are many challenges to overcome in the transition from the present tax-based financing system to a SHI financing system. 

In a country where the informal sector is large, and more so during the Covid-19 pandemic over the last two years, getting people to contribute to a social health insurance will be a challenge. For the formal sector, many may already have private insurance paid for by their employers, or have taken their own private insurance.

To replace private insurance schemes with social insurance may not sit well with employees if they do not enjoy extra benefits. There will also be a pushback from private insurance companies and insurance policy holders. 

In a tax-based system, citizens, and even foreigners working and living in the country are provided free access to health services, while SHI only provides services to its contributors.

The challenge then is how to ramp up universal coverage in a short time so that everyone can be covered like in a tax-based system. If this is not done, many may be lack access to services if they are not covered by SHI. 

In a SHI scheme, there may be an increase in health care utilisation, as people feel that since they have contributed to the fund, they would want to extract benefits. If this leads to excessive utilisation of services, it may lead to higher costs. 

The government’s portion of health care allocation to this fund may not change much if the government continues to pay for the poor, the vulnerable, public sector employees and their families, pensioners, and the elected. It is likely that the public funding for this pool of SHI beneficiaries may continue to increase as compulsory contributions are necessary for a universal coverage. 

Instead of a SHI financing system with a sudden approach, I am proposing that we should take an incremental approach in financing the health care system.

To increase public funding of health care services and to make it more sustainable and certain, an earmarked health tax from individuals and corporations should be imposed, apart from the allocation from the annual federal budget.

It is commendable that a large number of employees and employers have taken medical insurance, which has reduced the burden of the government. They should be encouraged with new incentives.

Insurance schemes should be made portable when they leave and join other companies. Insurance companies should not refuse to cover or charge more people with pre-existing conditions to encourage people to increase the uptake of insurance.

The government can also set up a social health insurance for new public and private sector employees and their families, rather than try to cover everyone. These incremental approaches will not disrupt the financing and delivery of services and will take time to develop and mature. 

  • This is the personal opinion of the writer or publication and does not necessarily represent the views of CodeBlue.

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