‘Now’s Not The Time’ For Health Financing Reform: PH Rep

DAP’s Howard Lee says a new tax or a co-pay system to fund health and aged care is not on the table for Harapan because “now is not the time”. The UK launched its NHS in 1948 after World War II.

KUALA LUMPUR, Oct 24 – Pakatan Harapan (PH) does not plan to reform the financing of health and social care, including aged care, if elected as the next federal government.

DAP central executive committee member Howard Lee explained that PH plans to fund a care economy in its proposed rolling national Care Economy and Ageing Population Preparedness Plan that will be tabled in Parliament – similar to Malaysia Plans (RMK) – by taking existing allocations from across ministries.

This includes the ministries of human resource, health, and the Welfare Department that is currently under the Women, Family and Community Development Ministry, with the Care Economy and Ageing Population Preparedness Plan to be led by a coordinating minister.

The care economy – envisioned as the creation of a new sector of professional carer jobs to provide care not just for the elderly, but also for younger people who cannot live independently – will also include government-funded carers’ allowances, Lee said at the launch of civil society’s “Manifesto Rakyat” by Gabungan Bertindak Malaysia and the CSO Platform for Reform here last Saturday.

PH also proposes implementing planning guidelines or requirements for new property developments to include care infrastructure or facilities for young, old, and less able people, said Lee, who is in PH’s election manifesto committee.

As the care economy – which Lee said would be among PH’s 37 key agendas for the 15th general election – requires early investments in the training of carers, the coalition plans to dip into the Human Resources Development Fund (HRDF) under the Ministry of Human Resources. PH also plans to increase the Ministry of Health’s (MOH) annual budgets.

CodeBlue asked Lee if a PH government would implement payroll contributions to a specific fund by workers upon reaching a certain age that could finance their health and social care after retirement.

“I have no shame in saying that this is a very, very tough sell even among Harapan members to talk about a co-pay system. We have discussed a co-pay system of employer-employee-government [contributions], but it’s a discussion that went nowhere because there was no consensus and far from it being agreed,” Lee said in response at the forum.

“The argument overwhelmingly was now is not the time to essentially introduce another extractive method of paying for services. It needs to come from existing taxation revenues.

“I know what you’re seeking — you’re seeking a specific number from a specific source and perhaps even another taxation revenue,” Lee told CodeBlue. “But another taxation revenue on this right now or even a co-pay system is not on the table.”

Co-payments are payments for certain medications or services that are shared between the patient and other parties like the government or private insurance. A social health insurance scheme, on the other hand, is a separate fund that can be financed by payroll deductions from employee and employer; the government can also contribute to this fund.

When CodeBlue asked if PH would cut fuel subsidies to divert the revenue into health care, Lee said: “Why does it have to be fuel to health? Why can’t it be ‘cut’ to ‘targeted’? Why does it have to be cut?”

At the Manifesto Rakyat launch, Lee also said a PH government will not restore the goods and services tax (GST).

The incumbent 39-year-old assemblyman for Pasir Pinji in Perak, which has one of the highest old-age dependency ratios among state constituencies in the country, acknowledged that Malaysia does not generate enough tax revenue to implement the services that the country needs.

“We need to have an open, real, honest, and frank discussion of GST or not, co-payment system or not, social protection payments or not, we really need to have these discussions,” Lee said.

“But right now, I think you would all agree, another form of extraction directly from taxpayers, and workers and Malaysians is not something we can stomach and swallow right now.”

Malaysia has already reached ageing nation status, with the population aged 65 years and above expected to reach 7.3 per cent this year, according to the Economic Outlook 2023 Report by the Finance Ministry, meeting the 7 per cent threshold for the conventional international definition of an “ageing society”.

A November 2020 report by the World Bank projected that Malaysia would become an “aged society” by 2044, with 14 per cent of the population expected to be above 65 years old.

Employees’ Provident Fund (EPF) chief strategy officer Nurhisham Hussein told BFM recently that 96 per cent of EPF members are not able to meet the RM600,000 pension fund target to retire comfortably in major cities like Kuala Lumpur.

“Based on the numbers we got from DOSM (Department of Statistics Malaysia), roughly two-thirds of the elderly are in the B40 (bottom 40 per cent) group and 85 per cent plus of the elderly are in the B60 (bottom 60 per cent) group,” he said. “So obviously, old age poverty is a problem we are facing. It’s not even a crisis in the future, it’s a crisis today.”

While Lee, a former DAP Socialist Youth chief, claims that “now is not the time” to reform health and aged care financing with payroll-funded social health insurance or co-payments, the United Kingdom, under the Labour (socialist) government, launched its National Health Service (NHS) in 1948, three years after the end of World War II.

The UK’s NHS is primarily funded by general taxation, with 20 per cent coming from national insurance, a payroll tax paid by employees and employers. The NHS also receives income from co-payments that are charged for outpatient prescription drugs and NHS dentistry services; drugs prescribed in NHS hospitals are free.

Last month, the short-lived administration under then-Prime Minister Liz Truss announced the cancellation of a planned health and social care levy in the UK, a separate tax that was coming into force in April 2023 to replace this year’s 1.25 percentage point rise in national insurance. The levy was expected to raise around £13 billion (RM69.6 billion) a year to fund health and social care.

Multiple health advocates, physicians, and doctors’ groups have repeatedly said that Malaysia’s health care system is unsustainable, as they called for health care financing reform. Malaysia’s male life expectancy at age 60 — a proxy measure of non-communicable disease management — has risen much more slowly than other countries, including Singapore, while Malaysia’s maternal and child mortality rates have been stagnating over the past two decades.

Malaysia will likely miss global 2030 goals in various health areas and priorities, if PH, Barisan Nasional, or Perikatan Nasional do not commit to reforming health care financing in their next five-year term when elected into federal government.

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