Health Financing Reform ‘Not Easy’ But Vital: Minister’s Advisor

Besides targeting public health care spending at 5% of the GDP, the Health White Paper is proposing other health financing models like social health insurance to ensure sustainability and equitability, says the Health Minister’s advisor, Dr Kelvin Yii.

KUALA LUMPUR, May 11 – The complex issue of health financing reform is vital for Malaysia’s health care system, according to Dr Kelvin Yii, special advisor to Health Minister Dr Zaliha Mustafa.

In an interview with Bernama Radio Tuesday, Dr Yii, who is also Bandar Kuching MP, said that the Health White Paper is recommending the implementation of payroll-funded social health insurance, among other proposals, to help make health care financing sustainable.

“Health financing is not an issue that is easy to deal with, but the government has to make sure financing is sustainable to prevent any negative impact on service delivery,” Dr Yii said.

“We have put a target to increase [public] health care spending from 2 per cent to 5 per cent of the GDP (gross domestic product), but we are also exploring other models, like national health insurance, to ensure that health care financing continues to be sustainable and equitable for all citizens.”

About 57.9 per cent of Malaysia’s health care expenditure in 2021 was from the public sector, according to the Ministry of Health’s (MOH) Malaysia National Health Accounts (MNHA) presentation last November. By percentage of Malaysia’s GDP, public health care spending made up 2.9 per cent of GDP, and private 2.13 per cent of GDP.

The MNHA report also found that out-of-pocket (OOP) spending jumped 9 per cent to RM24.6 billion in 2021 from RM22.6 billion in 2020.

Public health care in Malaysia is primarily funded by annual government allocations to the MOH from general taxation.

Dr Yii highlighted that Malaysia’s ageing population was one of the main challenges faced by the health care sector, and financing reform was necessary to address increasing health care demands from the elderly population.

“Malaysia is an ageing nation, and this is an issue we want to highlight because the cost of health care will increase. We have to ensure that health care financing constraints are addressed so that the quality of care is not compromised due to lack of funding,” said the health minister’s advisor.

Dr Zaliha previously told the Dewan Rakyat that the Health White Paper’s strategic priority is to make health care financing more sustainable by broadening funding sources, which included the possibility of implementing a national health insurance scheme.

According to Dr Zaliha, a first-term PKR lawmaker, the current level of health care spending is “inadequate” to maintain a sustainable national health care system that can meet the needs of an ageing population with various chronic illnesses and the possibility of future pandemics.

The Sekijang MP further described the current financing of the national health care system as suboptimal and does not maximise the use of Malaysia’s health care resources, nor is it designed to be people-friendly.

In 2012, the government under then-Prime Minister Najib Razak proposed a social health insurance programme called 1Care, which aimed to provide more affordable health care.

The proposal included a mandatory 10 per cent deduction of an individual’s monthly salary and no option to opt-out. Employers who did not participate would face legal action. 

Patients would not be able to choose their own doctors for free medical treatment. Instead, a doctor would be assigned. 

However, stakeholders, including health care professionals and politicians, opposed the proposal due to affordability, sustainability, and feasibility concerns. 

The proposal was eventually withdrawn by the government in 2013, and no new plans for a social health insurance scheme have been announced since then.

The Health White Paper, which includes recommendations for health financing reform, is scheduled to be tabled in the upcoming Dewan Rakyat meeting beginning May 22.

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