KUALA LUMPUR, August 9 — The Galen Centre for Health and Social Policy has called for Bank Negara Malaysia (BNM) to protect health insurance policyholders from catastrophic health care expenses by introducing a copayment limit.
Galen Centre chief executive Azrul Mohd Khalib said the central bank’s new policy direction to phase out non-copay reimbursement models could increase hardship for households, including those with some savings.
“It can expose them to the risk of financial catastrophe, like what we see in the United States, where people go into debt or even become bankrupt due to medical debt,” Azrul told Astro Awani’s Melisa Idris on Astro Awani’s Consider This last Tuesday.
Azrul highlighted the need for BNM to implement a cap on copayments, similar to the system in Singapore, where there is a maximum copayment limit per policy year.
He suggested that Malaysia could adopt a cap of RM5,000 per year, which, while still substantial, would prevent financial catastrophe related to multiple diseases or disabilities within the same year.
“What we need to have from Bank Negara is definitely a cap, because we need, like what we have in Singapore, for example, that there is a cap per policy year. So for that year, you can only have this amount of copay.
“In Singapore, I think it’s around SG$3000 (RM10,147), and in Malaysia, we should be able to also ensure that there’s a cap per policy year, the maximum that you can be charged within that year for copay is maybe RM5,000.
“That’s still a lot, but at least it’s not going to happen per disease or per disability, which could be the risk right now,” Azrul said.
Azrul explained that without a cap from BNM, copay limits set by insurers could be as high as 10 per cent; the central bank has simply set a minimum 5 per cent for copayments in health and medical insurance. There is also no limit on how much can be charged within that 10 per cent.
“The problem here is that the safeguard is going to be reduced, meaning we would have to not only pay for deductibles, but also a certain proportion of treatment costs in the future, not now, but after we’re done with our treatment.”
Azrul pointed out that when one orders food at a restaurant, the price is known upfront before one consumes the food and pays the bill at the end of a meal. But when it comes to health care for an injury, illness, or disability, one does not know at the start how much the treatment will cost.
“We only know at the end of it, and suddenly what is supposed to protect us now has presented us with, say, a RM4,000 or RM5,000 bill that we also have to pay,” he said.
“It may sound small in comparison to the larger bill, which could be like maybe RM40,000 or RM50,000, but it’s still a lot for households that can’t fork out so much money at one go.”
Azrul admitted that copayment might be necessary for the insurance system’s sustainability but emphasised the need to address critical issues, including assessing the affordability of copayments for individuals, managing cases where policyholders cannot afford their copayments, and determining if insurance companies will sue individuals who fail to pay the required copayments.
The Galen Centre also countered arguments that premiums for copay plans are lower than premiums for full-coverage products, pointing out that the copay amount one has to pay after getting treatment (for example, RM4,000 or RM5,000) could far exceed the amount of premiums for full-coverage products paid over a period of time, say extra RM600 a year compared to copay plans.
“We don’t want to end up in a situation like in the US, where hundreds of thousands of people suffer from bankruptcy due to medical debt. We don’t want that here,” Azrul said.
“We want a win-win situation where insurers and private hospitals can sustain their operations, but patients and people are also protected against catastrophic health expenditure.”
He criticised Bank Negara for having extensive consultations with the insurance industry and private hospitals, while neglecting the consumer’s perspective.
“Why is it that the burden is given to the consumer to address the problem of health care inflation in Malaysia? We need Bank Negara to have a clear policy of consultation with patients and consumers to protect them because they’re supposed to look out for us, in terms of ensuring we’re protected from catastrophic medical inflation and expenditure that’s going to happen here.”
Chua Hong Teck: ‘Nothing Is Free’
Health economist Chua Hong Teck argued that copayments are standard globally, even in countries with national health insurance like Taiwan, Japan, and Australia. He noted that many policyholders in Malaysia have enjoyed free-rider insurance, leading to resistance against copayments.
“In all these countries, even though they have national health insurance, there is copayment. Nothing is free, but because we are so used to free, that’s why, when they come up with copayment, everybody jumps,” Chua said.
Chua believes the copayment amounts will be affordable for policyholders, who typically fear large bills rather than smaller copayment amounts.
“Folks who take health insurance, I think they are not poor. Normally you’re afraid of the big bills, you’re not afraid of a few hundred dollars or a couple of thousand. It is big bills like RM20,000 or RM50,000 that you are afraid of, but these are not going to be the copayment amount,” Chua said.
He suggests that instead of a fixed copay limit, insurance companies should adjust out-of-pocket expenses based on income and policy, as practised in other countries.
“I think we should leave it to individuals when they buy the insurance, to look at those plans, and then the insurance companies and takaful companies should allow this… because different people can afford different amounts.
“Five per cent to the middle income is a big deal, a lot. But 5 per cent to a rich person, it may not be so much,” Chua said.
“What they can do is actually fix the total out-of-pocket expense for a particular year based on your income and your policy. That is done, whether it is in Japan or the national health insurance in Taiwan or even Australia.”
