KUALA LUMPUR, August 30 — Insurers predict that the phasing out of non-copay health insurance products in Malaysia will depend on market forces, following Bank Negara Malaysia’s (BNM) mandate for all new products to include copayment features.
Life Insurance Association of Malaysia (LIAM) chief executive Mark O’Dell said that while the future of non-copay plans remains uncertain, historical trends suggest that the primary factor leading to their decline has been cost rather than regulation.
“Whether it’s phased out by regulation or phased out because it becomes too expensive, I don’t know, but in other countries, non-copay plans have disappeared because of cost, not because of regulation – meaning it keeps going up and up at a higher rate than copay plans, and so people just don’t buy those plans anymore,” O’Dell told CodeBlue in an interview on August 16.
“Bank Negara Malaysia has made statements that they don’t intend to mandate copay plans. I can’t predict the future. I think that you’ll see demand for copayment plans slowly pick up. I don’t think it’s going to come on September 1. I don’t see any drastic change happening,” O’Dell said.
Since last June 1, BNM has mandated a minimum 5 per cent copayment feature in the design of all new medical and health insurance and takaful (MHIT) products and/ or an RM500 deductible, but left it to insurance companies to decide whether to keep existing non-copay products in the market.
BNM’s definition of a “new product” includes changes to benefits and limits of existing products.
The September 1 date cited by O’Dell refers to BNM’s requirement for licensed insurers/ takaful operators (ITOs) to offer consumers the option of at least one copay health insurance product and for ITOs to design one if they do not already have such products on-the-shelf.
Critics have warned that despite the current availability of non-copay plans, the market is likely to shift towards copayments, since all new health insurance products now must have copay features and even changing one’s existing insurance benefits or limits is considered a “new product”.
“The 100% plans are still there. I think the market will dictate how long they stay around. I think if they’re still popular, they will be there. They’ll be there for the indefinite future,” O’Dell said.
“But copays can be beneficial. It hopefully will incentivise the consumer to be more mindful about the cost of their care, where they’re going for their care.”
On concerns about copayments being anti-competitive, O’Dell clarified that if insurers collectively decided to implement copayments on their own, it could be seen as anti-competitive. However, since the mandate comes from BNM, it is not considered anti-competitive.
“The anti-competition concern arises if the industry unilaterally agrees to impose copayments. But if the government or regulator, which has legislative backing, mandates copayments, it is not anti-competitive,” O’Dell said.
A 2020 insurance industry study reported by CodeBlue in July raised concerns that mandatory copayments could potentially breach anti-competition laws. The study suggested that while premiums might decrease with copayment products, overall consumer costs could rise due to additional out-of-pocket expenses.
BNM has since defended its mandate for copayment features in all new MHIT products, asserting that it does not violate anti-competition laws. The central bank stated that the policy aims to offer consumers more affordable choices while maintaining competition within the insurance industry.
