Bank Negara Malaysia’s (BNM) November 28 statement requiring insurance and takaful operators (ITOs) to review their current repricing strategies for more reasonable increases in medical insurance premiums comes across as disingenuous, cosmetic, and late.
This response only came about in response to public backlash and numerous reports that people were terminating their policies in the face of double and even triple digit percentage increases of their health insurance premiums.
The Galen Centre for Health and Social Policy calls for two things: the setting up of a parliamentary inquiry to look into the ongoing and immediate issues of health insurance premiums and hospital charges, and an independent statutory commission to regulate the private health care sector.
The horse has already left the stable. It was pointed out in July by the Galen Centre that Bank Negara’s direction on this issue was problematic and likely to cause increased economic and medical hardship, large out-of-pocket payments, patients to delay seeking medical treatment, and people to terminate their insurance policies altogether.
It would also fail to address the problem of high health care inflation.
Therefore, what is seen today was neither unexpected nor a surprise. Disappointingly, the earlier concerns were not taken seriously by neither BNM, nor the insurance industry and private health care providers.
The ongoing and upcoming increases in health insurance premiums were also not unexpected. Besides managing rising claims and medical inflation, the current exercise was also intended to nudge or persuade policy holders to switch their medical and health insurance and takaful (MHIT) plans from having zero copayment coverage or full riders, to plans which have copayment and/or deductibles to share the burden and reduce medical costs.
While seemingly plausible on paper and in theoretical models presented by analysts, it is clear that policyholders and customers are not cooperating.
Faced with 20 per cent to shockingly more than 200 per cent increases in premiums, many have decided instead to terminate their policies, attributing their decision to a lack of affordability caused by the high premium increases, and to “take a chance with the public health care system”.
Many of those affected are older, vulnerable and at-risk of financial catastrophe from even a single medical incident. Household out-of-pocket payments on health expenditures, currently around 33 per cent, will jump.
The promise of lower health insurance premiums with the adoption of copayment and deductions was also proven to be hollow with policyholders reporting small reductions based on the revised rates, and reduced benefits and coverage.
Offering staggered increases in premiums and providing flexible payment plans will also achieve very little as notices went out months ago and the consequences are now being felt. As health insurance becomes less affordable, more people are likely to become uninsured.
It is a mistake to shift the responsibility of reducing medical inflation onto the shoulders of policyholders, patients, their families and communities. That should be the regulator’s role.
These health insurance premium increases do not happen in a vacuum.
The medical bills imposed by providers such as private hospitals continue to be unregulated. How will the problems of overcharging be addressed or even recognised? The use of wheelchairs, pillowcases, glucometers, kidney dishes, ECG monitors, whose costs would have already been recovered hundreds of times over, are routinely charged as if they were brand new.
There are also reports of non-existent tests, visits by consultants which never happened, and a significant difference of charges between those with a medical card and those without.
Insurers are forced to pay what has been charged, often leaving them transferring the consequences of over-consumption and overcharging to consumers, patients and policyholders. What are we doing about regulating these charges imposed by private medical facilities?”
A government linked company (GLC) providing private health care services recently announced a historic milestone of RM1 billion in quarterly earnings. Though it is great news for the shareholders, which include the government, this should be a concerning development.
Kluang MP Wong Shu Qi, in an intervention during the Dewan Rakyat sitting yesterday, complained that BNM and the Ministry of Health seemed to push responsibility to each other over rising health insurance premiums, and private hospital charges.
It is clearly apparent that in the case of private health care, consumer protection is secondary and no one is in charge. This clearly illustrates the current problem.
Moving forward, the Galen Centre recommends the following:
The setting up of a parliamentary inquiry to look into the fees and charges imposed in private health care facilities. The inquiry should have the power to summon government and non-government representatives and require them to provide statements, and present evidence and data on this issue.
It should be mandated to provide recommendations. The parliamentary inquiry’s hearings and findings should be made publicly accessible.
The setting up of an independent statutory commission to regulate charges in the private health care sector. A regulator, similar in role and powers to the Malaysia Competition Commission (MyCC), is urgently needed and should be established.
If the Private Health Care Facilities and Services Act (PHFSA) 1998, which currently regulates only doctor and procedure fees, cannot be adequately amended for this purpose, new legislation should be introduced to enact a Private Health Care Commission.
The Commission could be mandated to independently review charges and fee increases. If the Commission finds a rate increase to be unjustified, excessive, or unfairly discriminatory, it should be considered unreasonable, and would need to be subjected to review and publicly disclosed.
Currently, caps and thresholds on insurance premiums and hospital charges appear to be determined by the industry rather than regulated.
Azrul Mohd Khalib is the chief executive of the Galen Centre for Health and Social Policy.
- This is the personal opinion of the writer or publication and does not necessarily represent the views of CodeBlue.
