KUALA LUMPUR, March 19 — The Association of Private Hospitals Malaysia (APHM) today welcomed the insurance and takaful industry’s recommendations to address rising medical costs, while calling for further collaboration to ensure balanced and effective reforms.
The recommendations—put forward by the Life Insurance Association of Malaysia (LIAM), the Malaysian Takaful Association (MTA), and the General Insurance Association of Malaysia (PIAM) on March 7—advocate for greater price transparency, co-payment structures, and a shift to diagnostic-related grouping (DRG) pricing to manage health care expenses.
“APHM views insurance and takaful operators (ITOs) as essential partners in the health care ecosystem, united in the shared goal of ensuring the well-being of patients,” APHM said in a statement. “In this spirit, APHM is committed to working closely with ITOs. With the support of the Ministry of Health (MOH) and the Ministry of Finance (MOF), we will take aligned action in addressing concerns related to medical cost inflation through the establishment of joint committees in the coming months.”
While APHM supports the industry’s recommendations, it stressed the need for further input from private hospitals and other stakeholders to ensure alignment and cohesion.
The association backed efforts to enhance price transparency by publishing the average costs of common procedures and annual medical cost inflation rates but emphasised the need for its involvement in analysing and presenting the data to prevent disputes.
It recommended that for long-term sustainability, the MOH or an independent authority oversee the publication to ensure an unbiased perspective.
The association also supported mandatory co-payment schemes as a way to encourage responsible health care consumption but cautioned against insurers using co-payment waivers to steer policyholder decisions, warning that such practices could undermine the system’s intended purpose.
On pharmaceutical pricing, APHM agreed with promoting generic drug use but cautioned that direct price controls could limit access to innovative treatments. It called for a “balanced approach” to ensure affordability without discouraging new therapies in Malaysia’s relatively small market.
APHM also noted that private hospitals have implemented various cost containment strategies, including group-negotiated pricing, regular cost reviews, and strategic selection of supplies to optimise costs. However, it acknowledged challenges such as staff wages, rising supplier costs, and medico-legal expenses, which complicate the feasibility of a price freeze.
“Despite rising costs, the baseline costs for patients in Malaysia remain significantly lower than in comparable global and regional markets, even though input costs to hospitals are similar,” it added.
The association further backed tax exemptions on group insurance premiums from 8 per cent SST and suggested that policyholder incentives, such as no-claim bonuses, be structured as credits or prepaid premiums, instead of direct cash returns, toward future premium payments to enhance long-term affordability.
“This approach can help offset higher premiums in later years, such as after retirement, or potentially contribute to specific accounts like the EPF Healthcare account or the National Healthcare Financing account,” APHM said.
“In addition to no-claim bonuses, for value-based insurance, we suggest incentivising both ITOs and hospitals to actively engage in reducing the rates of non-communicable diseases (NCDs) among policyholders. By focusing on proactive health management, we can encourage long-term well-being and reduce unnecessary medical claims, benefiting both policyholders and the health care system,” it added.
APHM also voiced strong support for the implementation of a diagnostic-related grouping (DRG) system, saying it would enhance transparency in health care charges and billing. However, it said the system should be carefully designed with input from all stakeholders to ensure its success and alignment with a national health care financing scheme.
“Having shared our initial recommendations with the Public Accounts Committee (PAC), we look forward to working collaboratively with all key stakeholders to ensure a thoughtful and effective rollout,” APHM said.
The association also backed efforts to collaborate with Bank Negara Malaysia on a basic, long-term insurance and takaful product, while allowing ITOs to offer top-up schemes for additional coverage.
“We believe that collaboration of all stakeholders (including APHM and practising clinicians) from the outset is essential to ensure these products effectively meet the needs of both patients and health care providers. We look forward to working together to shape these solutions,” it said.
APHM said it remains committed to working with industry stakeholders and regulators to develop sustainable health care financing strategies that balance affordability and quality care.
