In the Ministry of Health’s (MOH) first town hall meeting in September 2022 with stakeholders to discuss the Health White Paper (HWP), the issue of raising the public sector health budget to 5 per cent of GDP was first put forward by the then-health minister.
He recognised that it will be very difficult in the near term, but hoped this could be achieved by 2030. This was to future-proof the health system as envisaged in the HWP.
Khairy Jamaluddin again raised this in his podcast recently when discussing the medical inflation with his co-host, Shahril Hamdan. They believed insurance companies and private hospitals were not the main divers of rising health costs, contrary to most analysts.
The problem may lie in the medical supply chain and ecosystem driving up the prices of raw materials, medicines, equipment, and manpower.
A thorough study needs to be done, and if found that these are the causes of medical inflation, then the government should consider increasing its health budget to 5 per cent of GDP from its current 2 to 3 per cent as shown below:
Source: Malaysia National Health Accounts, Ministry of Health
Before this, most countries, including Malaysia, have been targeting to spend 5 per cent of its GDP on health, which is in line with the recommendation of the World Health Organization (WHO) to achieve universal health coverage (UHC).
In 2021, Malaysia spent 5.1 per cent of its GDP on health, and the public sector contribution was 2.9 per cent. This was at the height of the Covid-19 health pandemic.
According to the Malaysia National Health Accounts (MNHA), and looking at the past 10 years from 2013 to 2023, it was 4.7 per cent in 2020, then peaked at 5.1 per cent in 2021, and then 4.4 and 4.6 per cent in 2022 and 2023 respectively.
Ever since this statement by Khairy, some in the MOH, medical and health associations, and health analysts have been calling for this target to be achieved. The slow progress can be attributed to several challenges, including budget constraints, competing priorities in the national budget, and the need for extensive health care reforms.
Looking at the current fiscal situation of the federal government, this target will be difficult to be achieved in the next five years. To achieve this, the government needs to grow the economy by more than 5 to 6 per cent and its revenue by a similar quantum or even higher, and the MOH needs to more than double its current annual budget.
The growth of the health budget has been at its highest in the last decade at 12 per cent (13.5 per cent in 2024 and 10.0 per cent in 2025). This is about 10 per cent of the total federal budget, and another 10 per cent or about RM40 billion must be sourced from some other federal ministries or agencies or other sources.
Another strategy would be to enhance the efficiency and effectiveness of existing public health care services to maximise the impact of current spending. The MOH budget consists of about 70 per cent for emoluments, and therefore, there is not much discretionary expenditure.
Therefore, it is better to explore other sources (like a new tax or contribution) or grow the private health sector to complement the national health system.
There has been many discussions and studies done on the feasibility of a national health insurance (NHI or SHI) scheme for the past 30 to 40 years to grow the national health budget.
During these years, the private health care sector has been growing and contributing from 1.8 per cent of GDP in 2013 to about 2.2 per cent of GDP in 2023.
As in education, the government has tacitly let the middle class bear the brunt of this health burden by encouraging private health care. People and companies have responded and contributed to this growth.
But at this juncture of its development, this high medical inflation has had a great impact on the middle class. Therefore, the policy of leaving the middle class to shoulder the burden cannot continue.
The government needs to have a better understanding of the impact on people and the health care system. It is good that this issue has caught the attention of policymakers, regulators, and relevant stakeholders.
There will be much discontentment (as shown in the recent Public Accounts Committee town hall) and disruption in the national health care system if this is not given proper attention.
While the focus is on immediate solutions, it is important that we ultimately set out to become a healthy nation in the next 20 to 30 years.
The dual health care system that is currently in existence should be enhanced and protected, while the government and people continue to explore the transformation of the national health care delivery and financing system to be become a truly healthier nation.
Chua Hong Teck is an independent public policy and health analyst.
- This is the personal opinion of the writer or publication and does not necessarily represent the views of CodeBlue.
