Despite calls to engage insurers privately and not moot their points through the media, the Association of Private Hospitals, Malaysia (APHM) continues to air its concerns publicly.
The general public couldn’t care less about this issue. These are private matters between APHM and assurers. As mentioned in the same article, the relationship between private hospitals and assurers is best described as symbiotic. APHM must find solutions that develop this relationship rather than just be parasitic.
APHM has proposed the formation of a joint working committee between assurers and themselves to review billing structures and ensure fair pricing of health care services.
This is a good start, but APHM needs to focus its energy on the core matter, namely increased hospital charges that cause assurers to increase their premiums. The billing structure and so-called fair pricing will not solve the current problems. It is more of an academic exercise.
APHM’s public statements call for assurers to keep cashless medical products while maintaining patient care is a ruse to maintain its top and bottom line.
Its lack of sincerity an be seen when it issued a statement rejecting assurers’ proposals for private hospitals to freeze costs for three years and also for the Ministry of Health (MOH) to regulate the pricing of pharmaceuticals and medications during the same period.
Public Education
Since APHM is only interested in making public statements to try to arouse policyholders’ sentiments to protect their cash flow and profit margins, it is time for assurers to take steps to protect policy owners’ interests.
The public is concerned about rising health premiums. They don’t understand the reasons behind it.
Therefore, assurers need to expand their role in public education on how assurers develop their product prices. Most of the cost goes toward paying claims, distribution costs, and maintaining statutory reserves.
Assurers must demonstrate how much money is allocated to companies as their pre-tax profits for every ringgit of premium received.
Public education goes a long way and will make the public understand the financial burden caused by APHM members.
Cheaper, Scalable, And Customised Direct Products
Policy owners deserve access to cheaper health assurance products. Assurers can consider two critical modifiable parameters: direct distribution without going through agents and selling their products on a reimbursement basis.
Distribution through agents is costly. The technology today allows companies to educate customers on product features with ease. Product distribution has greater depth now.
Assurers can develop tier products that cover the treatment of medical risks for specific age groups. The young have a lesser risk of admission due to chronic illnesses. The sum cover can be lowered since the cost of treatment for acute illnesses and injuries is low.
Employees can buy a small sum for the employed category to cover health top-up products, where the primary claim should be against the employer’s paid assurance. The top-up is used only when the primary product limits are exhausted.
The second strategy would be reintroducing reimbursement-based products. It has dual key advantages.
First, policy owners are responsible for controlling hospital bill expenses. Coupled with Bank Negara Malaysia’s (BNM) directives on copayment, policy owners would question their hospital charges.
Introducing copay reimbursement products is within the assurer’s rights. We cannot blame APHMs for making public statements and calling for assurers to keep cashless medical products as they know it significantly impacts their earnings.
The third strategy is for assurers to revisit and expand the strategy they introduced in early 2000, when they formed a consortium that marketed national health assurance products instead of individual company products.
An industry-wide product allows the consolidation of claim data to determine the true industry burning costs. More importantly, consolidating policy owners’ data enables the industry to spread costs and introduce cheaper products.
Individual assurance companies only need to focus on distribution and customer service. The focus would be on customer service. This approach would be the seed of the National Health Assurance scheme under the assurance industry-driven National Healthcare Financing System.
Under this approach, competition among the assurance companies will no longer be based on pricing. The law of large numbers will be the deciding factor and will have an impact on prices.
However, if private hospitals continue to have the unchecked freedom to determine the charges, the proposed measures will only temporarily reprieve policy owners.
Conclusion
In the interests of policy owners and to protect themselves against increasing premiums, re-introducing reimbursement health products would be the best approach. Policy owners themselves must take the role of questioning hospital charges, which directly impacts health assurance premiums.
Assurers must develop products that limit benefit payments according to age, gender, pre-existing conditions, and risk exposure. A young person who enjoys employer insurance coverage does not need an RM1,000,000 sum of cover. Having high annual and lifetime limits promotes medical inflation.
Assurers must get their act together, focus on their policy owners, ignore APHM’s public statements, and develop a structured public education programme explaining how they price their products.
Dr Mohamed Rafick Khan is a trained physician with 12 years of experience in military medical services and over 22 years of experience in the assurance industry. He retired as the CEO of a multinational reinsurance company in 2019 and remains active as an independent international assurance industry consultant.
- This is the personal opinion of the writer or publication and does not necessarily represent the views of CodeBlue.
