I was invited by National Cancer Society Malaysia (NCSM) to present my views on the above topic at the SEA Healthcare and Pharma Conference on April 24, 2025.
I was also on a panel to discuss this together with Prof Jomo Sundrum of Khazanah Research Institute (KRI) and Jaswinder Singh of Prudential BSN.
During the talk, I highlighted that there are two important financing and delivery policies adopted by the government.
Universal Health Coverage (UHC), where all have equal access to public health care without financial hardship. This policy is supported by the following facts:
- Health facilities are situated at every 5km, including mobile and flying doctor services.
- The Ministry of Health (MOH) has not revised its charges since 1982, except for new services and for foreigners.
- The MOH’s revenue (RM526 million in 2023) is less than 1 per cent of its annual budget.
- The T15 group will be required to pay more, as announced in the 2025 Budget.
- As many more are seeking private health care, better access for those who cannot afford to pay for such care will be made available.
The outsourcing of health care by the government to the private sector to cater to the middle class and those who can afford to pay. This is evidenced by the following facts:
- The rising demand by the middle class with higher disposable incomes has increased demand for private health care services, perceived to offer shorter waiting times, better facilities, and more personalised care.
- Regardless of whether this is a deliberate policy or not, the government seems to want it to continue, with investments from both federal and state governments and private health care providers such as IHH Healthcare, KPJ Healthcare, Selgate Sdn Bhd, and KMI Healthcare.
- Privatisation policies and privatising MOH procurement and support services and health tourism have also contributed to this growth.
This has resulted in a dual financing and delivery system, namely public (highly subsidised) and private (user pays though out-of-pocket payments of insurance (personal or corporate).
The public sector handles nearly all public health activities and is available throughout the country, while there is also an increase in private health care facilities over the last 30 years, found mainly in urban areas.
Malaysia has spent 4 to 5 per cent of its GDP on health over the last 10 years. The total health expenditure (THE) was RM84.2 billion in 2023. The public-private mix was 53/47 in 2023, narrowing in the last 15 years, as seen in the chart below:
Source: Malaysia National Accounts, Ministry of Health
Apart from this, the number of hospital beds and patient loads in the private sector have increased as shown in the table below. The number of doctors and nurses in the public sector have increased more than that in the private sector, but the share of the number of hospital admissions and outpatient attendances have remained the same.
The number of doctors has doubled in the public service, and therefore, the question is whether there is a shortage of doctors in hospitals, or if there is more of a distribution of functions of these doctors in the public sector.
| Public | Private | |||
| 2012 | 2023 | 2012 | 2023 | |
| Doctors | 27,478(71 %) | 54.949(77%) | 11,240(29%) | 16,455(23%) |
| Nurses | 56,089(66%) | 79,397(68%) | 28.879(34%) | 37,719(32%) |
| Hospital Beds | 42,707(76%) | 51,100(73%) | 13,667(24%) | 18,779(27%) |
| No. of Hospital Admissions | 3,235,099(77%) | 2,927,320(68%) | 971,080(23%) | 1,362,564(32%) |
| No. Hospital Outpatient Attendances | 20,876,115(84%) | 22,484,243(85%) | 3,853,779(16%) | 4,062,272(15%) |
Source: MNHA 2013 and 2024 and Health Facts 2013, 2024, Ministry of Health
I quoted some major financing studies that were carried out by the government from 1985 to 2018, including:
- Healthcare Services Financing Study (NHFS), Westinghouse Overseas Service Corporation, funded by ADB, 1985
- Study on the corporatisation of 14 general hospitals by Rashid Hussein Berhad, 1995-1996
- National Healthcare Financing Mechanism in Malaysia, Ministry of Health, EPU and UNDP, KAROL Consulting, Australia, 2007
- 1Care for 1Malaysia 2012, Ministry of Health
- Malaysian Health System Reform (MHSR) by Harvard University, 2016-2018
There were 10 other studies that are related to health care reforms and financing. These studies recommended the implementation of social health insurance, earmarked taxes, voluntary health insurance, and a consolidaiton of the various existing financing and new financing mechanisms. None have been implemented by the private sector.
However, they were a few standalone financing mechanisms that were carried out for a specific target group. These included:
- Skim Perlindungan Insurance Kesihatan Pekerja Asing 2011. This foreign worker insurance scheme was developed by PEMANDU, insurance companies, and MOH. It is used in MOH facilities for inpatient treatment of foreign workers up to RM10,000 a year, and was developed to give foreign workers peace of mind and to overcome the huge unpaid bills incurred by them in MOH facilities. About 17 private insurance companies are involved in this scheme.
- mySalam comes under the Ministry of Finance, with coverage at government hospitals. A total of 36 critical illnesses are covered by the plan. Those diagnosed with one of the illnesses will receive RM8,000 as a one-off payment, and those who are self-employed or who are daily wage workers will receive RM50 daily payments for up to two weeks as income replacement while hospitalised. This is funded by Great Eastern Insurance with a contribution of RM2.0 billion.
- Peduli Sihat and Iltizam Selangor Sihat are for residents in Selangor who have lived 10 years in the state and B40 families. It covers basic medical treatment, vaccination, and critical/death benefits. The Selangor sate government also has other schemes for state government employees.
The 12th Malaysia Plan (2021-2025) has the theme on financial sustainability for health care. Some of the proposals that touched on the financing of health included the following:
- Current health charges and subsidies to be reviewed.
- Health endowment funds, particularly from waqaf, will be introduced as a measure to diversify sources of funding and create alternative financing for health care.
- The M40 group will be encouraged to subscribe to health and employment insurance.
- Several approaches include public-private partnership, rent-to-own, leasing, and sharing of resources to reduce dependency on government allocations.
- Pool procurement of pharmaceutical products with private sector and with other countries in ASEAN.
Almost all these proposals that were to be implemented by end of the Plan in 2025 were just mere lip service, and we have not seen any light of the day. Some may argue that they have not been carried out because of the changing political landscape, and these take time to implement, but the politicians want immediate results and therefore have been put on the backburner.
Instead, the newly formed Health Transformation Office (HTO) has been tasked to explore Rakan KKM, DRG, and voluntary basic private insurance. Rakan KKM is just a different version of the full-paying patient programme (FPP) that have been implemented since 2007.
Therefore, if there is a need to make any adjustment to it, then by all means do it, but must it be called by another name just because it is under another minister and new political regime, if the objectives are still the same? And why is the government exploring the prospect of voluntary private insurance as well?
The recent controversy of rising medical inflation and the huge increase in insurance premiums for the first time made the government realise the policy on privately financed health care may not be sustainable.
The regulators, Bank Negara Malaysia, MOH, and the Ministry of Finance (MOF) have not seen this coming, and this has threatened the sustainability of financing and the delivery system of health care services. Only when this “outsourcing of their (government) responsibility” has been shaken, has the government started to assist those who are insured.
In conclusion, public-private partnership in financing health care has been only been “successful” as a public policy for the government.
Like in education, the government has “outsourced” health care and participated actively in the delivery of health care services in the private sector, as seen by the involvement of some state governments and GLCs and GLICs.
The government has also trained and sponsored many specialists, doctors, nurses, and allied health professionals and see them leave for the private sector and overseas. There must be a better way for these government-sponsored specialists to continue to contribute to the public sector even though they have completed their compulsory service or bond.
The ability of the government to spend more and invest in public facilities is limited by its fiscal position. The call to spend 5 per cent of GDP on public sector health care is an impossible dream. There must be other sources of revenue for this to happen.
The government should be “indebted” to the middle class who not only pay taxes but still pay out of pocket for private health care. There is a need to recognise that private health care and financing is here to stay as they form a major part of the national health system.
It takes time and determination for a nation to transform the health delivery and financing system. Therefore, incremental steps should be taken to reform the financing and delivery of the nation’s health system, and timelines should be set to achieve each small step.
Ultimately, what is important is that we must aspire to be a healthy nation for subsequent generations, and it wll take a whole-of-government and nation approach to do this.
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.
