KUALA LUMPUR, Jan 22 — The government launched a White Paper today on the development of a voluntary base medical and health insurance/takaful (MHIT) plan that adopts risk-rated premiums.
According to the White Paper jointly published by the Ministry of Health (MOH), Ministry of Finance (MOF), and Bank Negara Malaysia (BNM), the base MHIT plan sets an annual coverage limit of RM100,000. For individuals aged above 60 years, the annual policy limit is RM150,000.
Premiums and contributions to the base MHIT plan will be risk-rated, factoring in an individual’s age, gender, and health status to ensure the sustainability of the risk pool to meet claims.
“The adoption of risk-rating considers the well-documented challenges associated with community rating under voluntary health systems observed in other countries,” said the White Paper.
“While full community rating can improve equity through the cross-subsidisation of higher-risk lives, it can lead to substantially higher premiums borne by healthy lives.
“Under a voluntary system, this increases adverse selection where healthier lives delay or refrain from buying insurance/takaful until they are sick, causing the overall experience of the pool to deteriorate and eventually become unaffordable and unsustainable.”
The White Paper did not state if medical screenings would be required before people can purchase the base MHIT plan and would then face higher premiums if they had pre-existing conditions.
Commercial health insurance products are also individually risk-rated.
According to the White Paper, BNM is considering a “no look-back” provision for the base MHIT plan that will “establish a period of continuous insurance/takaful coverage, after which insurers and takaful operators (ITOs) cannot deny claims on grounds of prior medical conditions.”
If medical screenings aren’t required prior to purchasing the base MHIT plan and premiums are risk-rated, the government would essentially be incentivising people not to declare any known chronic conditions, especially if denials of coverage on the basis of pre-existing conditions are prohibited.
RM10,000-RM15,000 Deductible For RM300,000 Standard-Plus Plan
Besides the standard plan, the government’s proposed base MHIT product includes a standard-plus plan with an annual coverage limit of RM300,000, with deductible levels of between RM10,000 and RM15,000 under consideration, “in line with comparable products in the market”.
It’s unclear what “comparable products” the White Paper is referring to, since there are RM1.5 million health insurance policies with RM10,000 deductibles in the market. Older products with more than RM1 million cover have RM500 deductibles.
“Under this plan, individuals will bear the costs of hospital bills up to the deductible amount in the event of a hospitalisation episode, and the plan will pay for any costs above that amount,” said the White Paper.
“Such a plan caters to individuals who may already be covered under medical benefit plans provided by their employers, or who have the ability to bear a larger share of payments for hospital bills and only wish to protect themselves against catastrophic expenditures.
“Premiums for the standard-plus plan are expected to be between 15 per cent and 70 per cent lower across different age bands due to lower overall claims that will be borne by the insurance/takaful pool.”
RM500 To RM1,000 Deductible, Higher Premiums For Elderly
According to the indicative target premium range, which will guide the final premiums before the base MHIT plan is launched in 2027, those aged 61 to 65 may face a monthly premium of RM280 to RM350 under the standard plan, while those aged above 75 may be charged a monthly premium of RM500 to RM780 under the standard plan.
The White Paper curiously omits target premiums for those aged below 31, between 36 and 60 years, and 66 to 75 years.
Lower premiums of between 15 per cent and 70 per cent across different age bands are proposed for the standard-plus plan that come with a whopping RM10,000 to RM15,000 deductible, as overall claims are expected to be lower.
“Premiums for the base MHIT plan will be subject to periodic review by authorities to ensure the premium levels remain sufficient to pay claims. The revision to the premium levels will take into account the claims experience of the risk pool, medical inflation, as well as any revision to the benefits covered,” said the White Paper.
Yet, at the same time, the White Paper noted that the 2024 repricing exercise by ITOs saw nearly 40 per cent of revised policies seeing premium increases of 21 per cent or higher.
The government’s base MHIT plan will provide protection for individuals up to 85 years of age. The maximum age for enrolment into the plan is 70 years old.
According to the White Paper, the base MHIT plan will apply a two-tier copayment structure, differentiated by health care providers.
With in-network hospitals, the deductible is RM500 per disability, increased to RM1,000 at age 61 in tandem with a higher annual limit. For out-of-network hospitals, an additional 20 per cent coshare, capped at RM3,000 per disability, will be imposed.
“In-network hospitals are hospitals that demonstrate an appropriate use of resources aligned to best-practice, cost-efficient care models, and are committed to minimum standards of cost transparency and service levels,” said the White Paper.
“The selection of hospitals within the network will also consider factors to ensure adequate access (in terms of location and capacity) for individuals covered under the base MHIT plan.”
The government’s base MHIT plan is designed to co-exist with individual MHIT products offered by ITOs in the market, but the White Paper proposed two seemingly contradictory conditions.
Participating ITOs must demonstrate the ability to meet qualifying criteria in order to offer the base MHIT plan, but at the same time, an ITO that wishes to offer its own MHIT products must also offer the base plan on a standalone basis.
Dengue, Pneumonia To Be Treated Outpatient
The White Paper proposed that diseases like dengue, influenza A and B, bronchitis and pneumonia/bronchoneumonia be treated in outpatient settings under the government’s base MHIT plan.
“This allows patients, where clinically appropriate, to recover more comfortably at home, reduces risks of in-hospital infections and avoids unnecessary expenses associated with hospital stays,” it said.
Free Malaysia Today reported recently about insurers’ quotas for private hospitals to cap the number of admissions in favour of treating as many cases as possible as outpatients, such as dengue fever, influenza, bronchitis, peptic ulcer, and gastroenteritis.
Pneumonia and dengue are serious conditions that can turn severe very quickly. Pneumonia was Malaysia’s second highest cause of death in 2024, according to the Department of Statistics Malaysia (DOSM). Dengue fever can also be fatal.
Treating dengue as outpatient, rather than admission to a hospital ward, also flies in the face of infectious disease control, since a mosquito that bites an infected person at home can spread the virus to surrounding people in the community.
“The base MHIT will initially cover outpatient treatments provided at a hospital’s outpatient department, with the view to include private empanelled general practitioner (GP) clinics in future, subject to an assessment of operational preconditions and the impact on premium affordability,” said the White Paper.
“Further, an interoperable Electronic Medical Record (EMR) system will be established to enable the sharing of patient clinical records with patient consent, across network hospitals and participating ITOs to reduce the need for duplicative diagnostics and procedures that can add to unnecessary costs.”
Most private hospitals in Malaysia have their own EMR system.
In a joint media statement released after Finance Minister II Amir Hamzah Azizan and Health Minister Dzulkefly Ahmad held a press conference earlier today, the MOH and MOF said the base MHIT plan “aims to provide meaningful coverage for individuals who desire private health care coverage and individuals seeking additional options due to the repricing or changes in their existing plans.”
The White Paper stressed that the base MHIT plan was not a social insurance scheme, as participation is voluntary.
“Premiums for the base MHIT plant will be borne by individuals from their own savings or income. EPF (Employees’ Provident Fund) contributors will have the option to pay for premiums from savings in their EPF Account Sejahtera which is already currently designated for medical, education and housing expenses,” said the White Paper.
“This is entirely at the discretion of contributors with no compulsion to draw on EPF savings.”