Since Bank Negara Malaysia’s (BNM) White Paper was announced on January 22, 2026, there have been many commentaries on the Base Medical and Health Insurance/Takaful (MHIT) Plan.
Critics and observers have said that the coverage is insufficient and they are existing better plans in the market with higher and more comprehensive coverage. There are also issues of copayments and the shift of health care financing to people.
But Health Minister Dzulkefly Ahmad’s announcement at the recent Forum Ekonomi Malaysia 2026 gave me a clearer indication that the government has the back of their mind that MHIT can be evolved towards a new National Health Financing Scheme (NHFS).
The first announcement was establishing a National Health Fund (NHF) with contribution from employers and employees (this looks like a social health fund even though BNM said that the MHIT is not a social health insurance).
The second announcement is the coverage of pre-existing conditions under MHIT. If it is not a form of social fund (insurance), it will not be sustainable for the private insurance and takaful operators (ITOs) to take in those with pre-existing conditions without higher premium and certain exclusions.
As the announcement was made a few days ago, I notice that most comments have been from those in the health care space, and generally, these two announcements have been welcomed by them.
There have been two recent articles by Wong Teck Jin and Mohamed Rafick Khan on the issue of the NHF. Let me put my thoughts on the same issue.
I have been involved in many studies and proposals on health care financing during my time in the public service since the mid-1980s, led by the Ministry of Health (MOH).
With regard to this White Paper on the base MHIT plan, it was led by BNM, the Ministry of Finance (MOF), and the MOH. It also involved the key stakeholders and had input from many engagements to strengthen the Malaysia’s health care system.
After so many studies and proposals on health care financing that did not see the light of day over the past 30 to 40 years, I am glad that the government is seriously looking into the financing of health care of the future. And this is rightly led by BNM and MOF, with MOH playing a supporting role (what is missing is the role of Ministry of Economy or the former EPU).
Let us look and examine how can this Base MHIT, which is still a work in progress, has the potential to turn into an actual NHFS. While most previous MOH proposals took a “big bang” approach, the MHIT takes an incremental approach.
It can be considered the first building block of a future NHFS. The government has acknowledged that people have to be responsible to take care of themselves and family and pay for their health care even though the public health care system will remain accessible to all. This is a good starting point of having a health care financing philosophy for the rakyat.
A core feature of any national health financing scheme, is a defined essential benefits package. In this Base MHIT, it is touted that for the first time in Malaysia’s private insurance market, a standardised base plan is mandated across all insurers. (Even though the Foreign Workers Hospitalisation and Surgical Scheme (SPIKPA) has been in place since 2011 with standard plan, rate and only available in MOH hospitals).
With Base MHIT, there is uniform coverage limits (RM100,000 standard; RM150,000 for seniors). There is also a standard-plus Base MHIT Plan with an annual limit of RM300,000 but with higher deductibles. It is right to focus on essential inpatient care rather than luxury benefits for the present moment.
In South Korea, Japan and Taiwan, this is how they begin in their early stages of NHFS systems in by defining what a “basic” health care package means nationally, before universal participation. This is important, as Malaysia currently has fragmented protection plan (public care, employer insurance, individual policies, etc).
Base MHIT introduces a single national reference standard for health insurance benefits, which is a prerequisite for any national pooling system. In my experience with previous studies and proposals like 1Care, the benefits package was too comprehensive covering both the existing public health and private services.
It wasn’t sustainable from the word go and failed to take-off as the package of benefits was too generous, among many other reasons. While the present package of services is more towards hospitalisation, in future it can evolve to include primary care and preventive health to reduce high costs of hospitalisation.
The Base MHIT creates a regulated national risk pool, though it is still incomplete. While Base MHIT is voluntary and risk-rated today, it begins to standardise underwriting and claims practices under BNM’s oversight. National insurance systems require predictable risk pooling, and MHIT introduces safeguards like portability and limits on repricing.
The aim right now is to attract those who do not have insurance and existing policyholders who might want to switch their existing plan to a more financially sustainable plan in the future.
This can slowly be evolved from a purely voluntary to some form of compulsory scheme for those who are new in their employment in both the government and private sectors.
If it is difficult to mandate it in the private sector, it can start with the public services (include the police and armed forces) and government-linked companies (GLCs).
It can be funded from their salaries, and those at the lower categories can be subsidised by the employer (government). As this pool is relatively “young and healthy”, the fund will be more sustainable.
With this compulsory enrolment, instead of risk-rated, it can be income and age-rated. Many countries have transitioned this way to avoid political and economic resistances to a sudden compulsory (universal) enrolment. And many countries have started with the enrolment of public sector employees.
A major obstacle to a national health financing scheme (insurance) is runaway medical inflation. Base MHIT is explicitly tied to the Reset strategy, which aims to reform how health care is paid for, not just who pays. It is moving away from a fee-for-service provider payment mechanism with a bundled payment and diagnosis-related groups (DRG) reimbursement.
It has also started publishing benchmark prices for some of the common procedures. While this has been carried out by private hospitals, it must be also done by public hospitals.
This is because the ratio of total public/private expenditure is nearly equal, and it is pertinent that public expenditure must also be spent wisely and opened to scrutiny and be transparent.
The Base MHIT can also create administrative and data infrastructure needed for the NHFS. Since the insurers and takaful operators (ITOs) have agreed to the Base MHIT and will be selling this product together with their own products, they will have to adjust their system to account for the MHIT.
ITOs and regulators must invest in standardised claims systems and national cost and utilisation datasets. This is what an NHFS will rely upon when it comes to monitoring outcomes and pricing practices.
These systems are expensive and can be difficult to build upfront. But with Base MHIT, it allows Malaysia to develop them incrementally, within the private insurance ecosystem, before scaling to a national system in the future.
In conclusion, I am of the opinion that the Base MHIT has for the first time given us hope that the government is seriously looking into an alternative way to finance health care for the future. And it is right that the central agencies, BNM, and the MOF, who are the regulators and keepers of national finances, are steering this initiative with the MOH and other related stakeholders.
This has to be done with a clear true north – the development of a new NHFS. It has to be done in phases and with right steering from the top and by the right people as being done right now.
Ultimately, the government’s political will and the rakyat’s interest, rather than the design, will determine the success of the new national health care financing scheme.
I pray that it will be successfully implemented and ultimately lead to better health for the rakyat and country in the future.
Chua Hong Teck is an independent health analyst and senior counsellor at Vriens & Partners.
- This is the personal opinion of the writer or publication and does not necessarily represent the views of CodeBlue.
