KUALA LUMPUR, March 30 — Gopeng MP Tan Kar Hing called today for amendments to the Private Healthcare Facilities and Services Act 1998 (Act 586) before launching the Base Medical and Health Insurance/Takaful (MHIT) product.
The PKR lawmaker said the Ministry of Health (MOH) must expand control over every component of private hospital charges to prevent over-servicing and unreasonable charges.
“Amendments to Act 586 should have been implemented first before the rollout of the MHIT policy, as medical cost inflation cannot rely solely on adjustments at the end stage through insurance products,” said Tan, who is also deputy chairman of the Health parliament special select committee (PSSC), in a statement.
He pointed out that Malaysia’s medical inflation rate has now reached between 12 and 15 per cent, far exceeding the 10 per cent global average and 11 per cent Asia-Pacific average.
“The practice of over-servicing by private hospitals has created a domino effect on rising insurance premiums, with increases of up to 40 per cent to 70 per cent. This situation places significant pressure on the B40 and M40 groups, with some facing the risk of losing coverage,” said Tan.
The Health PSSC deputy chairman said despite the government’s proposed value-based care approach and diagnosis-related groups (DRG) payment model, Act 586 can only regulate doctor fees, while other charges such as facilities, medications, and consumables remain “insufficiently controlled”.
“As long as the MOH does not have sufficient legal authority to ensure transparency in private hospital charges, the co-payment mechanism will not only be inadequate but may also risk shifting the cost burden to consumers,” said Tan, referring to the Base MHIT.
He found the Base MHIT to be suitable for lower-income groups and senior citizens with more affordable premiums, albeit with lower coverage limits.
The Base MHIT’s basic coverage is an RM100,000 annual limit, rising to RM150,000 for senior citizens aged 61 and above. However, the latter faces a higher RM1,000 deductible and monthly premiums of RM280 to RM350 (for age 61 to 65).
However, Tan stressed that senior citizens shouldn’t lose access to treatment due to premium constraints when transitioning to the Base MHIT product.
“I also emphasise the importance of strengthening the role of general practitioners (GPs) within the health care system. Many people currently lack confidence in the primary care system and go directly to specialists, which indirectly increases treatment costs and creates room for inflation in private hospitals.”
Bank Negara Malaysia (BNM) governor Abdul Rasheed Ghaffour told Berita Harian that the Base MHIT plan would introduce a “no look-back clause” that prohibits insurance and takaful operators (ITOs) from denying claims based on pre-existing conditions after a certain period of continuous coverage.
Malaysiakini previously reported that the required continuous coverage to operate a “no look-back clause” could potentially be as long as 10 years.
The central bank also plans to launch a pilot project for the Base MHIT product in the second half of this year.
“The focus during this phase will be on ecosystem readiness, including within the insurance and takaful sector and private hospitals. It will help identify technical issues, test operational readiness, and gather user feedback,” Abdul Rasheed was quoted as saying.
“Any necessary adjustments to product structure, benefits, or the implementation timeline will be made to ensure a smooth full rollout.”
It’s unclear how exactly BNM plans to “test” the Base MHIT product, given that commercial medical insurance typically have waiting periods of up to two years before a policyholder can make a claim.
Unless ITOs allow Base MHIT policyholders to make claims on the first day of coverage, the only outcome from the “pilot project” would be the number of subscriptions.
In a recent interview with CodeBlue, Prudential Assurance Malaysia Berhad declined to comment when asked if it would cover pre-existing conditions under the Base MHIT because the product framework was still under internal review.
The insurance company also said medical plans with RM50,000 to RM100,000 annual limits were outdated by 13 years, based on its own claims experience, pointing out that it had paid out more than RM1 million in claims to a breast cancer patient last year within a single policy year.
