KUALA LUMPUR, July 9 — The Madani administration has decided not to implement mandatory national health insurance (NHI), choosing instead to expand private health insurance, according to Dzulkefly Ahmad.
The health minister noted that the public health care system is funded by general taxation and that user fees are only RM1 and RM5 for general outpatient and specialist fees respectively, which he acknowledged are “unreasonable”.
“We’re not taking the NHI or SHI approach – national health insurance and social health insurance – because both are mandatory. That’s our view,” Dzulkefly told the Public Accounts Committee (PAC) proceedings on February 24, 2025, according to Hansard, in its inquiry on rising health insurance premiums, private hospital charges, and the impact on public health.
“It is just not politically right but it as well, from an ideological perspective, when you are already a general taxation-based financing system, you can’t further compel. Already you have taxed your rakyat. Then you use the combined funds to finance public hospitals and suddenly, you implement NHI or SHI. It would be a double war.”
Dzulkefly explained that the Ministry of Health (MOH) wanted to “mainstream” use of private health insurance to reduce out-of-pocket (OOP) spending in private health care instead.
“That’s why we are trying to nudge ITOs, the insurance and takaful organisations to make them understand that if they — and also private hospital operators, if they reduce or increase, not reduce. If they’re more reasonable in imposing charges, they will finally get the volume.
“But if they increase it, then people render their policies, they will all be making bee line to our public hospital. That will jammed us. It will be a race to the bottom. Nobody wins in that situation.”
According to the MOH’s Malaysia National Health Accounts (MNHA) 2024 report, private insurance comprised only 17 per cent of private sources of health care financing in 2023, while private household OOP made up 76 per cent.
Dzulkefly acknowledged that underfunding of the health care system – with public and private spending comprising 2.3 per cent and 2.1 per cent of the country’s gross domestic product (GDP) respectively – has led to understaffing and overwork. As an upper middle income economy, Malaysia should be spending 5 per cent to 6 per cent of its GDP on health.
“But, as I said to the prime minister, if you cannot allow me to have more resources, allow me to be resourceful. That’s the reason why we are coming with diversifying sources of funding, among other thing, to come out with the Rakan KKM, an improvement of the private wing, full-paying patients.”
When Bayan Baru MP Sim Tze Tzin asked if the government was planning to amend the Private Healthcare Facilities and Services Act 1998 (Act 586) to control medical inflation, Dzulkefly said in February 2025 that the MOH wasn’t ruling it out.
“But I’m also reminded that we need to be cautious because we do not want unintended consequences. So we for something that we don’t to use the sledgehammer whatever.”
Nearly 18 months later, the government still hasn’t tabled a bill to amend Act 586 to control private hospital charges beyond doctors’ fees, touting the diagnosis-related groups (DRG) reimbursement system instead.
Dzulkefly: Getting Hammered Because People Think I’m Superman
Seputeh MP Teresa Kok, who is also the PAC vice chairwoman, pointed out that many Malaysians asked PAC members during public hearings about when the government would do something to halt health insurance premium hikes.
“You know why, this issue comes out front page in Sin Chew, front page in many media. So, if the government does not respond, then it will end up, you face a lot of criticism,” said the PAC member.
Dzulkefly acknowledged public criticism and the need to counter the narrative by “our friends” on social media, whom he declined to name.
“Their attacks sometimes can be very damaging, as if the KKM ship is about to sink,” he told the PAC on February 24, 2025, according to Hansard.
The health minister said the MOH was working “round the clock, non-stop” on reforms, but that they were perhaps “not very good communicators”.
“So, sometimes the impression on social media is as if the health minister can do everything,” said Dzulkefly, citing things like staffing positions, remuneration, and on-call. “Everything like I’m a Superman that can solve all these problems and they keep hammering at me.”
He stressed that managing health care issues involved a whole-of-government approach, describing health as a “social, moral, and political imperative” that will cost the government of the day the next election if they aren’t resolved.
“I keep reminding my colleagues in the Cabinet, including PMX. We have to really address this and address this with full responsibility and trust.”
NHI Typically Implemented In Countries With Large Formal Labour Force
Dr Yap Wei Aun, chief executive officer of the Health Transformation Office (HTO) in the MOH, asked parliamentarians if they would “feel comfortable” signing into law an additional statutory contribution for NHI from formal workers, on top of existing Employees’ Provident Fund (EPF), Social Security Organisation (Socso), and Employment Insurance System (EIS) contributions.
Kubang Pasu MP Ku Abd Rahman Ku Ismail pointed out that Indonesia and Singapore, besides other developed countries, have national health insurance schemes.
Dr Yap said in response that Indonesia’s BPJS Kesehatan, which administers the country’s national health insurance scheme, has previously noted near annual deficits hitting the JKN programme that required bailouts from the government.
“The reason why is because like Indonesia, Malaysia has a high proportion of informal labour force. The typical countries which are associated with NHI and SHI would be — for example is Germany, a very advanced country which has a very solid formal labour force, able to contribute to assist NHI, SHI,” Dr Yap told the PAC on August 14, 2025, according to Hansard.
“But even globally speaking, when you look at NHI and SHI countries, the question of how do you cover it in a context where people is increasingly aging— just like us where they are poor people, who is going to cover them? And so even for those countries, they are going towards a more of a planned system.”
Just three months after Dr Yap asked PAC members if they were willing to approve NHI as an additional statutory contribution, the Dewan Rakyat passed the Employees’ Social Security (Amendment) Bill 2025 in December 2025 to impose statutory contributions to the Lindung 24 Hours scheme that covers accidents occurring outside working hours.
However, following public backlash to Lindung 24 Hours that arose after the first month of the scheme’s implementation in June, the Cabinet decided yesterday to make contributions voluntary with immediate effect.
Contributions to Lindung 24 Hours are fully borne by employees and set at a rate of 0.75 per cent of their salary for the first two years, before a raise to 1 per cent for the next three years and subsequently to 1.35 per cent from the sixth year onwards.
Yap: Rakan KKM Not ‘Zero-Sum Game’, Unlike FPP Scheme
While defending Rakan KKM back in August 2025, Dr Yap criticised the MOH’s own full-paying patient (FPP) scheme.
“The critical point of change is to think that full-paying patient (FPP) is a zero-sum game because you are running this service with the existing budget,” the HTO CEO told the PAC, according to Hansard.
“Rakan KKM is not a zero-sum game because you can charge the cost plus and retain it to improve things for all patients. So, therefore you can see why it’s an improvement of the existing unequal initiatives.”
Dr Yap also claimed that there was a lot of “disinformation” about Rakan KKM on social media, likening it to vaccine misinformation, as he referred MPs to rakankkm.moh.gov.my. That website is currently down.
MOH deputy secretary-general (finance) Zahrul Hakim Abdullah told the PAC on August 14, 2025, that based on Rakan KKM Sdn Bhd’s plans, the private wing scheme would see its first patient in December 2025.
He even touted the launch of Rakan KKM in four government hospitals – Cyberjaya Hospital, Putrajaya Hospital, Sultan Idris Shah Serdang Hospital, and the National Cancer Institute (IKN) – by the fourth quarter of 2025 before expansion to other main hospitals this year.
But the Rakan KKM project has since disappeared from public view, without any explanation from the government about its progress or when it would be launched.
In recent statements following the tabling of the PAC report in Parliament on June 25, the government didn’t mention Rakan KKM at all, but merely talked about piloting the Base MHIT product, named MediAsas, by the end of this month.
This is the fourth and last article in CodeBlue’s series on the PAC’s 1,999-page report. Read the first three articles below:
- Governor: Bank Negara Mandated To Protect Insurance Industry
- Insurers Question ‘Excessive’ Private Health Screenings, Procedures, Hospitalisations
- Private Hospitals Say They’re At The Mercy Of Big Insurers
Selected quotes from the testimonies of insurance and hospital executives to the PAC’s inquiry can be found on CodeBlue’s Facebook page here.
