Why Malaysia needs health care reform

The government's proposed 1Care health financing reforms have fuelled a fiery debate, not least because the ruling party's record in privatisation exercises has been abysmal.

Critics of 1Care warn that the planned RM44 billion national health insurance fund would be the largest Umno cash cow to be fattened for slaughter in our nation's history.

According to critics like Selangor Menteri Besar Khalid Ibrahim, (right) the opening speaker at last Sunday's public forum on 1Care in Petaling Jaya, the potential for corruption and leakages would be immense.

He cited the Malaysian peninsula's grotesque water privatisation exercise as a model case.

Amidst all this heat and mud-slinging, though, the arguments for health care reforms - including, but not limited to, reducing health care expenditure - have largely remained obscure.

Our nation's healthcare costs include burgeoning out-of-pocket (OOP) private health payments, to the tune of RM16.68 billion in 2008: that is, payments by private patients not covered by insurance, or whose insurance coverage has been exhausted.

OOP means draining ordinary people's savings to pay for private care. Out of pocket payments leave them, literally, 'out of pocket' - some near bankruptcy.

Giving charity to private hospitals
Many of us have heard horror stories of middle-income families losing their nest eggs because of a single family member's catastrophic illness.

Certain cancer treatments or surgical procedures cost hundreds of thousands of ringgit.

We frequently see newspaper appeals for donations for babies requiring heart surgery or children undergoing organ transplantation. These advertisements are a source of national shame.

Most of these charitable donations go to private hospitals, their doctors and their shareholders.

Even in the somewhat unusual event that a private surgeon or doctor waives professional fees, the corporations running private hospitals still demand their pound of flesh. These corporations are run with one, and only one goal - profit.

The Malaysian public is largely unaware that most of this treatment is available in certain government hospitals, albeit with longer waiting times, and with variable difficulty of obtaining access, particularly outside the Klang Valley.

Many patients simply do not know where to go, in the bureaucratic maze of the public health system, with its mythical gatekeepers. They go to private clinics or hospitals instead.

Elastic demand for health care

Proponents and critics of 1Care agree on one thing: the skyrocketing OOP expenditure on private health care is unhealthy and unsustainable.

Most understand that the demand for health care is elastic, and prices are not subject to traditional supply-and-demand economics.

People are emotional, as well as rational, beings: they cannot coolly restrain their spending on health care once a loved one falls ill.

Desperate relatives may readily agree to expensive but ineffectual medical or surgical procedures, even if they have little idea of the cost-benefit analysis.

This explains the huge revenues posted by healthcare corporations like KPJ, Pantai, Gleneagles, Sime Darby and the like, even during downturns in the economic cycle.

This haemorrhage of citizen's hard-earned cash into the balance sheets of private hospitals means patients' private debt is accumulating.

According to the 'slippery slope' argument, Malaysia is headed down the path of the US.

The US spends 16% of its GDP on a prohibitively expensive healthcare system, where some insured patients are overtreated, while one in six Americans have no insurance, and effectively no access to healthcare.

As a result, the US has chalked up the heftiest national debt in human history, caused mainly by excessive spending on health and the military.

This causes less investment in other, more productive sectors of the economy, even though a handful of private hospital owners and insurers have grown fabulously wealthy.

The famous capitalist dictum, repeated ad nauseam by monetarist Milton Friedman, that 'there is no such thing as a free lunch', takes its natural course in private hospitals.

There are certainly no free lunches there: no free needles, no free cotton dressings - not even free toilet rolls.

Stopping the bleeding

Among the government's main selling points is that 1Care financing system will be able to cap OOP costs, reduce the government burden from general taxation, as well as provide universal health care access.

Opponents of 1Care say that the Ministry of Health estimates the cost of the putative National Health Insurance Fund to be 10% of the average household income, and that imposing a mandatory contribution would add to an unbearable tax burden.

Senior doctors also point out that our current 'fee-for-service' funding models means that private doctors make more money for every investigation, medication and operation that they advise.

Some doctors accept that a fixed salary for doctors would be a better model to keep private health care costs manageable, while many private doctors are outraged at the suggestion.

Can reining in health care expenditure, particularly in the private sector, be achieved without the potential leakages intrinsic to the 1Care proposals?

Can we establish an equitable health care system for all, including the poor populations of the peninsula, Sabah and Sarawak?

Perhaps the best advice regarding health care reform was provided by Dr Subramaniam Pillay, a leading member of Aliran, the Coalition Against Health Care Privatisation, and the Bersih 2.0 Steering Committee.

At the 1Care forum, speaking long after the address by Khalid Ibrahim, he said Malaysian citizens must not rely on the Ministry of Health, nor private doctors, nor politicians opposing the scheme, to find the best answers.

The interests of these, he cautioned, might coincide with those of all citizens to some extent, but would diverge in others.

Instead, he argued, we must educate ourselves regarding the need to reform, and the risks posed by 1Care.

We must vote in an informed way, and keep up pressure our leaders - if necessary, by mass mobilisation similar to last July's Bersih 2.0 rally.