Medicine cost, doctors’ fees will rise after GST, say medical practitioners

Concerns have been raised that the GST will result in increased healthcare cost. – The Malaysian Insider file pic, December 13, 2014.

Despite repeated assurances by the prime minister that private healthcare will be exempted from the Goods and Services Tax (GST), briefings by the Customs Department have indicated otherwise, say medical practitioners, who warned that extra charges will be imposed on medicines and doctors' fees.

Convinced that private healthcare will cost much more once the consumption tax comes into effect next April, the Federation of Private Medical Practitioners' Associations Malaysia (FPMPAM) has expressed concern over the contradictory statements by Datuk Seri Najib Razak and the Customs, which has been tasked with collecting the GST.

Its president Dr Steven Chow said that Najib had promised not once, but twice, that healthcare – both public and private – would not be affected by the GST.

"On October 10, 2014, in his Budget 2015 speech, our PM further said that medicines on the National Essential Drug List (NEDL) would be zero-rated, thus giving the impression that the sick, who are already burdened by their disease, need not be further burdened by additional tax for what is needed to treat their illness," he said.

"However, the guidelines and many briefings by the Customs' GST team tell a different and rather complicated story."

He revealed that the NEDL was not the complete drug list for the treatment of all important diseases and their complications. In fact, it consists of only 208 different medications despite having 2,900 items on the list.

"Many of the 2,900 items include repetitions of various preparations or different brands of the same medications," he said.

"If you look closer, the NEDL is clearly not designed to cater for all the important diseases and complications of the various disciplines of primary and specialist care. Specific treatment for many common diseases is not in the list."

Dr Chow said that at present, all registered medication was exempted from the sales and services tax, adding that the price of medication was set to rise when the GST is implemented.

"It will go up further when the cost of administrating the GST is passed down the line. Even patients in government healthcare facilities, who require these medications, will end up paying more."

He warned that treatment using only the restricted medicines under the NEDL would lead to problems such as a fall in productivity due to increased sick leave and patients would also choose to forgo medicines due to the increased costs.

Dr Chow also said that based on briefings, only services provided by doctors employed by private hospitals would be exempted from the GST.

"This is a major mistake. The majority of the doctors, especially the specialists in private hospitals, are not employed but work as independent contractors.

"The situation is made even more complex with the various versions of this concept of independent contractors in private hospitals and the existence of multiple layers of middle-men agencies like MCOs (Managed Care Organisations) and insurers collecting and processing fees before the hospital is finally paid and only then to the doctor," he added.

He noted that with the many levels involved in healthcare services, imposing GST on them would not only be costly and complicated in terms of administration but will cause the cost of healthcare to escalate across the board.

"Patients will end up paying much more next year for the same treatment. The multiplier effect will have a major adverse impact on the national expenditure on healthcare," he said.

Dr Chow, a dermatologist, said that the perception that patients who opt for private healthcare can afford the increase in costs following the GST was not true and urged Putrajaya to reconsider imposing the tax in this sector.

"The fact of the matter is that the long queues and waiting time in public facilities is a major reason why many opt for private care. They need to get well fast so that they can go back to their jobs and be productive.

"Healthcare is a basic right of every person. No person chooses to be sick and if they do become sick, taxation should not be imposed on an involuntary condition,” he said.

"We hope the government will abide by the PM’s pledge and implement the exemptions of the GST across the board for healthcare services as promised in October 2013. The trust of the people must not be breached.”

- TMI