“Temporary fixes won’t halt surge in insurance premiums; legislations required to regulate private hospital charges”

 

WHILE the interim measures unveiled by Bank Negara Malaysia (BNM) on Dec 20 to address rising medical insurance premiums is commendable, it must be noted that these measures are merely temporary fixes and will not resolve the underlying issues of medical cost inflation and insurance system imbalance.

The government must swiftly implement systemic healthcare reforms to prevent long-term burdens of high medical costs.

BNM’s measures include phased premium hikes, delaying increases for policyholders over 60, and allowing individuals who lost coverage to be reinstated into the system.

While these actions may alleviate some immediate pressure, they only address symptoms, not the root causes. Without a long-term solution, MCA fears that the premium crisis will resurface in a few years.

One major reason for soaring premiums is the lack of transparency and standardisation in charges by private hospitals.

For the same condition, medical costs covered by insurance can be up to four times higher than out-of-pocket expenses. This drives up the payout costs for insurers, which are passed on to policyholders.

MCA urges the government to regulate private hospital charges, enforce transparency in pricing structures, and set reasonable fee limits.

This approach will help reduce healthcare costs and create a healthier environment for insurers, addressing the root causes of continuous premium ascents.

(Image: Shutterstock)

The Health Ministry (MOH) could learn from successful international practices, such as the United States’ ‘Hospital Price Transparency Rule’ which mandates hospitals to disclose all costs upfront, ensuring transparency and preventing excessive financial burdens.

Mandatory price transparency can reduce insurance payouts due to unnecessary or inflated services, easing the pressure on premiums.

Additionally, MOH should encourage price negotiations between healthcare institutions and insurers. This will allow insurers to review medical costs more strictly, ensuring excessive expenses are not passed on to policyholders, directly addressing rising premiums.

Healthcare should be part of public welfare, not an unaffordable luxury. With slow household income growth and rising living costs, middle- and low-income families face overwhelming economic pressure. For many, healthcare has become unaffordable, exacerbating the situation.

MCA calls for the rapid implementation of the ‘Diagnosis-Related Group’ (DRG) payment system to standardise payments and control medical costs.

The government should also collaborate with insurers to develop cost-effective insurance products offering greater flexibility for different income groups.

Acknowledging that Bank Negara’s short-term measures are commendable, the government must urgently focus on long-term solutions to systematically address the imbalance in our healthcare system. 

Datuk Ir Lawrence Low is the MCA vice president and the party’s economic and SME affairs committee chairman.

The views expressed are solely of the author and do not necessarily reflect those of  MMKtT.

- Focus Malaysia.