T20 turning to govt healthcare as insurance costs rise, says PKR MP

 

PKR lawmaker Sim Tze Tzin has called for tighter regulation of investment-linked insurance schemes, which he said have driven up costs in the private healthcare sector and forced more affluent citizens to turn to government hospitals.

At a press conference in Parliament today, the Bayan Baru MP responded to Kuala Lumpur Hospital (HKL) director Dr Harikrishna KR Nair's statement that many “T20 patients” were being transferred from private to government-run hospitals after reaching their insurance coverage limit.

Yesterday, Berita Harian reported Harikrishna saying HKL has found that its services are no longer sought only by lower-income patients, with a growing number of wealthy individuals (T20) and VIPs now seeking treatment at the hospital.

He said the increase in such patients reflected their growing confidence in the hospital’s expertise.

He explained that the rise in “wealthy and prominent” patients was also linked to transfers from private medical centres, as their insurance coverage could no longer cover the high cost of treatment once limits were exceeded.

Harikrishna noted that this trend has been evident over the past decade, driven largely by rising medicine costs.

“Health insurance customers who purchased investment-linked plans with a 'rider' up to the age of 100 are facing a drastic reduction in their coverage period.

“They are being asked to pay a large amount of additional top-up payments. This has burdened policyholders, especially retirees,” Sim said.

He explained that this problem stems from overly optimistic profit projections for investment-linked products by insurance companies when selling policies, adding that many plans were offered with assumed returns of up to nine percent per year for 20 consecutive years.

“In reality, the actual returns were much lower than projected, causing the fund value to be insufficient to cover the cost of protection.

“As a result, insurance companies drastically shorten the duration of their coverage. This means that when they retire in their 60s and are in critical need of medical protection, they will be ‘abandoned’ by the insurance companies,” Sim said.

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More comprehensive regulations

Sim also urged Bank Negara Malaysia to impose more comprehensive regulations on such schemes, following an initial circular issued in 2019.

The Bayan Baru MP explained that the existing circular did not address problems faced by policyholders who bought their plans before 2019, and called for an urgent solution.

Sim also stressed that Section 155(b) of the Financial Services Act 2013 requires Bank Negara to issue a directive if a company conducts business in a manner that is detrimental to the interests of depositors, policyholders, participants, consumers, creditors, or the general public.

Further, Sim urged the central bank to take the matter seriously and follow through with appropriate action, suggesting a more transparent mechanism to prevent the public from being blindsided if their insurance premiums were drastically increased and if their coverage periods were abruptly shortened.

“If left unchecked, the problem highlighted by the health minister and HKL director, concerning retirees and T20 shifting from private to public hospitals, will continue,” he emphasised.

Early this year, the Finance Ministry and the Health Ministry formalised the setting up of the joint ministerial committee on private healthcare costs, building on ongoing engagements among various stakeholders to address rising private healthcare and medical inflation.

In June, Health Minister Dzulkefly Ahmad also reportedly said that the government is considering allowing Malaysians to use their EPF Account 2 to pay monthly health insurance premiums.

Although voluntary, if implemented, the minister said the scheme could enable 16 million EPF members to utilise their contributions to access private hospital care. - Mkini