Malaysia’s healthcare RESET: what comes next?

 As the government moves ahead with reforms under RESET, FMT takes a look at where its key strategies stand, how they could tackle medical inflation, and the challenges that remain.

Khazanah Research Institute research associate Ilyana Mukhriz said it is too early to determine whether MediAsas is working without more information on its uptake and impact on costs.

PETALING JAYA:

Rising medical bills and insurance premiums are far from new problems plaguing Malaysia’s private healthcare and medical insurance system.

The government has sought to address these rising costs through RESET, a whole-of-nation reform effort targeting the root causes of medical inflation.

RESET, a joint effort involving the health and finance ministries, Bank Negara Malaysia and industry players, centres on value-based healthcare, cost-effective service delivery, and improving access to quality healthcare.

The strategy comprises five strategic thrusts: MediAsas, greater price transparency, a stronger digital health system, more cost-effective healthcare options, and changes to how healthcare providers are paid.

It also complements the reforms outlined in the Health White Paper, a 15-year strategic roadmap introduced by the health ministry, aimed at future-proofing the nation’s healthcare system.

Khazanah Research Institute research associate Ilyana Mukhriz described RESET as an ambitious effort that could help address medical inflation if properly implemented, with payment reforms and electronic medical records laying the foundation for further healthcare innovation.

As the government moves ahead with reforms under RESET, FMT takes a look at where its key strategies stand, how they could tackle medical inflation and the challenges that remain.

MediAsas

Among the most closely watched measures is MediAsas, an affordable basic medical and health insurance and takaful product being piloted in the Klang Valley.

Six insurers and takaful operators are participating in the pilot, which runs from the end of July to October, with indicative monthly premiums of RM60 to RM550 ahead of a targeted nationwide rollout in January 2027.

Ilyana said it was too early to determine whether MediAsas was working without more information on its uptake and impact on costs.

“Although it is not the silver bullet against medical inflation, a pilot is a good start to understand whether this is the way Malaysia needs to go,” she said.

She called on the health ministry to publish data on take-up rates, who is purchasing the plans, their perceived affordability and whether they are financially sustainable.

Going digital

Another RESET thrust seeks to strengthen the digital health system through interoperable electronic medical records under the Malaysia Digital Health Certification Network, to improve information-sharing between healthcare providers, reduce duplicate testing and enhance billing transparency.

Ilyana said efforts to create digital patient records dated back to the late 1990s, but described the health ministry’s renewed push as a step in the right direction.

“Digital health records are a critical foundational tool for digital transformation within the healthcare sector,” she said.

She said such digitalisation could improve continuity of care, support telemedicine and preventive healthcare and reduce costly repeat testing between public and private providers.

However, she said, implementation could be hindered by development and maintenance costs, outdated infrastructure, reluctance among healthcare workers, incompatible systems, and gaps in laws governing health data and patients’ rights.

Changing how providers are paid

RESET also seeks to transform provider payment mechanisms through Diagnosis Related Groups, where payments are based on categories of patient cases rather than providers charging separately for each service.

Ilyana said this could address overbilling and overconsumption under the current fee-for-service model but warned that providers could instead be incentivised to cut hospital stays, tests or procedures too aggressively to keep treatment costs down.

“There may also be cases where providers, particularly private ones, avoid providing care for patients who they deem too complex or expensive to treat,” she said, calling for strong monitoring and a risk-adjustment framework that takes patient complexity into account.

Can price transparency bring costs down?

Private healthcare service price ranges have also been published since January, although Ilyana said it was still too early to determine whether this had made a meaningful difference to healthcare costs.

She described greater transparency as a positive step and said the health ministry should publish data on its impact.

She noted that over time, indicators of success could include narrower price differences between providers, lower insurance claims costs, better-informed patient choices and slower medical insurance premium growth.

RESET only part of the answer

While measures such as MediAsas are intended to expand cost-effective options, Ilyana stressed that they should complement rather than replace Malaysia’s tax-funded healthcare system.

She said tax funding allowed for a larger pooling of financial resources and remained crucial to universal healthcare, as RESET alone could not address all of Malaysia’s healthcare challenges.

Greater attention was also needed on the healthcare workforce, prevention and the needs of an ageing population, she said.

“Ultimately, RESET is one of many measures that we should be focusing on, and we really need an all-of-government approach to care for the health of our nation,” she said. - FMT