The Health Ministry is looking into issues plaguing the private health insurance sector as part of its efforts to reform the entire healthcare system.
Speaking at the Monash Health Economic Forum today, the ministry’s planning division senior deputy director Dr Rozita Halina Hussein (above) remarked that escalating cost was causing Malaysians to opt-out of having medical insurance.
She pointed to a 2016 study by Harvard University and the Malaysia Health System Research which found insurance premiums were rising between 14 to 15 percent annually.
It also showed that up to a quarter of total insurance revenue was spent on administrative costs while payout rates to policyholders were low.
“Now, we also look at what is going on in private health insurance [...] people are no longer buying insurance or they are dropping their insurance purchases because a lot of the premiums go to high administration costs.
“The actual payout for healthcare is only between 56 to 72 percent, so for every RM1 you pay for your premium, you are only getting a maximum of 72 sen back in actual healthcare.
“So clearly, there are lots of market failure in the private sector,” Rozita said.
She did not state what are the solutions the ministry was considering to address the issue.
The rising cost of private health insurance was caused by the rising cost of healthcare as a whole.
The study found that healthcare costs in Malaysia rose between eight to 15 percent per year, among the highest rates of increase in Southeast Asia.
Rozita pointed to one contributor to the rising costs - inflated prices of medicine.
The highest mark-ups were found in private hospitals - where it can go up to 50 percent - while private pharmacies charged an average 26 percent more for medicine.
Unlike the government, Rozita said insurance providers rarely negotiate to bring down medicine prices for their policyholders.
“It’s easier for them to just transfer that pricing to their increasing premiums, that’s why premiums are going up 14 percent per year [...],” she elaborated during the question and answer session.
Price ceiling won’t rock pharmaceutical industry
In May this year, the ministry announced that it was working on a mechanism to regulate medicine prices by setting ceiling prices.
This led to concerns from the Pharmaceutical Association of Malaysia (Phama) that the move would negatively affect pharmacies and clinics. It also disputed its efficacy in reducing healthcare costs.
Asked about such concerns today, Rozita assured that the move would begin with a pilot project and she did not expect drastic results.
“The ministry is just doing a pilot (project) so it is a very limited scope of single-source originator drugs [...] I don’t know what calculations my colleagues at the pharmaceutical division have looked at (but) it is not designed to have a big impact anyway,” she said.
As for the price control mechanism, she shared that the ministry would set two price ceilings - one for wholesale prices and another for retail prices.
“Even though this is happening in the private sector, our concern is for the population [...] with the whole objective of benefiting patients, reducing prices and making our overall healthcare system much more sustainable,” she added.
Today’s forum saw a slew of local and foreign academics and doctors discuss sustainable healthcare financing in Malaysia.
Among those featured included National University of Singapore’s Phua Kai-Hong, UK University of York’s Mark Sculpher, UK Office of House Economics Adrian Towse, Australia University of Newcastle’s Li Shu-Chuen and Hospis Malaysia chief executive officer Dr Ednin Hamzah. - Mkini
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