The 2027 budget should focus on making healthcare less administratively rigid

 Financing should remain largely federal, with allocations based on population need, age, disease burden, geography and deprivation.

From Ng Sze Fung

Every year, Malaysia’s healthcare debate returns to the same question: how much more should the government spend? The 2027 budget will be no different.

There will be calls for more doctors, more nurses, better hospitals, newer equipment and higher allocations.

All of these are necessary and known. But throwing more money into the same administrative structure will only get us so far.

The harder question is more structural in nature.

Malaysia runs a highly centralised public healthcare system. That model has important strengths. National financing and common standards help prevent access to healthcare from depending entirely on where someone lives.

But centralisation also creates rigidity. The healthcare needs of Selangor, Penang, Kelantan, Sabah and Sarawak are not identical, yet staffing, service planning and resource decisions still operate largely through the same federal machinery.

The answer is not simply to create 13 separate health systems. Nor can healthcare simply be “handed over” to the states. The Federal Constitution is clear. Under the Ninth Schedule, medicine and health fall under the Federal List, while public health, sanitation and disease prevention sit partly within the Concurrent List.

Any serious proposal for decentralisation must therefore work within this constitutional structure, not pretend it does not exist.

Fortunately, decentralisation need not be equated with constitutional disruption. The federal government can continue to finance healthcare, set national standards, regulate professions and medicines, and redistribute resources between richer and poorer states.

At the same time, states or regional health authorities could be given greater discretion over how services are delivered locally.

That could mean more flexibility in workforce deployment, clinic and hospital planning, maintenance spending, primary care integration and partnerships with private providers where public capacity is stretched.

Local authorities could also play a larger role in preventive health, particularly where healthcare overlaps with sanitation, urban design and community wellbeing.

The guiding principle should be simple: centralise what protects equity, decentralise what benefits from local knowledge. The biggest risk is postcode healthcare, where richer states pull ahead while poorer states struggle.

That is why financing should remain largely federal, with allocations based on population need, age, disease burden, geography and deprivation.

Sarawak could provide a useful starting point. The state has already pushed for greater healthcare autonomy under the Malaysia Agreement 1963, including greater control over healthcare planning and the decentralisation of certain regulatory functions to the Sarawak health department, arguments shaped in part by the realities of delivering healthcare across a vast and dispersed population.

Rather than treating Sarawak as an exception, its experience could serve as a practical test of how greater local discretion can operate within a federally financed health system.

Malaysia needs to make its healthcare system less administratively rigid.

If the 2027 budget is serious about reform, the debate should not stop at how much more healthcare receives. It should also ask who is best placed to decide how that money is used, and perhaps the states are the best place to start that discussion in the spirit of decentralisation. - FMT

Ng Sze Fung is a senior analyst with Bait Al Amanah, a think tank.

The views expressed are those of the writer and do not necessarily reflect those of MMKtT