Malaysians are increasingly burdened by the sharp rise in medical insurance premiums, with many policyholders expressing concern over the affordability of coverage. Last August, Eson Leo, a cancer survivor, experienced a staggering 147% increase in his medical insurance premiums. This significant spike reflects broader trends in Malaysia, where medical inflation rates have soared to 15% in 2023 and 2024, far exceeding the global average of 10.1%. The government has intervened with interim measures to curb premium increases, yet experts warn that these solutions may be unsustainable in the long run.
The Life Insurance Association of Malaysia reveals that approximately 45% of Malaysians hold medical insurance. Despite this coverage, about 70% of medical bills remain unregulated, leading to unpredictable costs for policyholders. Medical bills typically consist of doctor's fees and hospital charges, both of which continue to escalate. This situation has prompted widespread concern and calls for stronger regulatory measures.
Eson Leo took action by contacting his insurer and lodging a complaint with the regulator after his premiums surged. He expressed frustration, stating:
“I was so shocked by the increase. If it had increased by 50 per cent it would have still been acceptable,” – Eson Leo
Another policyholder, Tang, an accountant, experienced a 30% rise in her monthly premiums this year, increasing from RM200 to RM260. These increases are not isolated incidents but rather indicative of a broader trend affecting many Malaysians.
In response to the outcry over premium hikes, which were initially planned to range between 40% to 70% this year, the government announced interim measures. These measures include capping premium increases and spreading changes to premiums over a minimum of three years. Bank Negara Malaysia stated that this cap will remain in place until the end of 2026. However, the Life Insurance Association of Malaysia cautions that these measures are only temporary and come at a significant cost to insurers.
“Insurance and takaful products are businesses which need to respond to ground realities such as the escalating cost of hospital charges … we are postponing the inevitable,” – Mark O'Dell
Insurers like Prudential, Great Eastern, and AIA have reported significant net profits in 2023, amounting to RM963 million, RM1.123 billion, and RM1.41 billion respectively. This profitability further fuels the debate over whether premium increases are justified.
T. Saravanan emphasized the need for transparency and accountability in the insurance sector:
“While insurers often cite rising medical inflation as the reason for increasing premiums, it is crucial to scrutinise whether these justifications are valid and proportionate,” – T. Saravanan
He further added:
“Consumers need clear and detailed explanations about the factors driving these increases, and stronger regulatory frameworks should be established to ensure fair pricing practices by insurers and healthcare providers,” – T. Saravanan
Azrul Mohd Khalib, chief executive of the Galen Centre for Health and Social Policy, advocates for a more balanced approach where hospitals are incentivized for cost containment rather than maximizing charges.
“Right now, it's just the other way around. They're incentivised to charge as much as possible and to provide or prescribe as many drugs or procedures as possible as well,” – Azrul Mohd Khalib
“We're not looking for cost control or fixed pricing, but we just want the incentives to be aligned where the hospitals are on board with cost containment.” – Azrul Mohd Khalib
The healthcare industry in Malaysia faces unique challenges, including reliance on a local workforce without foreign doctors or nurses. Nadiah Wan highlighted these complexities:
“Healthcare is one of the very industries in Malaysia … (that are) protected from undermining wages from foreign labour. We are not allowed to hire foreign doctors or nurses. It’s a complete local workforce and we have to compete with many different markets,” – Nadiah Wan
Sim Tze Tzin remarked on the broader systemic issues at play:
“It is (an) entire ecosystem and on the receiving end are the patients and policyholders" – Sim Tze Tzin
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