Income

Khairy Moots social health insurance, fully subsidized for low income people

KUALA LUMPUR, June 13 – Khairy Jamaluddin proposes to introduce social health insurance and co-payments to bolster Malaysia’s “chronically underfunded” public health system, with full subsidies or waivers for low-income groups revenue.

The health minister said the Cabinet was also “seriously” considering increasing the government’s allocation to health expenditure, noting that Malaysia’s health expenditure in the public sector was only 2.6% of proceeds gross domestic (GDP) of the country, below the 4 percent on average among middle-income countries and the rate of 5 to 6 percent recommended by the World Health Organization (WHO).

However, Khairy stressed that he had to be “realistic”, saying that increasing allocations for the Ministry of Health (MOH) from the federal government’s budget had its “limits and constraints”, particularly in the medium term as the economy is recovering from the Covid-19 pandemic, as he cited Malaysia’s “extremely tight” fiscal situation and possible global stagflation.

“The health care fund must be large enough to fully harness the power of risk pooling, effectively spreading risk between healthy people and those with pre-existing conditions, a group that today would not be eligible for private insurance coverage or who would not be able to obtain affordable coverage given their high risk,” Khairy said in his June 2 keynote at the Health Leadership Dialogue. organized by the Saw Swee Hock School of Public Health at the National University of Singapore (NUS).

“So if we want a future-proof Malaysian health care system that provides equitable access to better quality long-term health services, including better preventive and promotional care, we must have a dedicated health care fund that is both tax financed and supported by contributions from those who can afford it, whether in the form of user fees or social insurance or a combination of these progressive contribution methods.

“And that’s easier said than done. This is a huge and difficult political call.

User fees mean that patients pay a certain percentage of treatment costs, compared to the current system where the government subsidizes about 98% of health care costs at MOH facilities. Patients currently pay a nominal registration fee of RM1 to RM5 in public clinics and hospitals.

Khairy said contributions to the proposed healthcare fund should be on a sliding scale based on one’s income and that contributions should be waived or fully subsidized for people on “low incomes”.

The health minister did not say whether the poorest 40% (B40) of the country’s wage earners should be exempted from contributing to the proposed healthcare fund. The B40 group likely grew after economic shutdowns in the past two years of the pandemic led to job losses and wage cuts.

Exempting a large portion of Malaysia’s population from social health insurance payments means that the middle class – who already pay income tax – would shoulder the burden of paying health costs for everyone else.

Khairy also did not specify a contribution rate proposed by employees and employers for the proposed social insurance fund.

The previous 1Care social health insurance scheme proposed by the Najib administration from 2010 to 2012 was suspended due to public opposition to reports that employees would be required to contribute 10% of their monthly gross salary to the scheme which is compulsory for the registration of all citizens. , in addition to mandatory employer and government contributions.

1Care has been proposed to be regulated by a new national health financing authority which would act as a strategic buyer to negotiate prices and payments with service providers for the social health insurance scheme which would make available covered by health services in the public and private sectors.

Under 1Care, patients could not choose their own doctor for free medical treatment. The 1Care system would assign them one. If other physicians were consulted by patients, the costs would be borne by the patients, not 1Care. Visits to the general practitioner (GP) were limited to six per year. Beyond that, patients would pay for the visits.

In his speech to Singaporeans, Khairy pointed out that out-of-pocket spending accounted for 34.5% of Malaysia’s total health spending in 2020, which he called “very high” compared to other upper-middle-income countries. About 43% of out-of-pocket spending went to outpatient services.

“These levels of out-of-pocket payments are a major concern, particularly when we have a high prevalence of chronic disease, as this would likely lead to treatment delays and greater illness due to cost avoidance,” he said. he declares.

Khairy acknowledged that in the medium term, federal taxation – which is the primary source of funding for the public healthcare sector in Malaysia – would likely continue to be the primary source of healthcare funding for Malaysia due to its “intrinsic fairness”.

“But the question for Malaysia and me, will relying on federal taxation be sustainable in the long run? What would sustainable health care financing look like to us? The answer to the first question is of course no. This is no longer viable and the system will break.

He noted “very limited” opportunities to integrate the public and private health care sectors through strategic purchasing, amid limited public funds. In 2020, Malaysia’s total healthcare expenditure of around RM67 billion came about 55% from the public sector. The Ministry of Health was the main source of funding for Malaysia’s total health expenditure at around 46%, followed by out-of-pocket expenditure by private households at 34.5%.

Total health expenditure in Malaysia by public and private sources of financing from 2006 to 2020. Graphic from the presentation of the National Health Accounts Steering Committee of the Ministry of Health Malaysia on November 3, 2021.

Khairy said his draft Malaysian health white paper on health care reform, which he plans to table in parliament in November, will contain proposals on a sustainable health care financing model for the Malaysia.

“The structural reforms that I mentioned earlier, such as, among others, the creation and strengthening of a strategic purchasing function or the development of payment models, all these reforms will require processes and reporting lines that guarantee that each function is accountable to taxpayers and contributors.

“There may be some increase in administrative costs, but I think it will be manageable if we emulate global best practice and worth it if access and health outcomes are improved.”

Khairy stressed the need for “future-proof” health care reforms, some of which have been discussed for decades, in various administrations, regardless of political party in government.

As well as seeking bipartisan support, or a “national green light”, for the White Paper in Parliament that would propose reforms spanning a 15-year period, the White Paper would also suggest the creation of a commission health care reform to monitor, advise and report “independently”. on the status of implementation of the proposals to the government, parliament and Malaysians.

“Having a transparent and well-appointed health care reform commission would hopefully inject a level of institutional check and balance and stability into the political economy of health care, supporting structural reforms regardless of be the future.”