KUALA LUMPUR: Medical insurance coverage has now become unaffordable to a vast number of Malaysians, as healthcare inflation has caused insurance companies to reprice their products to maintain their underwriting profits.
Datametrics Research and Information Sdn Bhd (DARE), a Malaysia-based data-gathering, strategic analysis and advocacy platform for businesses and industries, is of the view that the increase in medical insurance premiums affects the public in more ways than one, especially those who are not covered by their employer and those who could not afford it in the first place and are dependent on the public healthcare system.
“Definitely! This will add pressure to our overstretched public healthcare system, not only for outpatient treatments but more critically for those who require hospitalisation and surgery.
“The long queues that we have observed in certain cases will only get longer and, for some, the waiting may just lead to delayed response, leading to fatalities even,” DARE managing director Pankaj Kumar told SunBiz when asked to comment on the significant shift in private insurance policyholders returning to seek treatment in government hospitals.
The Consumer Choice Center (CCC), a non-profit advocate of consumer rights, warns that up to 70% premium increases could make private health insurance unaffordable for many Malaysians.
CCC representative Tarmizi Anuwar said the number of people in Malaysia who have life insurance is still quite low, which is less than half of the total population. This reduces choice and forces reliance on overstretched public healthcare.
“Policyholders are switching to public hospitals because they cannot afford to continue paying their policies. This is due to various factors, including wage increases that are not keeping up with inflation, increasing household needs and low awareness levels.
“If this continues, it will increase dependency on the government, which will impact and burden the public system,” Tarmizi told SunBiz.
He said while Bank Negara Malaysia’s directive to provide remedies is a positive step, these solutions must be developed in close consultation with consumers to ensure they address real concerns.
Transparent engagement with policyholders can lead to more targeted and sustainable solutions, fostering trust and fairness in the process.
To tackle medical inflation, regulators, the government and stakeholders must address its root causes, Pankaj said.
He added that insurance companies should be stricter in approving hospital claims and push for standardised, reasonable pricing for procedures.
“Ownership of private hospitals by profit-driven investors, such as private equity or doctors, often leads to inflated costs, especially for insured patients, due to two-tier pricing.
“Additionally, insurance policies are frequently sold with unnecessary high claim limits, driven by agents seeking higher commissions and rewards, which further exacerbates costs. These practices need reevaluation to ensure affordability and fairness in healthcare,” Pankaj said.
When asked about co-payment option schemes requiring policyholders to bear a portion of medical costs upfront and whether this option exacerbates financial strain for families already struggling with rising living costs, Pankaj said co-payment is one way out of the old structure where there is a sharing of cost based on certain thresholds and reduces the cost of insurance premiums upfront.
However, in instances where the hospitalisation does not exceed that threshold, the insurer will end up paying all the time, which defeats the purpose of having a medical insurance policy in the first place, he said.
Tarmizi said co-payment schemes are innovative and can help contain healthcare costs. However, the scheme must be designed carefully and transparently to avoid overburdening families. “Flexible plans tailored to the individual needs of each economic background group can offer a balance between affordability and accessibility.”
When asked about calls for investigations into excessive profiteering by private hospitals and insurers, Pankaj said all stakeholders, especially insurance companies and hospitals, will need to be transparent regarding the actual medical cost and not over-inflate how much hospitalisation costs.
“We need to have a range of acceptable practices, do away with dual pricing mechanisms for those with medical cover and those without, and cap the maximum medical coverage a person can have, as this has, in fact, given the hospitals a license to inflate medical billing,” he added.
Tarmizi said consumer associations should advocate for greater transparency through digital tools that publicly disclose pricing and cost structures.
“Expanding digital platforms for comparing insurance plans can empower consumers to make informed decisions. Promoting blockchain technology in claims and billing can reduce opacity and build trust. The aggregate improvements in speed and accuracy can also create more positive customer experiences and interest,” he added.
Source: The Sun Daily
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