Foreign insurer’s ‘contribution’ is bait to further undermine public health services

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Patients waiting even during the lunch hour at the BM General Hospital

The federal government should instead increase the federal budget for health and stop all leakages in public health services, writes Chee Heng Leng.

We read with alarm the report that discussions between a foreign insurer, Bank Negara Malaysia and the Ministry of Finance are at a final stage to introduce a medical insurance scheme to cover the bottom 40% of the population (B40) for up to 10 years.

The foreign insurer’s contribution of RM2.3bn-2.5bn with an additional RM500m-600m for scholarships is in exchange for an exemption from having to sell a 30% stake to local investors as required by Bank Negara.

Swap deals such as these should be viewed with extreme caution because the value of one part of the swap cannot be assessed independently of the other, and the people’s long-term interests are invariably swapped for short-term, often populist, political considerations and interests.

First of all, the proposed medical insurance scheme will supposedly benefit an estimated five million people in the B40 group (total population in the B40 category is 13 million). Each family will supposedly be entitled to coverage of up to RM10,000 a year for up to 10 years. This will expand the demand in private hospitals, pulling even more specialists and health expertise away from the public sector.

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Already, our healthcare system is being undermined with more and more specialists leaving the public sector for the private sector, to the detriment of patients who have to depend on our government hospitals. These include households above the B40 who will not benefit from this medical insurance scheme, but are still unable to afford private healthcare as well as those living in rural areas where there are no private hospitals.

Furthermore, the insurance scheme for B40 families is supposed to entitle them to annual outpatient treatment worth RM20,000 and hospitalisation costs of RM80,000 at private hospitals. What happens to cases that exceed these limits? They are likely to revert to our under-resourced public hospitals then.

Medical insurance premiums have in-built mechanisms causing costs to spiral. When costs rise, premiums will rise. There will be more and more medical treatments that will be excluded from the benefits, and people will have to buy co-insurance or top up their health insurance entitlements with out-of-pocket payments. Furthermore, the foreign insurer’s contribution will only be for 10 years. What will happen after that?

The proposed medical insurance scheme swap deal appears attractive because it has been described as a generous offer by the foreign insurer to “provide medical coverage for the poor without burdening the government’s financial and hospital resources”.

In fact, this seemingly generous donation will enable it to circumvent Bank Negara local ownership requirements and probably qualify it for generous tax exemptions.

More importantly for national healthcare financing, it will entrap the country into dependence on private health insurance and healthcare, including private hospitals, diverting limited financial resources away from public health services, including public hospitals. All this is likely to further undermine medical personnel, with expertise leaving for the ever-expanding private health sector.

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A recent report in a financial weekly noting how “shareholders of foreign insurers have benefited enormously” and that repatriation in the form of dividends, management fees and outsourcing arrangements to foreign shareholders and foreign affiliates are in the billions of ringgit speaks volumes about what the foreign insurance company hopes to gain in the long term from this seemingly generous contribution to a B40 medical insurance scheme.

Medical insurance, under any name, is not a sustainable nor viable solution to addressing current challenges in our healthcare system. The proposed medical insurance scheme for the B40 will lead our healthcare system down a path to unacceptable long-term decline rather than provide the building blocks for a sustainable solution.

As such, we call on the government to refrain from short-term piecemeal strategies that will lead to increasing fragmentation of Malaysia’s healthcare system and work towards a strategic long-term plan that considers the inter-linkages and functioning of the healthcare system more comprehensively and holistically.

We call on the Pakatan Harapan government, led by two medical doctors, to:

  • stop the swap deal with the foreign insurer to set up a medical insurance scheme for the B40
  • make transparent all plans to reform the health sector and practise the consultative approach promised by the Pakatan Harapan to engage in discussions with the public and civil society on this important issue
  • increase the federal budget for health from 2.1% to at least 4% of the GDP and stop all leakages in public health services due to corruption, abuse, misuse and demoralisation
  • strengthen our public health care system by seriously looking into the retention of public healthcare workers, especially specialists.
  • work towards a holistic and comprehensive healthcare system that will provide universal healthcare coverage sustainably in the long term
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Dr Chee Heng Leng is part of the Citizens’ Health Initiative.

29 October 2018

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