MALAYSIA’S public healthcare system took a massive beating during the Covid-19 crisis. In the aftermath, millions of patients - at least 70% of the population – continue to depend upon its services, especially those living with non-communicable diseases and the elderly and infirm. Also, health workers are increasingly leaving the service for better opportunities elsewhere.  

The healthcare financing system relied upon by the public health system today, which dates back to the mid-1980s and is derived from tax revenue, continues to subsidise up to 98% of patients’ costs. 

We do not need to be reminded of how cheap these services or treatments are to patients. The truth is: nothing in healthcare has ever cost RM1 or RM5. Consultation with doctors, care by nurses, diagnostic tests, medicines, surgeries, and other procedures are costs that are borne by patients, the government, taxpayers, or all the above.  

What we need to discuss is how to maintain and grow what we have today to ensure it meets the needs of Malaysia’s population for at least the next 30 years. The current financing mechanism has never been sustainable, nor was it intended to be forever. Government policy decisions are often being made based on the reality of what we can afford as opposed to what we need to achieve the best possible health outcomes.

Recognising this, more than a dozen reports and papers commissioned by past governments since the early 1990s have recommended reforms to Malaysia’s financing of healthcare to ensure it would be future-proofed. Each time, the government of the day was unwilling to take up recommendations that would have required necessary but unpopular action and preferred instead to continue to depend solely on taxes and the Federal Consolidated Fund, pushing the responsibility to its successors.  

Seven years ago, RM25 billion was allocated for health under the federal budget. In 2024, it was RM41.2 billion and the amount is still considered an underinvestment, falling short of actual needs. For health allocations to reach the aspired level of 5% of GDP, at least RM85 billion would have to be secured today, representing more than a 100% increase to existing levels, and 22% of this year’s entire federal budget. It will most likely not happen.

As of 2023, the Department of Statistics states that the current average life expectancy for Malaysia is 74.8 years: 77.4 for females, 72.5 for males. It is sobering to note that the last 8 years for many people are often spent in ill-health. Even though 11.1% of the total population are aged 60 and above, there is no single government body with the mandate, responsibility, and necessary budget to provide for the care and support of the aged. That remains largely dependent on individuals, families, and communities. Malaysia has been deemed ill-prepared for its future status as an aged nation by 2030.  

What we need is a new source of funds to fund Malaysia’s healthcare needs. One realistic possibility is the adoption of a national health and social insurance, where means-tested mandatory contributions from eligible working adults guarantees a minimum level of care for all. It will create a vast reservoir of funds similar to what is available under EPF and Socso. This would be applicable to all workers and be based on a sliding scale linked to monthly income and age. There would be collective pooling of both funding and risk. It would also enable patients to access both private and public healthcare systems, allowing for better utilisation of existing resources.  

The RM1 and RM5 fees should be eliminated. These fees collect less than 0.5% of total health expenditure. They are inadequate for meaningful cost recovery and mislead the public regarding the true cost of health care. Patients should not be required to pay anything at the point of registration. 

We cannot depend on maintaining what we have today based on a “living from national budget to national budget” mindset. A national health and social insurance could be how we go forward in ensuring more healthcare workers are recruited and compensated appropriately, essential medicines are in continued supply, and ageing healthcare infrastructure gets uplifted. There will never be a right moment to introduce such an initiative.  

We need forward-looking, strong and audacious leadership as well as collaborations and partnerships between the public and private sectors. The key benefits of a national health and social insurance should be made clear: potential to stabilise public subsidisation, allow space for cost containment, maintain and improve access and quality to essential services, improve access to innovative treatment, fund equitable access to services in the private health space, and modernise healthcare infrastructure. We need to be brave enough to adopt solutions that are out of our comfort zone. – September 6, 2024. 

* Azrul Mohd Khalib, CEO of the Galen Centre for Health and Social Policy, reads The Malaysian Insight.