The healthcare system has been financed by the government through tax revenue since independence.
However, faced with globalisation and trade liberalisation and the need to reduce its internal financial burden, the Malaysian government has gradually been giving up its universal model of healthcare system and giving way to privatisation of medical services.
This can be clearly observed by the blossoming of private hospitals since the 90s. Privatisation of healthcare in the Malaysian context does not just mean financial burden relief but is also a way to woo new income by foreign direct investment and health tourism (1).
Despite the privatisation, the Health Ministry views the health system to be '... equitable, affordable, technologically appropriate, environmentally adaptable, and consumer friendly with emphasis on quality, innovation, health promotion and respect for human dignity...' as stated in the ministry's 'Vision for Health'.
The government spending accounts for 58.8% of total national health expenses (2), which could be summed as US$60 per capita spending on health per year by the government based on year 2000 figures.
Though the per capita spending on health by the Malaysian government is almost double than that of WHO's recommended figure (which is US$34 per capita spending to provide basic and essential healthcare), the burden of national health expenditure is shifting from the Malaysian government to the private as can be noted.
It can be seen in the increasing share of private expenses (3) from 41.2% to 46.3% for the year 2000 and 2001 respectively (see chart above). This is more than a 5% yearly increment in the private share of total health expenditure (4).
Other than privatisation of healthcare services, the government also plans to introduce national health insurance (termed as National Health Security Fund) in place of tax revenue as the main financing of its national healthcare system.
It would be wise to note that the national health insurance scheme with mandatory contribution (with employee, government and employer share at 30%, 60% and 10% respectively with a 100% subsidy for below the poverty line) as adopted by Taiwan has seen a sharp escalation in medical costs that forced the annual contribution of those insured to be increased just after five years of implementation.
Though health insurance might relieve the government's financial burden, an assured payment from a centralised fund might encourage doctors to induce demand. This is evidenced by Taiwan as well as the US experience (5) - government expenditure on health declined but national health expenditure escalated sharply.
For the moment, while the rich in Malaysia may seek healthcare services at luxury private hospitals, the poor have to wait in long queues at the government hospitals.
In the long run, deregulation and privatisation will not just enlarge the quality gap of healthcare services between the rich and poor, but it will also jeopardise the quality of public hospitals. This can been seen from the outflow of medical staff from government hospital to private hospital and their migration from remote rural areas to urban areas as a result of lucrative offers by urban private hospitals.
Though cost is often a constraint in making improvement, quality progress still can be made without escalation of cost. Furthermore, Malaysia's 3.8% of the GDP as national health expenditure is far below to that of international average of 7.9%.
If Malaysia is to make its 'Vision for Health' come true, any changes in financing must not cause any deterioration in healthcare or be at the expense of equity.
1) According to Asiaweek (Nov 16, 2001), the number of foreign patients in Malaysia's 13 private hospitals rose from 33,000 to 77,000 from 1998 to 1999 through health tourism.
2) National health expenditure accounts for government spending on health and private expenditure on health.
3) Private health expenditure accounts for private spending on health insurance, insurance-covered payments and out-of-pocket medical expenses at public and private hospitals.
4) The RM150 million collected from patients at government hospitals (Sinchew Daily, Dec 13, 2004) only accounts for private direct payment at public hospitals and does not include private spending on health insurance, insurance-covered payments and out-of-pocket medical expenses at private hospitals. If the health expenditure by government is RM70 to RM80 million (Sinchew Daily, Dec13, 2004) that would mean that total private expenses on health would be as much as RM65 to RM75 million which is 46% of national health spending. Trends in Health Ministry's annual budget could be obtained from Syed Mohamed Aljunid et al. (eds) (2002) Health Economics Issues in Malaysia, KL: UM Press.
5) National health expenditures (NHE) in the US have nearly doubled (+88%) since 1992 and, at nearly $1.6 trillion in 2002, are more than six times the $246 billion spent in 1980. The approximately $1.6 trillion in NHE in 2002 represents 14.9% of the Gross Domestic Product (GDP), almost three times larger than the industry's share in 1960. About half of this increase occurred from 1980 to 1992, when health as a share of the GDP rose from 8.8% to 13.1%. Sources here.
6) Chart data source here.
The author is attached to the Institute of Health and Welfare Policy, National Yang Ming University, Taiwan.