Access to affordable private healthcare is a growing concern for many Malaysians. As medical costs continue to rise, medical and health insurance and takaful (MHIT) premiums have also come under pressure. Some policyholders are finding it increasingly difficult to maintain their medical and health insurance coverage.

In recent years, premium adjustments have placed additional pressure on policyholders, prompting some to downgrade or discontinue their coverage altogether. For example, a 52-year-old nearing retirement who pays RM 7,000 in annual premiums suddenly received a quote of RM 14,000 from her insurance company.

And yet while many couldn’t afford treatments they needed, higher treatment costs, increasing use of healthcare services and, in some cases, unnecessary treatment all contribute to higher medical claims, which drives up the cost of delivering healthcare services themselves, and in a vicious loop drives up insurance premiums.

Recognising this challenge, the Ministry of Health (MOH), Ministry of Finance (MOF) and Bank Negara Malaysia (BNM) have been working on a broader set of reforms under the RESET Strategy to tackle both sides of the equation: How Malaysians pay for private healthcare and how the cost of that healthcare is managed. Enter MediAsas, an affordable, inclusive insurance aimed at the M40, coupled with other initiatives, like access to selected preferred and cost-effective hospital networks and diagnosis-related groups pricing bands.

MediAsas is currently in a pilot phase. Recent public conversations about the initiative have generated both interest and confusion. Questions about its coverage, affordability and intended target group have fuelled a range of interpretations. BNM’s recently published FAQ provides a clearer picture of the product design and plan.

A closer examination of the feedback revealed several interesting aspects.

First, MediAsas is more affordable by design. With premiums targeting a monthly range of around RM60 to RM550 for individuals within the entry age of up to 70 years, subject to final pricing ahead of the national rollout, it aims to expand access to private health insurance among currently uninsured Malaysians.

Secondly, MediAsas is not a national social insurance. Some public commentary seem to be confused by this. MediAsas is a standardised voluntary insurance/takaful intended to serve the large segment of Malaysians who currently do not have private medical insurance, particularly within the M40 group.

For many lower-income Malaysians, public healthcare remains the primary source of treatment. Despite longer waiting times, Malaysia's public healthcare system continues to provide quality and affordable care. MediAsas is designed to supplement this system by offering an additional option for those seeking private healthcare coverage.

Third, MediAsas is a standalone health insurance. It is not linked to an investment-linked plan. Currently, more than 70% of Malaysians with medical insurance are covered through investment-linked medical plans. These plans combine insurance protection with an investment component, meaning policy sustainability can be influenced by factors such as insurance charges and fund performance.

Generally, investment-linked medical plans are more expensive. Where medical coverage is provided through an investment-linked rider, consumers pay premiums for both the underlying life policy and the medical rider, resulting in a higher overall cost of protection. Consumers should also be prepared to top up their premiums over time as insurers periodically revise the insurance charges.

MediAsas takes a simpler approach. It focuses solely on medical and health protection, making it easier for consumers to understand what they are paying for and the coverage they receive.

Fourth, and which is a heartening move, MediAsas extends coverage to individuals with certain existing stable and well-managed medical conditions, a group that has traditionally faced challenges in obtaining private health insurance. Some public commentary focused on the policy's 35 exclusions and waiting periods for specified illnesses, leading to conclusions that the product offers limited protection. However, some of these assessments overlook the product's broader design and underwriting approach.

Like all insurance products, certain exclusions and waiting periods are necessary to ensure that coverage remains fair and affordable for the wider pool of policyholders. Insurance, particularly voluntary insurance, is fundamentally designed to protect against future risks that are uncertain, rather than risks that are already known or certain to occur. If insurers were required to cover known or imminent claims without appropriate safeguards, individuals could choose to purchase insurance only when they already know they are likely to make a claim. This would result in substantially higher claims costs, driving up premiums for all policyholders. Over time, such a situation could make insurance prohibitively expensive and undermine the principle of risk pooling, ultimately threatening the sustainability of the product and its ability to provide protection to those who need it most.

MediAsas is a fully underwritten insurance product. Applicants are required to disclose their medical history, after which insurers assess the risk and determine the appropriate coverage terms and premium. These terms help define the scope of protection and the risks being pooled across policyholders, balancing between affordability and premium sustainability. Underwriting helps maintain that balance by ensuring the insurance pool remains viable over the long term rather than allowing costs to escalate for all policyholders.

Fifth, the actual annual coverage offered by MediAsas is designed around actual medical claims experience. The standard plan provides an annual limit of RM100,000, increasing to RM150,000 for individuals aged above 60. Insurance Services Malaysia (ISM) data for 2024 shows that 99% of claims paid by ITOs were below RM60,000, well within the RM100,000 limit. This suggests that the limit is sufficient to meet the healthcare needs of the vast majority of policyholders. In addition, MediAsas does not impose a lifetime limit.

Sixth, MediAsas caters to both the young and the elderly. Coverage starts from birth and extends up to age 85, making it a viable option for families seeking protection for both their children and ageing parents. For policyholders aged 61 and above, coverage increases to RM150,000, reflecting the greater healthcare needs that often come with age.

Importantly, the real test of affordability is not at younger ages, when insurance is generally cheaper, but later in life when health risks increase and premiums typically rise. If MediAsas can continue to offer meaningful coverage at affordable premiums for those who are in their 50s and beyond, it will represent a significant step towards making private health insurance more accessible and sustainable over the long term.

Seventh, MediAsas itself also incorporates cost-sharing through co-payments d, encouraging consumers and providers to be more conscious of healthcare utilisation. The objective is not simply to ask consumers to pay more out of pocket. Rather, it is to promote more prudent use of healthcare services and support a more sustainable financing system over the long term.

But insurance reform alone cannot solve rising healthcare costs. Making insurance cheaper without tackling the underlying cost of healthcare would provide only temporary relief. That is why MediAsas sits within a broader reform of Malaysia’s private healthcare ecosystem under RESET Strategy. Supported by a range of cost-containment initiatives that seek to improve efficiency and help keep medical cost inflation in check, MediAsas is the first product of its kind in the market to be introduced alongside such measures.Initiatives including better electronic medical records, greater transparency around medicines, strengthened provider management and the introduction of Diagnosis-Related Groups (DRG) are intended to improve efficiency and address the underlying drivers of medical costs.

MediAsas will not be the right product for everyone.

Consumers seeking multimillion-ringgit annual limits and broader benefits may find other medical plans more suitable. It is worth to be aware that the richer the coverage, there will be tendency of higher utilisation among the policyholders, which will drive up the claims cost, and eventually lead to higher repricing magnitude.

But MediAsas is not intended to replace every medical insurance product, nor Malaysia's public healthcare system. It is built on the principle of needs-based coverage: providing protection that is sufficient for the vast majority of common medical needs without requiring consumers to pay for benefits or coverage limits they may never use.

By combining simpler and standardised benefits, more manageable costs and broader healthcare reforms, MediAsas is a key reform initiative to reshape private healthcare financing and support wider healthcare system reforms

For Malaysians concerned about the affordability of private healthcare, MediAsas is an initiative worth understanding, one that seeks to balance affordability, accessibility and sustainability while aligning coverage more closely with actual healthcare needs.

The views expressed here are those of the author/contributor and do not necessarily represent the views of Malaysiakini.