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Peduli Sihat-style health insurance scheme may be unsustainable

Penang Institute  |  Published:  |  Modified:

COMMENT | We view with great concern that the public has been generally left uninformed over the new government’s plan for providing healthcare to the B40s.

At the time of writing, Malaysians still do not have any concrete idea (or worse, have not heard) regarding the previously hinted at healthcare scheme which was listed in one of Pakatan Harapan’s pre-election promises to be implemented within the first 100 days.

The new health minister, Dzulkefly Ahmad has since remained tight-lipped about the development of B40’s healthcare, except to promise that a national healthcare financing scheme for the B40s would be included in the pending Budget 2019 and would be "better" than the Skim Peduli Sihat initiated by the Selangor state government.

He also announced that B40s would enjoy free healthcare under this scheme, which would also include tertiary care in the private sector.

Yesterday, in a press conference he coined the programme a “Social Health Insurance scheme” for the B40 low-income groups, which also includes preventive care, health promotion, health screening especially related to non-communicable diseases.

Based on the limited publicly available information about the operation and allocation of the soon-to-be rolled out federal healthcare scheme, we have produced a study to inform the public about the potentially unsustainable nature of this scheme for the B40s, even if it were to only include tertiary care services.

First, we calculated the B40 healthcare demand projection for in- and out-patient services in private hospitals, based on B40 healthcare and prevalent patterns recorded in the 2015 National Health and Morbidity Survey.

This projection calculation was done to match the estimated budget following the promised original Selangor model whereby every B40 family will be provided with RM500 per year. In this case, the maximum budget could go up to RM1.4 billion (equivalent to 5.3 percent of the Ministry of Health’s 2018 budget) in the current year.

If the MOH budget allocation for the next year is only adjusted nominally and does not get significantly improved as promised in the Harapan manifesto, will we see the allocation for this Peduli Sihat scheme come also from the same MOH budget?

We are worried that the introduction of such a healthcare scheme would result in further cuts to the MOH’s development expenditure, which is crucial to the development, upgrading and expansion of our public healthcare facilities. If not, how could the government justify when most, if not all, Skim Peduli Sihat funds would be spent on the private sector?

In 2015, the prevalence of in-patient utilisation by the B40 population was 7.8 percent. Since the average household size in Malaysia is 4.1, this would translate to 28.3 percent of B40 households equivalent to about 806,000 B40 households needing annual access to hospital care.

Also, according to the 2015 survey, the B40 average perceived the costs for major surgery in a private hospital to be slightly over RM10,000. This indicates that more than half would not have enough to cover their hospital expenses, if the maximum claim threshold limit for the Skim Peduli Sihat were to be set at RM10,000 per family per annum.

When one is diagnosed with major illness or if major surgery is required, RM10,000 is probably inadequate even to treat one person. Malaysia has an average household of about four persons, so if the B40 patient has exhausted his or her family’s annual limit, where would that patient or other sick family members go?

Currently, the B40 utilisation rate for private hospital in-patient services is about 10 percent (i.e. 90 percent seek public healthcare), T20 households are at about 40 percent.

If it is based on the current rate, it would exceed 56.6 percent of the maximum Skim Peduli Sihat budget. But with access to the Skim Peduli Sihat programme, what if the B40 population were to increase their visits to twice or four times the current rate?

Our findings show that it would bankrupt the scheme even if the annual household claim limit is set at RM10,000 for just in-patient services, what more out-patient and health-screening services.

Thus, if the claim mechanism is based on a fee-for-service premise, and the government does not have any cost-containment strategies, we are afraid that the private sector might wrap up the system by inducing demand from the B40 population probably for unnecessary diagnostic scans and treatments, just to maximise profit at the government’s expense.

An unintended consequence of the scheme could be that the B40 group might become more reliant on private sector, this could, in turn, widen the resource gap between public and private hospitals and encourage a greater exodus of experienced specialists and allied health practitioners from the public to private sector.

The result will be that public healthcare becomes more financially and socially deprived, more like an inferior, ‘last resort’ choice for certain groups, even though it is universal and definitely a cheaper option for the rakyat.

Our recommendations for the MOH are, first, to create a mandate for public doctors to act as “gatekeepers” at the primary-care level, such that Skim Peduli Sihat claimants would first need to obtain a referral from the doctors before utilising the claims in pre-determined and pre-negotiated private healthcare facilities.

Second, the claim mechanism should not be based on fee-for-service, but rather on Disease Related Group (DRG), to prevent system abuse and/or induced demand.

Third, the MOH should collect co-payment as low as the current MOH rate for Skim Peduli Sihat claims when patients use private service. We believe that this would only be fair to public hospital users.

Generally, we agree that the MOH should flexibly share resources with the private sector, by paying them to use their underutilised equipment and services when in need.

While we applaud the MOH’s efforts to give greater access of healthcare, especially tertiary care, to the needy B40s, we are most of all doubtful about the financial sustainability and the long-term implications of such a scheme.

With huge budget allocations involved, and the significant shift of the healthcare finance system (in terms of the “social health insurance scheme”), MOH should be more transparent and open to multi-stakeholders and public consultation, before the policy motion is tabled to the Parliament.

Most of all, we believe that MOH’s priority should be enhancing and defending our public healthcare. To that end, a well-funded public healthcare system would provide greater benefits compared to the current Skim Peduli Sihat scheme that is on the cards.


This article has been written by Lim Chee Han (senior analyst) and Kenneth Cheng Chee Kin (analyst), of the Penang Institute.

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

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