Public healthcare: Wider discussion needed on RM2bn from insurance firm

Jeyakumar Devaraj, A Sivarajan and Soh Sook Hwa have written to the finance minister to express grave concern about the plan to expand the existing health insurance model in the country.

Our proposal for the RM2bn from Great Eastern company

This letter is our third letter to you on this issue. Unfortunately, until now we have not received any response from you although we have requested (through our letters dated 25 November 2018 and 17 December 2018) an appointment to meet and discuss this important matter with you.

Our purpose in delivering this letter is to elaborate on some points that outline our stance on health insurance and to request once again for an appointment with you to discuss this matter in more depth.

The Malaysian government should avoid promoting the development of the existing health insurance system within our country – because the existing insurance system:

• is offered by private companies with the motive of making profits for their shareholders
• has premiums based on the health status of each individual covered (risk rated)
• offers many differing levels of coverage (depending on the premium paid)
• has a high administrative cost
• and will further marginalise 70% of the lower-income citizens of this country.

So it is important to make sure that the RM2 billion donated by an insurance company is not used in a way that drives Malaysians to become customers of private insurance companies.

If our country decides to use insurance to cover the cost of medical treatment for our people, the health insurance system should be reorganised to be a “social health insurance system”,

• which has a single payer and is implemented by a non-profit institution, similar to EPF or Socso
• under which contributions are not based on individual health profiles but are “community rated” where contributions are a fixed ratio of each household income
• whose coverage is comprehensive and covers all treatment currently available at government hospitals

At this point, even a social health insurance system will not bring benefits to our country because:

• the income of the bottom 40% of households is low and one more deduction (maybe 8% of their salaries) will be an additional burden on them
• there are about 1.5 million families with low income, working in the rural sector – farmers, tappers, fisher folk, Felda settlers, etc. In addition, there are 1 million micro-businesses in our country and more than 3 million EPF contributors currently earn less than RM2,000 a month. The government would have to pay the insurance premiums for all these groups, and the amount will probably be more than the health allocation now.

The funding of the public healthcare system at this point is by the “capitation” method whereby one provision (RM28bn for 2019) is used to cover all the costs of treatment given in government hospitals and clinics.

The insurance system will switch this to a payment system in which every treatment, procedure and operation will be calculated and charged to the health fund (the “fee-for-service” method) and the cost of treatment will increase.

Currently, our country is spending RM55bn a year for all health costs in our country (taking both public and private into account). The social insurance system with the fee-for-service method will increase the total cost of treatment to RM100bn or more.

The health insurance system will not save costs for the federal government.

There is a high probability that the social insurance system will drive the development of private hospitals and further weaken public hospitals as a result of the accelerated migration of specialists to the private sector.

This will have a negative impact on our people in the East Coast, Sabah and Sarawak as well as in rural areas of the West Coast. Currently only the government system provides medical services in the rural areas and in much of the East Coast.

Because of all these facts, the decision to expand health insurance should be discussed in-depth among all stakeholders before any final decision is taken.

The RM2bn fund donated by the insurance company can be used to alleviate the burden of public sector patients who are required to make co-payments in the form of screws and plates for orthopaedic surgery, lens for cataract surgery, stents for angioplasty and many other implants that now need to be bought by patients treated at government hospitals.

There are several other related issues that we would like to discuss, and we hope we can get an appointment to meet and discuss with you.

Dr Jeyakumar Devaraj is a central committee member of the Sosialist Party of Malaysia whereas A Sivarajan is the general secretary and Soh Sook Hwa is the treasurer.

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