Sunday, November 1, 2009

Budget 2010: What’s in it for Health Care?

This has been published in Malaysian Insider 1 Nov 2009
A slightly briefer version was published in Malaysiakini 2 Nov 2009
Another full version is published as Analysis in MalaysianMirror 4 Nov 2009

Budget 2010: What’s in it for Health Care?
Dr David KL Quek,, President, MMA

YAB Dato’ Sri Najib Razak’s maiden national budget 2010 must at first glance appear people-centric, but on closer scrutiny, the goodies appear much less than expected and generalities abound rather than specifics.

Still, the Prime Minister must be credited for at least trying to reduce the national fiscal deficit from a high of 7.4% in 2009 to 5.6% for 2010.

The overall national expenditure has been reduced by 11.2% from RM215.7 billion to RM 191.5 billion. Operating expenditure has also been cut to just RM138.3 billion, but still consumes 72.2% of the entire budget. The rest of RM53.2 billion or 27.8% is earmarked for Development Expenditure.

What is more worrisome is that the projected federal revenue in 2010 is expected to decline 8.4% to RM148.4 billion compared with RM162.1 billion in 2009. From an expected recession of 3.5% negative growth ending this year 2009, growth is expected in 2010, at a modest positive rate of 2 to 3 per cent.

Budget 2010 and Health

What is there in the Budget 2010 for Health Care?

Well, most health economists and pundits including the Malaysian Medical Association (MMA) have always been advocating for a larger allocation of the national budget for health care services. Over the past 5 years, health care expenditure has been prudently but perhaps frugally low between 3.6 to 4.9% of the GDP, which many consider as being too inadequate.

Yet despite this rather low spending, over the past many years, Malaysia must be commended for having done relatively well in providing better than expected health care outcomes and importantly relatively high quality medical services. Our human development index has been above average for many years, although obviously laggard behind our more prosperous Asia Pacific front liners.

Yes, many detractors may grouse that perhaps we could have done better, and they would be right. Nearly every health system in the world could have performed better and more efficiently. But in practical terms, if we were to consider how much we actually spend on health care thus far, we have indeed done well in terms of productivity computations—the so-called better bang for the buck.

But because Malaysians are now expecting so much more in terms of better quality standards and timeliness of care, there has to be greater commitment and investment in our health care system, so that we are up to mark and comparable to the more developed nations, or even to be at par with neighbouring Singapore.

Malaysian Medicine can become better, if we show greater commitment to improvements and excellence of standards in both health care providers, supporting staff and properly trained use of amenities already in place in most of our hospitals and medical facilities nationwide.

There must be a greater commitment to retain and reward excellent performers, so that their talents and skills remain within the nation and preferably within the very well-funded institutions and academic centres. Our medical research should be raised several notches to showcase our serious intent into becoming a world-class deliverer of excellence!

We should remove that all-too-common tendency of many brilliant scientists and doctors to leave our public institutions because of financial concerns, petty local politics, glass ceilings and administrative interference. We must build and sustain a culture of excellence and steadfastly protect these cloistered if egg-shelled veneered institutions.

For 2010, the health care spending has been projected and bumped up to 7.0% of the developmental budget of RM 51.22 billion, i.e. an expenditure of RM3.594 billion, from last year’s RM2.6 billion (4.9%). But, the overall health care operating expenditure is projected to be RM 11.189 billion for 2010, compared with RM 11.753 billion in 2009, a decrease of 4.8%.

Our National Health Accounts give a slightly different perspective

However, if we look at our National Health Accounts (Dr Zailan Hj Adnan, Laporan Perbelanjaan Kesihatan Negara 2008, KKM Oct 5, 2009), Malaysian per capita spending on health rose steadily nearly four-fold from RM 381 in 1997 to RM 1268 in 2008.

In 2008, our computed nominal total health care expenditure was RM 35.1 billion out of a total GDP of RM 740.7 billion, some 4.7% (close enough to the Budget’s estimate of 4.9%).

Although the government spent some estimated RM 13 billion, the other major components of spending came from: other corporations (RM 4.8 billion), private insurance (RM 2.97 billion), other federal agencies (RM 1.6 billion), Ministry of Education (RM 1.05 billion), other agencies (RM 0.9 billion), but largely from out-of-pocket (OOP) private households (RM10.8 billion). Overall, the ‘public’ to private sector spending ratio is 46% and 54% respectively.

Earlier in our discussions with the Ministry of Health officials, there were plans that the government would be willing to push health care spending to reach 7.0% of the GDP in 2010. But this would mean that health care spending should reach some RM 70 billion [out of our total projected GDP (2010) of RM 1.026 trillion!] Does this seem plausible that within 2 years, our healthcare spending is projected to double from that of the year 2008?

Where’s the Extra Funding coming from?

Where is the extra funding coming from, since the government is coming out with only less than RM 12 billion?

Would this projected shortfall of RM 58 billion (of the RM 70 billion) be taken up by the other government-linked agencies and the private sector? This does not seem possible. Unfortunately Najib’s Budget 2010 does not offer any light on this. Since overall there is a determined reduction in government spending and budget, it is unlikely that we can harness such a growth in our healthcare service industry for the coming year.

Although, the general tone of the Budget 2010 is one that encourages private sector investment and spending growth, for the health sector this may not be obvious. The private sector has been expected to take up the slack in this push for greater health care expenditure, but this would depend largely on the economic recovery, which is by most economic predictions going to be ‘L’ shape rather than ‘V’ shape; which means a slow and gradual drawn-out trend rather than an upsurge!

Nevertheless, this 2010 budget on health care is a better commitment than what the MMA had earlier lobbied for. And we hope the private sector is given sufficient impetus and incentive to invest more and generate greater, if not more cost-effective, spending. Perhaps, these can be made more evident as we grapple with and fine tune the implications of the new budget.

Public Access should not be compromised

More importantly, the public and the less well of, should not be shortchanged when it comes to access to health care. Cutting back on public health care spending may adversely affect the quality and delivery of health care service, especially those who have limited options or capacity to choose.

In hard times, most people would on reflex cut back on allocating for health care expenses, and thus may suffer consequences of neglect, noncompliance and delayed treatment. Overall health status for some people can become adversely affected.

However, our public must be educated that better and more prompt access to health care, demands that they too should plan and budget more realistically, i.e. they must be more willing to pay a greater share for higher quality service. Health care especially during retirement years must be adequately budgeted 
for. We must all conscientiously plan for it!

It is increasingly clear that our government, our pensions, our public sector healthcare service cannot indefinitely continue to offer on demand, unrestrained superlative and quickest care for all. It’s simply just not possible.

Healthcare costs unfortunately, will always soar outside the realm of normal economic constraints, because life extending measures and new discoveries will almost always outstrip our abilities to pay for these, especially if modern cutting edge tests and therapies are to be expected and demanded by everyone! Escalating health costs will remain an infinite limitless demand that most finite resources or public purses can never hope to match.

Of course, a single payer national health service type insurance mechanism is probably best, but this remains on the drawing board due to uncertain public and practical concerns. In the interim, our citizens must engage in greater self-preventive and health promotive measures to help reduce unhealthy lifestyle risks. They must be encouraged to take up health insurance earlier and with wider coverage.

To encourage this uptake further, our insurance agencies must improve their operating standards. They must be made more accountable that they cannot always be looking at the bottom line to limit or to deny access. They must strive to be more all inclusive, without being meticulously dismissive—no exhaustive pre-existing conditions should be excluded which ultimately defeats the community coverage goals of health insurances.

We now have around 40% of our population who may have hypertension, and another nearly 15% who have diabetes. Does this mean that nearly 50% of our population be excluded from insurance cover, when they clearly need it most? The insurance industry must devise a better actuarial means testing to widen its possible scope of coverage for our citizens.

We note that for overall insurance contribution, there has been some additional tax rebate/incentive in the budget 2010. But this appears smaller than expected to boost much uptake. For the individual this is quite marginal, and the benefit may not be immediately realised. Besides, there is a run-in lag phase even if one now agrees to take on newer health insurance, but it’s a start to encourage more to invest in their own health planning for the future.

Medical & Health Tourism, not at or citizens’ expense

In many recent private-public workshops and seminars, there is an unprecedented belief that medical/health tourism is the way to go, to help create a new dimension for economic growth in the service industry.

Yet the reality is that this is unlikely to become a major contribution to the nation’s coffers for foreign exchange earnings. As of 2008, only some RM 300 million has been earned from foreign patients. It has been projected that perhaps by 2015, medical tourism dollars would reach RM 2 billion. But this will still only be a small fraction of our GDP.

This cannot be used as a benchmark, an alternative key performance indicator or an ego-boosting, chest-beating symbol, of having come of age! Being a preferred destination for ‘cheaper’ medical treatment, does not necessarily mean and certainly does not imply that our health care system has attained the standards of the first world.

It simply means that in some of our private health care settings, some of our selected medical disciplines are sufficiently good enough to be recognized as suitable, perhaps comparable and safe, and most importantly cost-effective choices for foreign patients.

It actually means that health care costs in some countries have escalated to such astronomical levels that many people could not afford the necessary care at home! Of course, among some of our neighbouring countries, we may attract foreign patients because our level of care has been considered as superior to their own.

More importantly, there are already grouses among many civil groups that despite this push to attract more patients through medical tourism measures, Malaysia has not yet been able to commit to a declaration to provide universal access to health care for all our citizens!

When we hear of almost daily requests for financial assistance for some tertiary (unaffordable and costly) therapies from our own citizens, this seems to run counter to our sense of equity and fair play, when on the other hand, we offer prompt access to aliens/outsiders who can offer a few dollars more!

So what about this further move to encourage greater medical tourism?

To further promote the medical tourism industry, the Government will enhance tax incentives for healthcare service providers who offer services to foreign health tourists. Currently, it is not generally known that there is an incentive for income tax exemption of 50% on the value of these ‘increased exports’. Most doctors are not really aware as to the exact mechanisms of tax rebates under such circumstances.

However, with this new Budget 2010, this rebate will be increased to 100%, to encourage private hospitals and health care facilities to promote their services more aggressively overseas. Thus, essentially all earnings from foreign health tourists will be tax exempt.

We are not too sure if this extends to earnings from the professional aspects/fees of individual doctors and specialists. This incentive is expected to enable healthcare service providers to offer high quality health services, to continually be raising standards and to promote more assertively overseas to attract greater numbers of health tourists. Perhaps, we may succeed yet.

1Malaysia Clinics: Expanding Public Health Facilities

The purported aim of these 1Malaysia clinics is that our government cares about the well being of the rakyat. In fact, a sum of RM14.8 billion (Is this a typo? Because this huge amount is larger than the entire operating expenditure budget for health care services in Budget 2010!) is allocated to manage, build and upgrade hospitals and clinics, although where this money is coming from is not clear as of now.

Apparently, in 2010, hospitals under construction and being upgraded include those in Kluang, Bera, Shah Alam, Alor Gajah and Tampoi.

In addition, we are informed that the EPU is the main driver for urging the government will expand these community clinic services, to be known as 1Malaysia Clinic in urban areas, similar to clinics in rural areas. For a start, RM10 million will be provided to establish 50 clinics in selected areas.

These clinics are to be located in rented shopping lots of housing areas to enable the local community to seek basic health treatments such as fever, cough and flu. What is disturbing is the stated suggestion that these clinics will be manned by medical assistants.
One would have thought that this model is a relic of the past!

There have been some global trends toward professional task shifting, now increasingly contemplated and advocated worldwide following WHO initiatives to reach out to very poor countries, which lack properly trained medical personnel.

This essentially means that so-called ‘simpler’ healthcare responsibilities would be shifted down to lesser (more specifically and focussed) trained, cheaper to maintain personnel e.g. nurse physicians, medical assistants, pharmacist assistants, etc.

In the pre-1980s, it is true that we had utilized medical assistants and ‘jururawat desa’ to help out in more remote rural clinics. They certainly provided a great much needed service then. But, these are now increasingly scaled down so that doctors can oversee more and more of these services to enhance greater quality and service even to our rural or more remote locales. Times have changed, and we are now more than advanced in our development of our personnel and health care providers including doctors.

Therefore, MMA has immediately opposed what we feel is a hugely retrogressive approach to health care. We are saddened that this approach had been suddenly sprung upon us. We understand that sometimes ‘pork-barrel’ goodies need to be dished out, but we envision these so-called ‘1Malaysia clinics’ as simply exercises to exude political goodwill, which can backfire.

This may temporarily salve some very poor urbanites, but we fear that in the longer term, this exercise may be shortchanging the less discerning marginalized public. Regulatory and medico-legal aspects, potential medication or medical leave abuses, and possible unethical practices remain to be ironed out.

However, we have counter-offered that our already very available and plentiful GP clinics be tapped to help provide these outsourced MOH initiatives, as more suitable alternatives. We are made to understand that the Minister of Health sympathises with us in this, although it would appear that the MOH has to contend with other Cabinet portfolios for ‘public service’ projects and financial resources…

For our country, which continues to produce so many new doctors—some 2500 per annum, this will be catastrophic for our younger medical graduates, who might in future not have enough jobs to function, whose livelihood might be threatened, and whose remuneration might be sharply reduced.

We need to enlighten the government that this may not be the best approach. Standards of health care cannot be compromised or made expedient just to accommodate to some economic or short-term considerations.


Thus overall, the Budget 2010 for health care has been more of noise than substance, and is quite disappointing, with a few shocks and regressive suggestions which are at best impractical, but at worst even contradictory, to our existing system and regulations.

We urge the government and the MOH to help resolve some of these incongruities by tapping, perhaps integrating, existing services such as urban private GP clinics, and engage and enhance greater public-private partnerships.

We must move towards better and a more consistent maintenance culture for our existing health facilities and management so that they function at tip top, zero-defect efficiency, with enhanced quality and safety, supported and manned by adequately trained personnel and physicians.

No comments: