The Malaysian Reserve: Sustainable healthcare financing system needed by Anuja Ravendran

Sustainable healthcare financing system needed

The Malaysian Reserve, 9 August 2010, Monday

By Anuja Ravendran

Malaysia needs a sustainable health financing mechanism as the present system is heavily subsidised and studies indicate that healthcare spending is on the rise.

However, Malaysian Medical Association president Dr David KL Quek said all avenues must be explored, and stakeholder buy-in must be sought before introducing a new scheme.

“The Malaysian National Health Accounts show that Malaysians have steadily increased healthcare spending to around RM 35 billion per year.”

“In 2003, Malaysians spent just USD 374 in total per person per year on healthcare expenditure, with the Government contributing USD 218. This figure approached USD 400 per person per year (government contribution) in 2008.”

Public hospital services are heavily subsidised by the Government at RM12.9 billion or 98% of the entire budget, while patients pay only 2%, he added.

If we are to come up with a system that can meet the needs of the people effectively, healthcare cost cannot continue to be subsidised at this rate, he said.

“Healthcare is not free, somebody has to pay for it, and RM35 billion is a lot of money,” he said.

Minister of Health Datuk Seri Liow Tiong Lai had recently said that the proposal for National Health Financing Scheme (NHFS) was still being developed and consultation is being carried out with various stakeholder groups to analyse the best model.

Looking at the trends in healthcare spending, Government will need to up its healthcare spending allocation of 2.1% to about 2.5% to 4% under the Gross Domestic Product, he suggested.

“The 4.8% cutback in health care spending announced in Budget 2010 from RM13.8 to 13.1 billion might seem small when compared with other economic sectors, but as the industry adopts newer and more costly technologies, medicines and therapies, it may not be sufficient to meet with public expectations.”

Also, under the present system, it would be difficult to expect the private sector to further defray healthcare cost.

“Private hospitals are already operating on thin profit margins – about 5%-6% for average ones and about 10% - 15% for larger ones. Personnel and infrastructure account for a huge amount of operating costs in the private sector.”

“If the expectation is for equal contribution from both public and private sectors, how is that possible when public hospitals are subsidised and private ones are not?” he asked

Quek felt if the private sector could see more commitment from the Government in the form of better allocation for healthcare and initiatives that they can benefit from, they would be more willing to be a part of a system that is both practical and sustainable for the people.

He added that there may be no need to introduce a new tax or payment scheme.

Instead, the Government should explore existing schemes such as the Employee Provident Fund (EPF) to see how best this existing channel can be used .

If the Government is unable to top up the amount, then a mechanism where employers and employees do so can be considered, similar to EPF contributions.

For effective implementation, Quek called for the setting up of a Government controlled authority to ensure that the relevant safeguards are in place.

“The mechanisms employed under this scheme must be communicated clearly and transparently and administrative cost should not be excessive.”

The goal of our healthcare system should be to ensure Malaysians have universal access to quality healthcare that is livable, affordable and acceptable but it is presently lacking in some areas, he said.