Prime Minister Datuk Seri Anwar Ibrahim has reassured Malaysians that the government will not tolerate any unjustified or exorbitant increases in health insurance premiums. This stance comes amid concerns over planned significant hikes in medical insurance premiums, which have been reported to be between 40 and 70 percent due to rising healthcare costs.
According to Prime Minister Anwar, Bank Negara Malaysia (BNM) is working on interim measures to ensure that any premium increases are small and sensible. “What we’re doing now is not a moratorium but interim so that the increment is small and sensible,” he stated. These measures include streamlining the planned increase of premiums and potentially amending an Act to implement a Diagnostic Related Group (DRG) system. The DRG system, used in countries like the US, classifies patients into groups based on their diagnosis, treatments, and other factors to determine hospital reimbursements and encourage more efficient care.
The medical cost inflation rate in Malaysia has been notably high, reaching 12.6 percent in 2023, more than double the global average of 5.6 percent. This has led to escalating claims and medical inflation, prompting insurers to raise their premiums. BNM has instructed insurers and takaful operators to be more reasonable with their repricing strategies, suggesting they spread out premium increases over at least three years to mitigate the immediate financial impact on policyholders.
Under these interim measures, the majority of policyholders will experience annual premium increases of less than 10 percent due to medical claims inflation until the end of 2026. Additionally, policyholders aged 60 and above will benefit from a temporary one-year pause on premium adjustments related to medical claims inflation. For those whose policies lapsed in 2024 due to previous premium revisions, reinstatement will be permitted without additional underwriting requirements.
Prime Minister Anwar also highlighted the issue of a supply monopoly in the healthcare sector, particularly in the sourcing of medicines, as a significant factor contributing to the rising costs. He indicated plans to terminate contracts with certain companies and seek out cheaper or reasonable generic medicines from various countries.
“One of the reasons cited [for the premium hike] is medical costs. We know at the moment prices of medicines and treatment are not regulated, in fact the sourcing of medicines for decades has been a monopoly,” Anwar explained. “As such we will terminate the contract with one or two companies and seek out sources from various countries so we can procure generic medicines that are cheaper or reasonable.”
BNM will monitor the progress of these reform efforts and conduct periodic reviews of the interim measures in line with advancements in the broader healthcare landscape. Policyholders can expect to receive communications from their respective insurers and takaful operators regarding these changes starting January 15, 2025.
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