logo
Malaysia seeks to reduce high medical inflation through BNM's reset health financing initiative

Malaysia seeks to reduce high medical inflation through BNM's reset health financing initiative

KUALA LUMPUR: There is both room and opportunity for Malaysia to reduce its high medical inflation, one of the highest in Asia, through reforms under Bank Negara Malaysia's (BNM) RESET health financing initiative.
BNM governor Datuk Seri Abdul Rasheed Ghaffour said Malaysia's medical inflation rate stood at 15 per cent compared with the regional average of 11 per cent, based on data from Aon International Insurance Brokers.
"However, with the right reforms and collaboration, this can be addressed," he said during a panel session titled "Rising Cost, Rising Stakes: Expediting Reforms to Address Medical Inflation", at the Sasana Symposium 2025, here today.
Abdul Rasheed said the initiative was not merely a response to rising costs but a broader reset of the ecosystem involving multiple stakeholders, including hospitals, insurance providers, physicians and patients.
He emphasised that previous BNM annual reports had highlighted the issue of high inflation and the need for reform.
"In December last year, we introduced new measures which provide some room for us to address this issue that has been confronted for a long time.
"With the involvement of the World Bank and various government entities, I am confident that this time the reforms will be implemented effectively," Abdul Rasheed said.
The RESET framework is anchored on five strategic thrusts and supported by 11 dedicated working groups, and among of its objectives are to redesign health insurance products to better support value-based healthcare services, improve the availability of tools for consumers to assess and select appropriate coverage, and enhance price transparency, especially in procedures, medication and hospital fees.
The governor noted that one of the challenges faced by patients is the wide variance in treatment costs, with little transparency on actual prices.
"Efforts are also underway to establish a national healthcare database by consolidating information from hospitals, insurers, the Ministry of Health and universities to better monitor healthcare costs and outcomes," he said.
Abdul Rasheed also underscored the importance of digital health systems in ensuring continuity of care, citing the example that diagnostic results, such as X-rays conducted at primary care clinics, should be transferable to hospitals to avoid unnecessary duplication and reduce costs.
The RESET initiative, he said, is also working toward the rollout of a base health insurance product that offers essential coverage at affordable prices.
"The design of this product is expected to come out by the second half of this year, with pilot testing targeted to run by next year. Hopefully, we can finalise the pilot before the end of 2026, that is, before the expiry of the current interim measures period," he said.
Abdul Rasheed said the goal of RESET is to ensure protection for all, enable insurance portability and broader coverage, while also strengthening primary care and preventive services to improve overall healthcare outcomes.
"We want to ensure protection for everyone and better performance of the healthcare system, especially at the primary care and preventive levels," he said, adding that full digitalisation of services will be critical to reducing unnecessary procedures and maximising healthcare spending efficiency.
With coordinated implementation, the RESET initiative can deliver long-overdue improvements in access, affordability and performance of Malaysia's healthcare system, said Abdul Rasheed.
Orange background

Try Our AI Features

Explore what Daily8 AI can do for you:

Comments

No comments yet...

Related Articles

Government mulls basic insurance scheme as medical costs rise
Government mulls basic insurance scheme as medical costs rise

Daily Express

time26-06-2025

  • Daily Express

Government mulls basic insurance scheme as medical costs rise

Published on: Thursday, June 26, 2025 Published on: Thu, Jun 26, 2025 By: Bernama Text Size: Finance minister II Amir Hamzah Azizan acknowledged the growing concern among the public about rising medical costs. Kuala Lumpur: The government is considering introducing a basic insurance scheme to help reduce the impact of rising medical costs, says finance minister II Amir Hamzah Azizan. He said a joint committee had been established involving the finance ministry, Bank Negara Malaysia (BNM), the health ministry, and several related agencies. 'Among our efforts is the Reset programme to explore how we can create a basic insurance scheme for Malaysians,' he said after launching a RM211 million SME Bank initiative to support the growth of micro, small and medium enterprises. 'The proposal is at the discussion stage to ensure that its implementation is beneficial and will not burden any party.' The minister said those involved in developing the scheme included insurance and takaful operators and financial sector representatives. 'Once we are ready, we will announce the implementation model. We are also open to suggestions, including models like the Social Security Organisation. The priority is to develop a product that truly meets the needs of Malaysians,' he said. He was responding to questions on the government's proposal to allow withdrawals from EPF Account 2 to pay health insurance premiums.

Govt mulls basic insurance scheme as medical costs rise
Govt mulls basic insurance scheme as medical costs rise

Free Malaysia Today

time26-06-2025

  • Free Malaysia Today

Govt mulls basic insurance scheme as medical costs rise

Finance minister II Amir Hamzah Azizan acknowledged the growing concern among the public about rising medical costs. KUALA LUMPUR : The government is considering introducing a basic insurance scheme to help reduce the impact of rising medical costs, says finance minister II Amir Hamzah Azizan. He said a joint committee had been established involving the finance ministry, Bank Negara Malaysia (BNM), the health ministry, and several related agencies. 'Among our efforts is the Reset programme to explore how we can create a basic insurance scheme for Malaysians,' he said after launching a RM211 million SME Bank initiative to support the growth of micro, small and medium enterprises. 'The proposal is at the discussion stage to ensure that its implementation is beneficial and will not burden any party.' The minister said those involved in developing the scheme included insurance and takaful operators and financial sector representatives. 'Once we are ready, we will announce the implementation model. We are also open to suggestions, including models like the Social Security Organisation. The priority is to develop a product that truly meets the needs of Malaysians,' he said. He was responding to questions on the government's proposal to allow withdrawals from EPF Account 2 to pay health insurance premiums.

What to do with rising medical inflation?
What to do with rising medical inflation?

Malaysian Reserve

time24-06-2025

  • Malaysian Reserve

What to do with rising medical inflation?

Malaysia is launching an ambitious healthcare transformation to address funding, accessibility and rising medical costs by GLORIA HARRY BEATTY MALAYSIA is embarking on an ambitious transformation of its healthcare landscape, unveiling a multi-pronged strategy designed to tackle long-standing issues of funding, accessibility and the escalating cost of medical care. At the Sasana Symposium 2025 organised by Bank Negara Malaysia (BNM) last week, a panel discussion titled 'Rising Cost, Rising Stakes: Expediting Reforms to Address Medical Inflation' brought together key policymakers and experts, including BNM governor Datuk Seri Abdul Rasheed Ghaffour, Health Minister Datuk Seri Dr Dzulkefly Ahmad, Treasury Secretary General Datuk Johan Mahmood Merican and World Bank senior economist Aakash Mohpal. The session explored the medical inflation containment initiative, given a codename Reset, a joint effort by BNM, Ministry of Health (MOH), Ministry of Finance (MOF) and other stakeholders. Dr Dzulkefly underlines health financing as one of his key focuses as the health minister (pic: MUHD AMIN NAHARUL/TMR) Rakan KKM: Opening New Doors During the panel discussion, Abdul Rasheed revealed that Prime Minister (PM) Datuk Seri Anwar Ibrahim had informed him of the Cabinet's approval on June 18 for the Rakan KKM initiative. Rakan KKM is a whole-of-government initiative aimed at enhancing public healthcare services through strategic collaboration with the MOH and other stakeholders. The programme focuses on strengthening hospitals and clinics while promoting both equity and sustainability in healthcare delivery. It is designed around three core objectives: Improving healthcare worker retention for better patient outcomes; increasing public health-care investment to uplift access for lower-income groups (B40) and providing more value-based options for middle-income (M40) patients amid rising medical costs. The initiative introduces a 'premium economy' tier at selected public hospitals for elective outpatient, daycare and inpatient services. This includes personalised care, the option to choose a specialist and enhanced privacy. Distinct from earlier efforts, Rakan KKM extends income support to the entire healthcare team, not just lead specialists. Crucially, surplus revenue will be reinvested to strengthen services across the public system, ensuring the programme supports long-term system resilience. The rollout will begin with a limited number of hospitals and gradually expand to most major specialist facilities nationwide. Abdul Rasheed noted that the Cabinet's green light for the programme is good news for Malaysians, noting that 'some action is happening now' in regard to the government's efforts towards improving the future of the healthcare sector, and continued enhancements are expected as 'that is where we are moving towards'. Concurrently, Dr Dzulkefly noted that while MOH has been allocated RM42.3 billion, the amount is not enough to catch up on under-spending for the sector in the last few decades. He underlined health financing as one of his key focuses as the health minister. Obtaining sufficient funding has proven to be an uphill battle, but is much needed both in the public as well as the public healthcare sectors. 'Ultimately, we need to modernise our health financing system that will be equitable, high-quality care and have sustainability as an essential characteristic. This includes a reorientation toward prevention and a careful layering of the role of private and public financing to achieve this goal. I'm just not a minister for the public sector, but also for the private sector, it is so very important that I get that done. 'Now, our current fiscal space may not allow this. I cannot keep asking the PM for more and more. Now, given this situation, I'm actually reminding him that if you don't give me the resources, allow me to be resourceful,' he said. Coupled with medical inflation, the need for sufficient funding has become even more imperative for MOH. 'I surely would have to diversify sources of income, not just from the consolidated fund…Therefore, I have come around to have a kind of a game changer of sorts for the Rakan KKM — a win-win kind of synergy with extra capacity of our public facilities, with our specialists and our healthcare team. 'So, we move away from the model of the private wing, full-paying patient, to one that we call the premium economy healthcare facilities of MOH, essentially to drive or generate revenues, to retain our specialists and at the same time, cross-subsidise our public facilities,' he said. Dr Dzulkefly said the aim is two-fold — to raise the floor by improving standards in public healthcare facilities while raising the ceiling to enable broader access to basic medical health insurance under the medical and health insurance/takaful (MHIT) scheme. MHIT refers to medical insurance and takaful products offered in Malaysia. These products are designed to cover the cost of medical treatment for illnesses or accidents, and are offered by both conventional insurers and takaful operators. He added that the initiative also serves as a form of benchmark competition, setting a reference price point to remind private healthcare providers that while they can offer similar services, they may not be able to match the affordability of the public sector. 'My overarching consideration is value-based healthcare — and that's where the diagnostics-related group (DRG) model comes in,' he said. Some elements of Reset certainly should be on track to be implemented this year, says Johan (pic: MUHD AMIN NAHARUL/TMR) Rising Medical Costs Recognising the intricate challenges posed by medical inflation, the government has formed a joint ministerial committee to spearhead long-term reforms in Malaysia's healthcare system. This was announced by Anwar on June 18 when presenting the keynote address at the same event. He said the new panel would comprise representatives from the MOF, MOH and BNM. 'When the issue of medical insurance first erupted into the public sphere, you had everyone pointing fingers. Rakyat was getting very upset with the insurance companies. The insurance company said: 'Don't blame us, it's the hospitals that are overcharging,' said Johan. 'And the hospitals said: 'No, but look, it's the insurance companies making large profits' and then everyone else (asked) what's the government going to do about it. Hence, the decision by the PM to establish this committee.' He said the committee aims to cut through the blame game by bringing together regulators, hospitals, insurers, consumer groups and medical professionals to drive long-overdue reforms. Johan stated the focus includes breaking silos between stakeholders, increasing pricing transparency, improving access to affordable insurance and exploring new financing channels, including the use of Employees Provident Fund (EPF) savings. 'At the end of the day, the committee really has to balance different interests of the different stakeholders, and particularly in the dynamics of a well-thriving economic activity. 'We need quality affordable healthcare, but at the same time (we need to) ensure that there's fair returns to the different sectors, whether it's the private healthcare, practitioners, doctors, insurance companies, so that there should at the end of the day be continued investment, continued product innovation to ensure the sustainability of the sector,' added Johan. When asked whether the committee had set clear deadlines, he said Anwar had instructed the committee that in no uncertain terms, tangible reforms must begin within the year. He noted that the proposal of Rakan KKM, which some deem as controversial, was approved by the Cabinet. 'We're very confident that some elements of the Reset (initiative) certainly should be on track to be implemented this year. At the same time, I think you also recognise (that for) healthcare reform, there's no silver bullet that can be done immediately.' Reset — which stands for revamp, enhance, strengthen, expand and transform — outlines five strategic thrusts and 11 initiatives designed to rebalance the healthcare cost ecosystem. 'The important thing is to demonstrate the seriousness of all parties showing some progress on the low hanging fruits. That hopefully also gives the credibility of these platforms like this committee to (show) that we're serious, we really want to bring all the different stakeholders to the table in terms of progressing in a very structured manner going forward for the betterment of all parties and also the healthy growth of the industry,' said Johan. This article first appeared in The Malaysian Reserve weekly print edition

DOWNLOAD THE APP

Get Started Now: Download the App

Ready to dive into a world of global content with local flavor? Download Daily8 app today from your preferred app store and start exploring.
app-storeplay-store