Aging Population Health Insurance

Malaysia’s healthcare sector, recognised internationally for providing affordable and high quality services, has been experiencing healthy demand locally due to the country’s ageing population and rising incomes.

According to analyst (research arm of CIMB Investment Bank Bhd) in a healthcare sector report from June 27, 2014, an ageing population, higher prevalence of lifestyle diseases and rising incomes drove the 215 per cent growth in private healthcare spending during 2002-12. That growth could slow down in the next few years as income growth has lagged behind medical inflation.

Currently, the medical inflation rate in Malaysia is estimated to be around 15 per cent, according to Intelligent Money Sdn Bhd (iMoney). The biggest consumer of healthcare services – the elderly – will feel most of the pinch. This is due to their retirement income which may be diminishing or there may even be none at all. The increase in retirement savings has not led to more affordable private healthcare as the growth in savings has lagged behind the rate of medical inflation. Those without adequate savings and insurance coverage will need to continue working or seek financial assistance from others to fund their private healthcare expenses.

According to the research arm of Kenanga Investment Bank Bhd (Kenanga Research), it is estimated at end-2014 that during the 2010-2040 period, Malaysia’s population aged 65 and over is projected to increase more than three-fold of the 2010 population.

Kenanga Research noted that the increase will lead Malaysia to become an aging population in 2021 when the population aged 65 years and above reach 7.1 per cent.

Longer life spans also result in a larger number of people aged 65 and above,” the research arm said, adding that this improvement has been attributed mainly to advances in medical technology, higher personal wealth and growing awareness of the importance of healthcare and disease prevention.

The demand for healthcare services in Malaysia will increase at a more rapid rate than the population growth due to the larger number of old people.