2021 Premium Hike - This comes after a similar re-pricing exercise in 2021 which saw 20%-30% increases during the height of the COVID-19 pandemic and economic downturn.
Industry offers multiple reasons, including medical inflation and the post-pandemic elective surgery uptake. While insurers were very active in trying to contain costs, providers were not actively controlling costs for insured patients. Policy plan designs which are changing also do not encourage patients to be conscious of costs as most plans today pay nearly 100% of the hospital bill.
Who’s at fault - Private hospitals had implemented strategies to manage the effects of escalating premiums. While cost-effective practices such as using generic medications and efficient technologies were embraced, balancing affordability and sustainability was challenging. This is a continuing tug-of-war between insurers seeking cost-effective solutions and healthcare providers advocating for patient choice and maintaining quality care standards.
Federation of Malaysian Consumers Associations (FOMCA) challenges the narrative of insurers attributing the premium hikes to medical inflation and rising private hospital charges.
FOMCA identified the lack of price controls on medicines and medical devices. While doctors’ fees are regulated, they are often bundled with treatment, medicines and hospital charges. There is often a lack of transparency in disclosure and worse still, the prices charged are exorbitant.
He described the considerable rise in insurance premiums as “unjustified”. The overloaded public healthcare system often pushes consumers towards private healthcare where prices are unregulated, resulting in exorbitant bills.
Justifying premium re-pricing - LIAM explained that on-going medical claims witnessed a considerable surge with a notable 28% increase in 3Q 2023 compared to the same period in 2022. This follows a substantial 34% hike in 2022.
The medical insurance policy becomes unsustainable when the premiums collected are insufficient to cover the expected claims expenses. BNM declined to respond if it had approved this latest premium re-pricing. This leaves a critical regulatory perspective unaddressed in the on-going dialogue on the sustainability of health insurance protection in Malaysia.
According to BNM’s 2019 Annual Report, the re-pricing of medical and health insurance (MHI) products is a significant concern affecting 4.5 million policies between 2016 and 2019. The consequence of this re-pricing is an affordability crisis as more expensive premiums render coverage increasingly unaffordable for a significant portion of the population.
This phenomenon is exacerbated by what the Report terms the “buffet syndrome” wherein policyholders seek to maximize the value of their premiums without considering associated costs, contributing to the upward spiral of healthcare expenses.
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