Malaysian health reform socio-economics

— David KL Quek
The Malaysian Insider
Feb 07, 2012

FEB 7 — Is the Malaysian health system really in trouble that it requires such a drastic revolutionary change? Is 1 Care for 1 Malaysia Health Reform the answer? Will this proposed radical change make our health system more efficient and effective as touted by officials?

Or, is this proposed reform too ambitious and sweeping that it could possibly lead to severe disruptions to our current health system that we are so used to?

More importantly, would this health reform plan become another government-linked corporate entity which, instead of benefiting the public, only enriches a few favoured cronies or insiders? The difference now is that this will be a humongous multibillion-ringgit exercise and the fattest cow to milk to date!

Sadly, at this juncture in time — in the name of social development, modernisation, and economic necessity even — there have been so many government-linked projects being scandalised and mired in corruption accusations and profligate leakages.

Thus, it would be foolhardy to implicitly trust the government to do the right thing despite the economic rationale or correctness, indeed despite even the most honourable intentions! We are dealing with the health choices and rights of the public, which could become severely disrupted and endangered if or when hurried reforms turn out to be another debacle of catastrophic proportions! We cannot afford a failed social experiment of this magnitude!

Economics and health care rights

Let’s examine the proposed 1 Care Health Reform. What indeed is this new concept that we are dealing with? The Ministry of Health has stated and defined the objectives of this 1 Care transformation as follows:

“1 Care is the restructured national health system that is responsive and provides choice of quality health care, ensuring universal coverage for the health care needs of the population based on the spirit of solidarity and equity.”

Theoretically, the above concept is a fully acceptable ideal. But it should not become just a neat slogan. Everyone should have equitable access to health. No one can or should deny this universal premise. No one should be disadvantaged or discriminated against when compared to another just because of his or her ability to pay more, or who can afford more. Most importantly, no one should ever be denied life-saving or symptom- or pain-relieving medical care just because of cost considerations. In reality however, this is not so simple.

Those who can afford to pay more would almost surely be able to purchase health and medical care at will, just because this is the way the free market works. Those who have more disposable or discretionary income and means almost always have a greater purchasing power to a wider variety and urgency of goods and services. This applies to every economic sphere and not just for health care. That is the way of world these days. Most people except perhaps those living in command socialist economies accept some degree of ease or disparity in their capacity to access healthcare, according to their individual means. This is socially unfair but also universal in its reach.

But again this is an undeniable truism, despite its distasteful and off-putting implications: the less endowed or less informed are almost always less demanding and have lesser recourse to demand or to expect more for any services or goods. If you earn more and have more money, you are able to afford more goods and services (sometimes known as “utilities”). If not, you would have to sacrifice not just the more luxurious aspects of the accompanying extras, but sometimes, even forego some basic necessities!

Thus, those who wish for more goods and services would have to work doubly hard and to strive harder when given a chance to gain, earn or excel. In competitive society, everyone is expected to achieve productivity for themselves to the best of his or her abilities. However, the playing field is often uneven and is never equal. Therefore the inherent inequalities of income and lifestyle must be considered when we wish to examine how fairly society provides goods and services for its citizens. This is particularly relevant when we consider healthcare services for society at large.

It is now well accepted that modern free-market society expects every individual to strive to provide for him/herself in the spirit of self-interest and self-betterment. Free competition would arguably allow the best and the most able to achieve more and thus provide the impetus for self-achievement and wealth accumulation. Free-market economics imply that society as a whole will be able to lift itself up by its own bootstraps to ever higher levels of development, both socio-economically as well as in terms of human development, so it is believed.

Increased wealth, unequal as this may be concentrated in the hands of some or a few, will somehow trickle downwards so that most of society at the various strata would benefit or reap some rewards, for themselves and their families. This creates “healthy” competition as well as competitive behaviour, which some argue contributes towards faster societal progress, because self-interests and individual desire for goods/services, almost always trump communal or other interests, outside the self or family.

But clearly there is a downside to this laissez faire market economic model. Increasingly we know that the rich and the powerful have grown ever richer and more powerful, and poverty appears to entrench and deprive the poor even more tenaciously than before in the poverty cycle — so much so that the wealth gap widens inexorably. The poor and the have-nots continue their inescapable slide down the poverty trap — the spiral of marginalisation, impoverishment and deprivation, whilst the rich grow ever richer.

Difficult as it is to consider, that is what the globalised world has now become — more and more market- and consumer-driven and more individual-focused. The wealth gap or income disparity between the rich and the poor (or GINI index4) continues to widen and serve as a serious challenge for governments worldwide.

Although with rising GDP growth, some benefits do trickle down to reach the lower strata of society, disgruntlement and discontent among society’s underbelly of the aggrieved and dispossessed, often strains society’s stability and fester public dissatisfaction. Worse, if the poorer segment of the population continues to grow and widen — this socially unjust disparity between the haves and the have-nots could be destabilising and could cause serious class conflicts.

Thus, there have been growing research and studies into the economics of income inequality, with many different models and indices being developed to try and describe these as close to reality as possible. It is hoped that these indices can help focus efforts to reduce these gaping inequalities as well as perceived inequities and perhaps develop better socioeconomic strategies and paradigms toward achieving greater social justice and cohesion.

Therefore social reform, which can eliminate or reduce such disparities, is always welcome in the name of social equity and fairness. Clearly this applies to healthcare discrepancy as well. So some reform is in order, at least nominally to reduce the gap of accessibility and perhaps too, to staunch the falling standards of health care. Just how this is to be realised is somewhat contentious, and the details of the government’s proposed reform remain unclear, and need to be better fleshed out. Here are where many outside the ambit of the Health Ministry and the policymakers find grave disquiet, disagreements and contentions.

Universal coverage — the ideal health care goal

Health financing options for any particular country are determined largely by the stage of its economic development — the poorer or less developed the country, the more likely it is for healthcare financing to be dominated by out-of-pocket payment options — healthcare is considered to be a luxury, instead of being a right or a privilege of being a citizen, a resident or a taxpayer.

For the poorer nation, there is normally no social protection against ill health, because out-of-pocket payments create financial barriers that prevent the poor from seeking and receiving needed health services. Which is why, our own pro-poor almost fully-subsidised public health system has been acclaimed and acknowledged as one of the best around the world, and not just for the developing world! Many underdeveloped nations have sent many cycles of delegates to learn from our much emulated public health system. So the premise that we are doing poorly in terms of healthcare is a myth, we are not. Of course, this is not to say that our health system is beyond reproach or improvement. There is much that can be made better.

Universal coverage as a guarantee for most if not all citizens is usually only provided by more developed or socially enlightened economies. But the mixes of payment options vary tremendously, with the more mature and socially equitable nations offering more tax-based or strictly demarcated or allocated social insurance for health. But such overall taxes tend to be very high and approach close to 50 per cent or more of earned incomes. Their tax bases are also broader, usually more than 70 per cent of the working populations are taxpayers, which enable such governments to implement collection mechanisms such as dedicated health insurance on a more inclusive and more comprehensive risk pooling (community-rated) manner. Examples include the Scandinavian countries of Norway, Sweden and Norway, and Canada and Australia.

Countries such as the United Kingdom are “blessed” in that a National Health Service was implemented decades ago, just after the Second World War, before free-market capitalistic practices have become entrenched. Other European countries have health systems, which are largely dominated by centrally controlled single-payer healthcare services with a sprinkle of private offerings for the wealthy. But most of these centrally controlled systems evolved over decades, often taking even longer than 50 years. For the more recent experiences of Taiwan, Thailand and South Korea, this evolved over the past 30 years, also through fits and starts. Despite this, health and medical care are often purchased services from private entities by the central authorities based on negotiated reimbursement plans, and varying co-payment options to decrease overutilisation of services, and ameliorate moral hazards.

The US is somewhat of an anomaly among developed economies in that it follows a free-market system of free choice and self- or employer-purchased insurances or managed care (MCOs) or health maintenance organisation (HMOs) options (to provide what is popularly known as managed competition). Unfortunately, this has failed to stem the tide of healthcare cost escalations, which has now exploded to a hefty 17 per cent of its GDP (some US$2.8 trillion (RM8.7 trillion)!) and its famously lack of universal coverage for its teeming uninsured — this number has now reached 47 million of its 300 million population (some 16 per cent of the population!).

This is also why the World Health Organisation has been pushing every nation towards achieving this goal of universal coverage for all. But this implies that governments, policymakers and the public are enlightened enough to agree to and allocate sufficient tax revenues toward health care, as well as to agree to some form of cost-sharing and risk-pooling. They must thus, also agree to the imposition of mutually-acceptable or negotiated social health insurance schemes to cover all the residents within their borders.

Universal coverage implies secure access for all to appropriate promotive, preventive, curative and rehabilitative health services at affordable costs. Besides financial risk protection, the extent of the population covered (e.g. who is covered) and the extent of health service coverage (e.g. what is covered) must also be properly defined, although this must clearly fit within the framework and context of affordability and means.

It therefore implies that governments provide sufficiently robust systems of emergency, catastrophic care and safety net services, so that the indigent and those impoverished can still partake of the health services without unnecessarily having to delay, to choose, or to sacrifice basic essentials for health, or vice versa. In other words, such barriers to healthcare access must be eradicated for as many people as possible, if not for everyone.

It further infers and probably necessitates that the country’s tax collection practices are mature, socially redistributive and reasonably equitable, so that the majority of the population can be adequately covered. Perhaps one of the most important considerations from the point of accountability is that administrative and service costs should be kept as low as possible, and not be allowed to bite into the already limited funds for whatever healthcare programmes!

  1. #1 by ekompute on Tuesday, 7 February 2012 - 11:32 am

  2. #2 by Loh on Tuesday, 7 February 2012 - 1:51 pm

    ///More importantly, would this health reform plan become another government-linked corporate entity which, instead of benefiting the public, only enriches a few favoured cronies or insiders? The difference now is that this will be a humongous multibillion-ringgit exercise and the fattest cow to milk to date!///–the author

    What else?

    In the case of highway tolls, one might choose not to use the highways. But under 1-care, no one is allowed to opt out. The government robs the people in the 9% premium and pay them directly to cronies.

  3. #3 by Cinapek on Tuesday, 7 February 2012 - 1:53 pm

    Before the Govt implements any new health care plan, the policy makers and even the Cabinet should be invited to view Michael Moore’s movie “SiCKO” in which he examines the pitfalls of the US health care and health insurance system compared with the health care systems of UK’s National Health System as well as the health care systems of Canada, France and Cuba.

    Since we have yet to know the details of this proposed restructured health care system, the underpinning factor should not be the cost of health care alone but rather the universal access to good basic health care, which is the right of every citizen in this country. Depriving a citizen of a life saving health procedure or medication because he cannot afford to pay any privatised cost, is not only grossly unfair but also leading to potential social unrest as the have-nots resent the haves who have better life choices.

  4. #4 by ksauyong on Tuesday, 7 February 2012 - 3:21 pm

    Which part of the population needs health care based on the spirit of solidarity and equity?
    Those working in the private sector have their healthcare needs provided for by their employers and they do not burden the Goverment. They seek treatment from private doctors and private Hospitals.
    Those who are Goverment servants have their healthcare taken care of by the Goverment Hospitals and doctors.
    Those self employed buy health insurance to take care of their health.
    So what is left that our BN Goverment finds so burdensome to take care of? Are they the unemployed, the jobless, the homeless? Is the cost of healthcare for these people so overwhelming that the private sector workers have to fork out 10% of their salaries to help pay for the costs? At present, these private sectors enjoyed free healthcare provided by their employers, but under 1Care, they have to pay 10% of their salaries. This makes the private sector workers pay for what should be provided for by the Goverment? Bear in mind that tax collected by the Goverment should be used to provide proper healthcare, and not to buy expensive military hardware, pay overpriced contracts, give no-need-to-pay-back soft loans and have frequent ‘overseas study tours’.

  5. #5 by yhsiew on Tuesday, 7 February 2012 - 4:32 pm

    When their cronies are cash-strapped, they will think of ways to replenish their cronies’ pockets. Hence we have 1Care, 1Malaysia Email, etc.

    A few flyovers near my place are hardly used by motorists. I wonder why they were built in the first place.

  6. #6 by Winston on Tuesday, 7 February 2012 - 4:40 pm

    A resource rich country like ours has to go on squeezing its
    citizens for everything?
    And now even healthcare is not spared?
    But they have plenty of money for non necessities!
    Now, it seems the government must also employ the numerous
    nurses who were churned out by the various nursing institutes.
    And soon it will be the doctors’ turn.
    Doctors churned by the many medical institutes and who may
    be facing problems earning a living!!
    So, now, I think that our government hospitals can afford to have
    at least a few nurses as well as a few doctors for every patient.
    We must be having the most pampered patients in our public
    hospitals!! In the world?
    Perhaps this is also part of 1Care?

  7. #7 by drngsc on Tuesday, 7 February 2012 - 6:25 pm

    Thanks David,
    I am no health economist and will not try to be one.
    If it ain’t broken, why fix it?
    At present, 90% of our population live within 5 Km of a static health facility. Any of us, should we be unfortunate enough to fall sick in the interior of Taman Negara, can go to the nearest Desa Kesihatan, and get help, and if necessary, be referred to district hospital and if necessary to a general hospital. We are very proud of that. Treatment there is almost free. I had two such referrals of tourist to this country with chest pains. The two tourist were so impressed.
    Healthcare is a government’s social responsibility. IT MUST NOT BE PRIVATISED or shall I say PIRATISED.
    Especially when this present government’s track record of managing large sums of money is greatly suspect.

    and learn more.

    We need to change the tenant at Putrajaya. GE 13 is coming. Healthcare is an issue. Please let us work very very hard to change the tenant at Putrajaya.

  8. #8 by monsterball on Tuesday, 7 February 2012 - 10:55 pm

    Health matters can be traced back 10 years or more where huge medical manufacturers…like B Braun had to move it’s manufacturing away from Malaysia because the Govt was dictating terms to them…such as no direct selling to all the pharmaceutical shops…must appoint a Govt agent..thus making medical products more expensive to the buyers…the Malaysians.
    That itself prove they do not care ……Malaysians are charge more to buy good medical products.
    This govt. cares only.. how to sweet talk and win votes.

  9. #9 by raven77 on Wednesday, 8 February 2012 - 1:10 pm

    Shouldnt FOMEMA be closed down…how did all this rent seeking scams got to milking the rakyat…with the help of BN no doubt…..

    Now another scam 1Care ….

    Everyone , especially those dealing with the public must campaign vigorously against this government and get rid of it including all the fellas who milked us dry all these years….

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