Malaysian health reform socioeconomics (Part 2)

— Dr David KL Quek
The Malaysian Insider
Feb 08, 2012

FEB 8 — 1 Care health reform phases

In the 1 Care Health Reform plan, there are four proposed phases of transformation that could take anything from 10 to 15 years (according to officials), depending on the uptake of the various phases and programmes, as well as its implementation progress.

Importantly, the Health Ministry increasingly understands that it would require general public acceptance, as well as significant consensus and (if possible) seamless buy-in from as many stakeholders as possible.

There is recognition that if the public fails to accept this in toto or in part, then there might be need to re-tweak or re-design certain aspects of the reform plans. Just how much the bureaucrats or our political masters are willing to change and adapt remains to be seen.

Therefore, it is crucial, indeed essential, that the public and interested stakeholders take an active role in providing enough input to help make this reform the one that they want. We should not simply accept a top-down programme designed by bureaucrats, and selectively enacted by policy makers. Why? Because, it would be disastrous if this reform fails or runs into the usual gaffes, just a few years down the line. Health care is simply too unforgiving and vital to fail or be subject to arbitrary social experimentation, no matter how good the intentions!

The current reform of the British National Health Service has almost run aground on several gridlocks and are now almost back to where it began just a year or so ago, after it was forcibly implemented against the bulwark of criticisms from several professional bodies, including doctors groups, healthcare workers and even business concerns. Chapter 17 discusses this debate in greater detail.

In the 1990s, Hilary Clinton and Newt Gingrich tried as a bipartisan Congress-Senate committee to radically reform the US health system, and this was totally rejected despite a six-year effort of intense debates and consultations. Even the Obamacare health reform was passed after severe truncations and whittling down of its programs and reach. There are still challenges, which remain to thwart its full if stuttering implementation.

Thus, reforming something so fundamental as healthcare is not something that any government can simply impose without feeling the pulse of civilian or partisan backlash, unless this can be made as consensually acceptable as possible, with as little disruptions or perceived inequities as possible.

Clearly, too, any reform or change will not be able to win over everyone or every dissenter. But at least, the majority must be able to accept, to believe in and buy into the system so transformed.

Two-way public consultations are crucial

So what about our own proposed health reform? Have there been enough high-level consultations and public input? There have been consultative meetings through various technical working groups (TWGs) involving an array of invited stakeholders, including the MMA, GPs, universities, private hospital and insurance groups, economic panning unit officials, etc.

However, the input into these TWGs appears fragmented and somewhat tailored to narrowly focused policy-directed micro-minutiae goals — the consultative groups are supposed to simply address the practical implications where they could be foreseen according to such objectives. By the way, almost all the TWG participants have to sign, under the Official Secrets Act (OSA), not to divulge these secrets on pain of prosecution!

The question, then, is if this sort of consultation reciprocal and two-way, or are they simply top-down exercises to assuage the “need” for paper consensus?

Most if not all these consultative meetings take place during working hours only, where Health Ministry officials could of course participate full time. But here is the crunch. Not many other stakeholders have sufficient manpower and knowledgeable experts or representatives who could attend such important meetings for weeks on end, and also over extended periods. Of course, one can argue that if parties are interested enough, they should sacrifice for the sake of the nation on something so important. But in reality this is easier said than done.

However, the main bone of contention is the sort of dialogue or consultation that these technical working groups (TWGs) address. Most participants lament the fact that the policy ideas and frameworks have already been fixed, and that participants are simply there to be merely made to understand the technical issues involved, and to tweak the minutiae of forecasted plans. There is little or no leeway to address disagreements and/or to seek alternative views in terms of policy direction or the best way forward—in other words, there is little tolerance for any dissent or variation.

Participating delegates are simply ushered along trajectories of planned reform pathways, which are then rubber-stamped as having been party to these so-called consultations! This is one major reason, why many invited groups have stopped participating in earnest or even wanting to come forwards to contribute, when these potential differing viewpoints are simply ignored or brushed aside, or considered irrelevant, by the officials in charge…

So, despite earlier high expectations, the difficulty is in getting enough interested parties and participants to consistently come forward to study and represent the vested groups sufficiently, to meaningfully address all the issues and implications of these crucial public consultations. So it is arguable if this current approach is an adequately thorough or fair process that is intended for deciding and planning what is best for the nation!

To cap the limitations of such discourses, there is also that (OSA) that participants have to comply with! With something to hugely critical, how can this be secretive and not be freely shared just because, these have not been cast in stone yet, as rationalized by some health officials, when complaints were made?

The cost containment argument does not quite compute…

But let’s get to the bottom of the government’s main contention that our health system is unsustainable. Is it really? The government’s main argument for this drastic health reform is that our health care costs have been escalating beyond its capacity to control and possibly to afford. What is interesting is that over the past two to three decades, the government’s contribution to healthcare budget has not significantly wavered from its customary two to 2.2 per cent of the GDP; the chunk of it all being utilised for the public healthcare sector.

The private sector has been encouraged to grow and develop as a complementary private sector financing initiative (PFI), but like all business or commercial enterprises, this model fosters escalating costs, albeit towards distributing the healthcare cost to those who could afford to contribute or pay more for themselves.

No one sets up any business venture to lose money; all are in it for personal or corporate gain. But by offering a modicum of perhaps more personalised or more luxurious healthcare, these private health centres provide outlets for those who desire just such an experience—the better-off can choose to pay more to receive “more” arguably.

Thus, this appears to be a form of unspoken tariff on the rich, to allow market forces and the better-off to choose and to cross-subsidise their own healthcare cost within their own means and ability-to-pay, while the government provides back up and safety net for the poor and the less endowed.

Over the years, however, the quantum from Malaysia’s general government revenues (GGR) has changed very little, while medical technology and newer therapies have leapt to new heights of sophistication and costs. This inevitably triggers greater public demand for higher and better quality medical care and treatment—everyone wants to live longer, and suffer less, even if these are crippling ailments, which were once considered terminal or incurable…

In large, the private sector growth has overtaken the slack public sector in terms of modernization of health services, which explains the reversal of private-public expenditure profiles from 2004 onwards; the private sector expenditure now tops 55 per cent of the Malaysian total health expenditure (TEH).

This also, unfortunately, serves as powerful push factor for the public sector to also rise up in tandem to catch up with the modernization and upgrading of their services—increased spending on facilities, diagnostic technologies and demanded therapies—e.g. MRIs, CT scanners, latest medical, surgical and/or radio-therapeutic techniques and expertise, including higher manpower and skills development/training and emoluments!

Officials have projected that by 2020, our health care bill could top RM90 billion (from the current RM35 billion) and that out-of-pocket payments would be around 48 per cent. But this is a theoretical assumption that the trajectory of healthcare cost continues as it has, with no major change or shift from either the government sector allocation or from private sector growth.

Health economists dislike disproportionate out-of-pocket (OOP) payment for medical care, because this reflects underlying disparity in the general public gaining or affording access to much-needed health care. High OOP payment for healthcare is believed to accelerate inequity trends and aggravate risks for medical bankruptcies. But this is seen predominantly in poorer third world countries than in more successful nations such as Singapore, Sri Lanka or even Vietnam, where OOP payments regularly exceed 50 or even 70 percent of the TEH. Malaysia is considered favourably, too, despite its OOP spending being around 40 per cent of TEH.

Our public health sector serves our public well

Another issue is the current strategy where much of the public sector services are so heavily subsidised, that there is worry whether there could be any further increased allocation from the government coffers. This is particularly relevant because our government is grappling with limited success to reduce its national budget deficit against pressing and competing demands. Healthcare spending has unfortunately and misguidedly been put on the focus point for reduced government “subsidy”.

As it stands, only a paltry two per cent is recovered from all the spending in the public health sector. This lack of copayment returns on the part of public users of these services has made some of our policy makers wonder if this is the right direction of the public health sector, which has been trying to modernise and strengthen, and perhaps become more cost-effective and financially independent—some officials would like to make this public sector more competitive as a corporate body, hence the not unwarranted public or NGO fears of privatisation or corporatisation!

However, this consistent lack of capacity of public sector patients to contribute back the costs of the services received, actually underscores the viewpoint that most Malaysians who utilise these services do so because their access choice is largely determined by their inability-to-pay otherwise, rather than their wishing to game the system unfairly! Most, if not all, could not afford alternative private care, otherwise!

Simply put, people use these public sector health facilities because these are convenient and are almost free despite the inconveniences, the wait times, the irregular access to a consistent healthcare provider or doctor, the cheaper generic medications, etc. This is not to imply that the services provided by the public sector are in anyway inferior or substandard. But the reality is that this service is arguably not the preferred one if they could afford otherwise. This explains why some 65 per cent of our Malaysian public across all ethnic or social groups use private general practitioner (GP) services nationwide — because these are more attentive, more personal, still relatively affordable, and preferred!

In Malaysia currently, it is estimated that our less well-off citizens form some 40 per cent of the population. However, this less well-endowed group continues to be able to gain access to public sector services without suffering the plight of having to stay away due to cost constraints — this is indeed one of our great strengths. (Conversely, this is a common problem among the poor worldwide where no universal access to healthcare is guaranteed.)

Our health officials acknowledge that this easily accessible (and nearly free) public sector health service is one critical aspect of the public’s expectation: That this is precisely the social safety net that it should deliver and not to curtail or eradicate in the guise of subsidy reduction! Healthcare is a fundamental societal expectation and a right (not a dispensable luxury!), and enlightened governments should allocate more rather than less toward this social good. The public expects this, and no less!

Thus, the public in general expects that such a system be continued as justifiable social services for citizens, taxpayers and the needy of the country. Indeed, most people, even if they do not now use these public sector services, feel that the government has a fiduciary duty to provide such healthcare services as mandatory back-up or safety net alternatives, even if only two per cent are recovered for all the public sector expenditure by the government.

The very fact that the almost fully-subsidised public sector services cater to the predominantly poor (and therefore, non-taxpaying citizens), makes this an inherent and natural cross-subsidy, which tends toward progressive equity in health care practice and financing.

There is, at present, no other simpler way for this to be separately reimbursed for this group of people who already do not contribute sufficiently to SOCSO, EPF, and are not eligible for or exempt from taxation. Thus, higher-earning taxpayers are already cross-subsidising this group of the poor via general government revenue allocations; while they (the better-off) still have a choice to access the preferred private sector either out-of-pocket or through some co-payment from third party payment mechanisms, including the much maligned health insurance!

Thus, our public health sector has an already inbuilt pro-poor system, which renders this social equity mechanism more progressive. This is certainly in the correct direction. There is public expectation that increase and not decrease in the quantum of allocation of government funds (general government revenues (GGR) from indirect or direct taxes) toward healthcare, is the preferred approach as part of the social services mandate of government.

Moreover, there is great reluctance on the part of the public of having to contribute more in terms of direct taxes (mandatory health insurance or any other form of goods and services tax), which generally affect the poor more than the better-off.

Proportionality of personal and individual taxes tend to affect the poor more because of their lower quantum of limited or no disposable or discretionary income, outside the realm of bare minimum basic livelihood essentials. The poor has a disproportionate share of indebtedness with little or no spare cash for anything else!

After taking care of livelihood and family maintenance necessities, the poor has hardly any excess or even no disposable income. Therefore, any further additional or mandatory household or personal tax/contribution would bite lopsidedly and painfully into these already-meagre funds. This leads to the concept of “ability-to-pay” considerations when it comes to economic activity, particularly relevant when it concerns health care.

* This article is the second in a five-part series. Part 1 is available here.

* Dr David Quek is past-president of the Malaysian Medical Association, but the opinions expressed are strictly his own and does not reflect those of the MMA.

  1. #1 by k1980 on Wednesday, 8 February 2012 - 1:09 pm

    I have nothing to say about this if our country is as dirt-poor as somalia or haiti, but look here, we are the 3rd largest economy in asean, with tremendous natural resources. If we have millions to pay a mamak hag to rear a few cows, why do we have pay through our noses for the new healthcare scheme?

  2. #2 by drngsc on Wednesday, 8 February 2012 - 1:28 pm

    I am very glad that many many are now talking more about the impending 1Care for 1Malaysia Healthcare Transformation. Discussions are always good. I learn much from David’s write-up. Without transparency, we are all feeling our way around. Like David said, when we ( FPMPAM ) were consulted, it was also piece-meal, top down approach. TWGs were for micromanagement issues, like fees, procedures, etc.
    More will be revealed on 12th Feb 2012. I think the 1Care Concept paper 2009, and the Economic Transformation Programme 2010, is a must reading and eye opener for all who wishes to understand the rationale behind this 1Care for 1Malaysia Healthcare transformation.
    Not engaging the consumer / public and the medical profession in a meaningful way is totally unacceptable, especially when you are thinking of taking 10% of the household income.
    This issue is even important enough for a national referendum

    Perhaps we should get the first thing right.

    We need to change the tenant at Putrajaya. GE 13 is our best chance. Enough is enough. Let us all work very very hard and get it right this time.

  3. #3 by Winston on Wednesday, 8 February 2012 - 1:32 pm

    Dr KL Quek, there is no need to write verse and chapters about
    this problem.
    I and perhaps many of my compatriots feel that it is caused by
    a serious lack of budgeting for the public sector hospitals.
    I understand that only about 3% of GDP is allocated whereas
    an effective amount should be around 6%.
    So, is it that difficult to know why there is always a lack of
    We are a resource rich country, so where has all that dough gone.
    Someone must be sticking his/her hand into the cookie jar!!!!
    Someone has listed 56 (fifty-six) instances of money squandering
    or money siphoning ways over the past years that have made the
    treasury looks like a sieve!!
    Once the Federal government has fixed its eyes on a money
    making scheme, it will stick to it like a limpet mine!
    And we all know who will be making the money!!!
    And it will use all kinds of ruse to ram it through.
    Well, it is up to Malaysians to ensure that they don’t
    succeed and to ensure that it won’t be done on the sly later after
    the furore has died down.

  4. #4 by Bigjoe on Wednesday, 8 February 2012 - 1:48 pm

    In Sapu Malaysia, 1Care=Sapu Care…

  5. #5 by Winston on Wednesday, 8 February 2012 - 1:59 pm

    Now, in case some of you may have missed it.
    The professed “”caring”” government that we have, that is always
    spouting out all sorts of slogans, are doing a lot of things that are
    Over the decades.
    And we all know who it really cares about.
    Don’t we?

  6. #6 by k1980 on Wednesday, 8 February 2012 - 2:09 pm

    Even countries with comparable GDPs in international dollars such as Mexica and Brazil spent much more on health care than Malaysia. Developing countries with lower GDPs such as China and India also spent higher proportion of their GDPs on the health of their citizens.

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