The 1 ‘S’Care scheme

— The Black Cactus
The Malaysian Insider
Feb 08, 2012

FEB 8 — In the last few weeks, there has been immense debate on the proposed national health scheme dubbed 1 Care in both the internet and the mainstream media. A collective conclusion shared by both the public and the very professionals alike (who play a major role in the system) is the uncanny ability to fully comprehend the confusing entity which remains an uncertainty till today.

This commentary was written to achieve the following objectives

1. To help the public understand why this system was proposed and what led to the genesis of this scheme;

2. If possible, to pressure the government to be more transparent in providing information on the 1 Care scheme to allay fears among the general public; and

3. To help the layperson understand the unaddressed policy issues but highly crucial perspectives surrounding the 1 Care scheme

First, it would be wise to have a quick update on the prevailing Malaysian health care system so that it would help shine some light as to why there is a sudden accelerated interest to bring the 1 Care scheme into an imminent reality.

The Malaysian health care scenario

The Malaysian health care system has often been hailed globally for its ability to endorse a sustainable health policy that reflects an outstanding and equitable health status at a relatively low economic burden.

By allocating just three per cent of its GDP to health care (majority of industrialised countries invest rough about six per cent, with the exception of the United States, which devotes 16 per cent), data compiled by World Health Organization shows that the performance of the Malaysian health system is, in fact, highly efficient.

This is evidenced by the “Health Adjusted Life Expectancy (HALE)” at birth indicator, which categorises Malaysia as equal to most industrialised countries, at 63 years.

However, the complexity of the system has also brought in much uncertainty that has not only slowed down service delivery, but has been closely related to the gradual increase in economic burden.

In an effort to make health care accessible (and most importantly equal) to all fabrics of the society, the concept of Universal Health Care was formulated and adopted by most countries around the world including Malaysia.

The system attempts to finance the health benefits for all by a balance of tax revenues and medical insurance (mostly recommended by private health caregiver in Malaysia currently). This is imposed on employed, working class population. In Malaysia, much of the public medical fees are subsidised to a great extent from the much gained tax revenues.

It is important to note that the Malaysian Ministry Of Health only manages to recover three per cent of its total operating cost through fees collected at health care premises. The amount is strikingly lower than most payments made in most European health system (which employs the co-payment system where funds are partly subsidized by the government and the insurance premium paid by the patient). The average consultation at a token rate of RM1 at any primary care centre barely covers 1 per cent of the economic cost per visit.

The resulting non sustainable system calls for fiscal limitations and will eventually cause much financial loss due to:

1. The spur of an unrealistic and unachievable demand for public health care;

2. The operational costs to cover universal health care will surpass the government’s current fiscal capacity.

By understanding this, it comes as no surprise that the proposed 1 Care scheme is a platform designed to re-coup the wastages from a bleeding pre-existing ( but noble and functional if properly handled) health care system that is sub-optimally managed.

Like any other subsidised policies, the current health care system is resilient to any structural reform partly due to the lack of political will (where it is vital to appease voters by holding on to the unsustainable RM1 token fee and RM15-20 token fee paid at primary and specialist health clinics respectively) and the society itself whom have become so accustomed to enjoying cheap but scarce medical resources that has been perpetually vulnerable to potential abuse all these years.

The single most important question: Where is the information?

Unlike most countries that have proposed and implemented such a scheme, information on the mechanics and the policies enshrined in the health care scheme is widely available for public scrutiny. One could easily access any updates and knowledge on the health care scheme through the Ministry Of Health website of the respective countries.

The same cannot be said for the 1 Care system. The public, at large, have very patchy ideas on the health scheme without corroborative evidence from the Ministry Of Health. It would have been prudent, with all the disparate views available from all avenues of the mass media, to allay all concerns by allowing the public to peer into the workings of the proposed scheme or at least highlight the salient points that matters most to the average Malaysian. Efforts to make it an intellectual discourse by taking in question from the public would have been highly commendable.

Strangely, the documents or information regarding its modus operandi has remained elusive and is not available on the Ministry Of Health website (which is mandatory in most civil nations). The reason as to why this has been enshrouded in secrecy remains anyone’s best guess.

However, one could only speculate that perhaps the precise knowledge of the system is within the confines of a privileged few elites who are still, themselves, grappling reach a consensus on how to implement a scheme that is totally not viable given the current economic climate.

Hypothesized 1 Care scheme model

Care scheme as the utility towards managed care

With the escalating medical expenditure of the country, a cost containment approach has to be put in place to eradicate or replace an ailing healthcare system that burdens the economy. One such option would be the 1 Care scheme. Given the very sketchy information on how this would be implemented, one could only draw inferences from other similar healthcare systems.

Bearing that in mind, it would suffice to say that the scheme would promote the technique of “managed care” (by managed care organisations or MCOs) where the autonomy of patients is sacrificed and replaced by a predetermined set of rules.

These rules govern patient’s rights to which doctor, the type of care and the kind of medications he/she receives. Many of us are aware of this has been given much focus in the previous attempts to describe the proposed health system in the media.

This has, in the past, led to reprisals from the public dissatisfaction due to denial of care stemming from government legislation to tight labour rules that restricts the access one has to healthcare options. Employers would then offer private health care plans (which are private insurance plans) to fill in this vacuum so that employees could afford all available treatments. Ultimately (and to the contrary of cost containment), this incident would give rise to the ballooning of medical expenditure in the country.

Free treatment for all, really?

Unless the full blueprint is made public, one could only hypothesize the magnitude or the process of financing involved in the 1 Care scheme, which is the crux of understanding how the whole system functions.

The population might be divided up to two broad classes namely:

1. The general public;

2. Concessional patients (the ageing public, citizens below the poverty line, disabled/handicapped).

It will be compulsory for all working citizens of the general public, who have wages within the taxable bracket, to pay 10 per cent of their earnings as contribution necessary for the funding of the scheme.

Remember that this 10 per cent tax does not mean that one is entitled to the type of care, it is just a contribution that is used to pay the wages of the physicians and other miscellaneous expenses (purchase of new equipments or subsidising the concessional patients etc.). This will be collected as federal taxes.

Secondly, to be amenable to treatments within the system, the general public will have to take up an insurance policy (social health insurance). Treatments within this system will be closely regulated by MCOs which could mean that a patient might not be covered for a wide range of interventions (eg. optical surgeries, prosthesis, aesthetics, etc.).

One burning question: Is the scheme really free so that it provides universal healthcare in a similar vein to the current system? Will drugs be free now that payments have been made by contributing to taxes and insurance schemes? Read on carefully.

So much focus has been given to the taxable amount that we need to contribute but the society has become oblivious about other aspects of the mandatory payments that one has to make in order to get the full package of services available. In summary, this would be the likely formula for the 1 Care scheme:

Social health insurance (SHI) + General taxation + minimal Co-payments for a defined Benefits Package

The fundamentals of SHIs and general taxation have been explained in detail earlier. What are copayments and benefit packages that are also an inherent part of the formula though?

Of copayments, benefit packages and additional private health insurances

Copayments are payments that have to be made by patients when their treatment has exceeded the threshold tolerated by the health scheme. Thus, a patient has to fork out a certain amount of money once the treatment requires more financial assistance due to the nature of their illness.

Benefit packages seem define the type of insurance from which special group within the population will be stratified according to deserve exemption from payments or will have their treatments partially subsidised.

Extrapolating from the statement above, even the casual layperson would demand an explanation by posing several questions below:

1. It was said that free treatment will be given to all. But what are these copayments, then?

2. Will there be copayments for drugs? Is there a minimum pricing policy?

3. Which class of society will be eligible to total subsidy and exempted from all payments?

4. How will the general public gain access to other treatments that the SHI does not cover?

To minimise copayments, steps will be taken to provide cheap but “equally” good quality drugs or services determined by the MCOs. This is called the minimum pricing policy, a key policy issue that has been very much in the shadows since the planning of 1 Care policy.

MCOs will only allow more patient autonomy if they are willing to endure an additional cost by purchasing an additional private insurance. The results would be:

1. Patients will now be provided with the added benefits which are not covered by the SHI policy;

2. Patients will be able to then choose doctors and types of procedures (dental/optical/physiotherapy that was previously not available in the SHI scheme).

Rise in public health care burden secondary to rise in market demand

The trend of an increase in purchase of additional private health insurance will influence the increase in demand of services as a whole. With the access to an affordable yearly insurance premium, the growing population will have a lowered out-of-the pocket price to pay when seeking medical treatment. This will directly lead to the increase in market demand for health care services for the medical needy and indirectly cause the sudden surge of prices for medical services.

With the increase in slow increase in inflation rates in Malaysia (upward trend towards the level of 3.3 per cent in December 2011), larger spectrum of the working population would be pushed into the higher marginal tax brackets. This would often leave citizens with lesser disposal income for their utilization.

In line with this scenario, many tax payers would prefer out-of pocket medical expenses be paid before-tax ringgit than after-tax ringgit (which is subject to tax imposition) by purchasing health insurance. Thus, this will inexorably increase market demand and simultaneously increase prices of medical services, especially if it is poorly regulated and unprepared.

Reeling from the aftermath


Faced with rising medical expenditure, the federal government will be dogged by limited and painful options.

1. Raise the 1 Care payroll tax and incomes taxes on the non age to sustain the failing 1 Care scheme;

2. Necessitate higher premiums for 1 Care among the aged and increase their deductibles and copayments;

3. Reduce payments to hospitals and physicians

The full brunt of the burden will be directed towards the public if the system goes awry. Physicians will opt out of the 1 Care scheme as their fees will be slashed to lower levels. Patients will then need to pay higher out of the pocket settlements to their doctors who are no longer under the 1 Care scheme.

The aged and the non-working class, who have little or minimum wage, will have to face a less forgiving reality that their benefits to subsidy will be greatly reduced.

The working population, with already rapidly diminishing disposal income will find it extremely difficult to come to terms with a scheme that requires them to be taxed higher and receive very little benefit from such health policy.


It is time that the government stepped up to the plate and educates the nation on their intentions behind the 1 Care Scheme. Let it not be a half baked policy reminiscent of the recent SBPA debacle (that still remains unresolved till this date) as the stakes are much greater and bigger calamity looms if the scheme is not reviewed with due diligence.

It would be pertinent, for the time being (while 1 Care scheme is being mulled upon), that the following recommendations be considered:

1. Assess the agent status of the majority of practitioners (whether they are they are perfect or imperfect agents for the proposed health care system)?

2. Take all steps possible, and in a transparent manner, to convince the nation regarding the relevance of the 1 Care Scheme.

Meanwhile and until it is acceptable to the public, minor tweaks or reforms could be made to the pre-existing healthcare system to make its function far superior than at present:

1. The symbiotic relationship between health care provider and patients is strongly encouraged in the hopes that patients themselves could be an active participant (and agents of cost reduction) in the system;

2. The reduction in over-reliance of services provided by the privatization of healthcare, thus curbing progressive increase in market prices by decreasing the percentage of the population who seek inexpensive medical treatment (due to insurance premiums and lower out-of-pocket payments), which could be prove to be economic vicious cycle;

3. Corporatisation of health care services (rather than a full change in the health care system) permits better operations management and greater accountability of a highly complex organization such as the primary health care system;

4. Careful and gradual integration of new information technology advancements to the pre existing service delivery system (e-mail consultation for example) which could ultimately reduce cost and lead times.

  1. #1 by drngsc on Wednesday, 8 February 2012 - 8:33 pm

    Good. Interesting notes. More attention to 1Care, some correctly, and some not so correct. Of course, I am basing it on the 1Care concept paper 2009, in combination with the ETP 2010.

    Please come and debate with us on 12th Feb 2012, 4-6PM at Global Business and convention center, P sec 19/1. The event is the Selangor / KL Healthcare Public Forum.

    Basically, they want to make healthcare a business. You can create Wealth from Health. Previously, Health is Wealth.

    We need to change the tenant at Putrajaya. 1Care is an important people’s issue. GE 13 is coming. It is our best chance. Let us all work very very hard.

  2. #2 by monsterball on Wednesday, 8 February 2012 - 8:51 pm

    Malaysians at large are viewing all caring and sharing proposals with suspicious minds….to divert attentions away from the most important issues…corruptions and murders….so many unsolved issues.
    It is like telling all such thing as billions and murders…and all PR politicians are liars….OR…telling Malaysians…forget the past…give them a change to change for the better.
    In that case…all criminal pending murder cases.. corruptions…robbers and thieves..cases….including all prisoners should be released.

  3. #3 by Winston on Wednesday, 8 February 2012 - 9:26 pm

    This long winded article makes things even more blur-blur!

  4. #4 by Loh on Wednesday, 8 February 2012 - 9:53 pm

    ///It will be compulsory for all working citizens of the general public, who have wages within the taxable bracket, to pay 10 per cent of their earnings as contribution necessary for the funding of the scheme.///–

    Health services now provided by the government come from government taxation, and it might not even equal to 10% of the total taxes collected. Some tax payers do not pay 10% in their taxable income. Now 1-care demands additional compulsory payment of 10% in income taxes. Are not these people overtaxed to fund the scheme?

    If the scheme is run by the government, one can reason that the government needed more resources. In that case, more taxes should be collected in the normal income tax scheme. But the money collected will be channeled through a ‘private company’. This is like government using law to force its citizens chosen by the government to pay the company to benefit some citizens visiting private doctors. As it is citizens are free to visit government clinics almost free of charge. In allowing people to visit designated private clinics of 1-care’s choice, 1-care provides only one additional doctor to each citizen. For that convenience, the selected victims of government had to part 10% more of their salary to 1-care, in addition to their normal income taxes. This is daylight robbery!

    The current health services, deficient thought it might be, at least provide health care to whoever chooses to visit government hospitals or clinic. There is no need to get private sector heath service providers mixed up with government health schemes. The government has no responsibility to improve the business opportunities of private health providers. There should be competition between public and private health services so that the costs of health care would come down, and public clinics and hospitals would not be overcrowded. Buying health insurance should be a personal choice. It is unconstitutional to mandate that citizens should buy health insurance, merely by living in the country, and much worse when the insurance premium, the 10% surcharge for health pay for the benefits of others. This is different from the government utilizing government funds to pay for health services for their citizens.

  5. #5 by monsterball on Thursday, 9 February 2012 - 9:11 am

    Winston…the writer is putting out the facts and argument.
    Blur is what Najib hope the majority ordinary Malaysians should become and have doubts..then vote for no change.
    Some comments are meant for scholars like the 2 million young Malaysians to digest…and weigh the pros and cons.
    Old guys like me…will vote for change for even if one supports BN…55 years is just too long.
    Will you wear any 55 years old clothings or drive a 55 year old car…you own?
    Only people from day one born and now 55 years old whose brains are captured by UMNO b to think that party is next to God to protect them..will not change…and naturally..there will be some minorities liking the idea to rub shoulders with the Devil for a piece of the cake…as their puppets and stooges.
    As such…ignore and be clear minded…to vote for change..which is the sensible thing to do…as a responsible Malaysian for country and people…and your love ones.

  6. #6 by dagen wanna "ABU" on Thursday, 9 February 2012 - 9:17 am

    Umnoputras’ greed is actually a very fast growing demand on the country’s coffer. The growth is much faster then the growth of the country’s economy. So tax collections from citizens alone are now no longer sufficient for umno to operate the business of governing the country, to work the economy and to feed umnoputras’ greed. So this scheme is yet another scam to squeeze more blood out of people’s bones to feed those blood sucking umnoputra vampires.

    Ini dia makna sebenar kasi gua u punya nambikei.


  7. #7 by Loh on Thursday, 9 February 2012 - 2:28 pm

    The Health Minister LTL said that it was not true that taxpayers would be asked to pay a total of 10% of their salary to 1-care. Of the 10 % salary-based deduction expected in the 1-care budget the government would pay 4% and employers 3% so the employees would be asked to pay the balance 3%. LTL said that private health services providers are expected to treat sick patients (Whatever he meant by that, it is clear that the government intends to include private hospitals and clinics into government services)

    based on what LTL said, if the government pays 3% to 1-care, does it mean that the Ministry of health will not get government funds to run its health ministry? Or is the 3% an additional payment to 1-care over and above what it pays to run the health ministry and government health services? If it is the latter, why not use the money to improve public health services?

    The employers contribute to what the employees pay for their health insurance premiums so that the employees can claim their health care costs from the insurance company. With 1-care in force, does the government expect the employees and employees continue paying their health insurance, and in addition contribute to 1-care so that the employees can continue to use the private health services. That amounts to make compulsory contribution to 1-care?. This is double taxation.

    Clearly, the employers would not be willing to pay health insurance premiums to two agencies, the private health insurance company and the government for 1-care. It would end up with employees losing their health insurance cover for seeking health services in the private sector. As they are entitled to avail of government health services, why should they pay premiums, on top of income tax, and yet be subject to 1-care rules for seeking health services?

    LTL said the the details on 1-care scheme is still being worked out. Before the Ministry work on the details, it should ask what benefits would making private health services part of government health services bring to the persons who are expected to pay for 1-care?

    Private health services providers can only improve if they have to compete. Why does the government deny the people the right to buy their own health insurance? By forcing employees to pay any money for 1-care premium, the employees have simply lost their money to seek insurance cover from the company of their choice. Thus the government denies them a free choice.

    Making 1-care compulsory is equivalent to making centrally planned health services. This is communism!

  8. #8 by raven77 on Thursday, 9 February 2012 - 7:54 pm

    Heck…today the blinking DG and his sidekicks are singing a different story compared to Liow…

    Hello Liow…you lying ..again…?

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