Malaysian health reforms socio-economics: Part 5

— David KL Quek
The Malaysian Insider
Feb 11, 2012

FEB 11 — Why the need for Health Reform now?

This is the question that has been posed by many people. What indeed are the key reasons for the government to embark on such a radical transformation of our health system? There is no easy answer. But I would venture some socio-economic and health economic possibilities.1

Although one cannot discount or exclude political reasons or even patronage-linked considerations, I would not wish to embark on this line of speculation, because essentially this would only detract from the real issues at hand. Also, it would be hard to prove what are at best, innuendoes and almost surely shaped by partisan motives and beliefs. But it would also certainly be impossible to allay public fears and anxieties that these sorts of political interjections might play a role in any government policy makeovers. So perhaps, these possibilities should at least be highlighted so that they might be forewarned and prevented from hijacking such a monumental policy shift for personal or partisan reasons.

Major reasons for this proposed health reform are: widening public-private disparity in healthcare delivery; attempt to slow down rising healthcare costs; government policy shift to reduce health care subsidy; implementing W.H.O. mandate to provide so-called universal coverage for health; social health insurance to tap into another copayment mechanism for healthcare payment; and forming an autonomous national health authority.

Widening Public-Private disparity in health care delivery

I think that thus far, perception-wise there appears to some official discomfort that the two disparate arms of our health system—one publicly funded and the other privately so—seem to be widening in their capacities and efficiencies at delivering health and medical services.

Perhaps, there is that unspoken belief even among the government officials that the privately funded sector appears to be superior or at least more effective at delivering healthcare for the public, albeit at a higher price. But, the health ministry has seldom, remotely and reluctantly acknowledged this. Instead, there have been highlighted public complaints of exorbitant charges, costs, or other mistakes on the part of private facilities so much so that a raft of special laws had been enacted to regulate them, i.e. the Private Healthcare Facilities and Services Act (1998) and the Regulations (2006).2 There have also been raised concerns that GPs are poor at chronic disease management, which many private doctors have debunked and found discriminatory without proof.3

Yet, we know that the public sector health care delivery has been at best checkered and often notoriously congested, that its efficiency has been called into question time and time again. Considering the huge volume of patient turnover seen by the public health sector vs. its limited resources and bureaucracy, this is not so much a criticism, but a reality-based commentary. I believe that under the circumstances, the public health sector is functioning the best it could, although one can argue that there is much that can be improved and made more effective and productive. Moreover, staff and personnel migration to the private sector has caused difficult manpower and expertise problems at maintaining competency and safety of medical services for the less-endowed public users of these services.

So like it or not, there is in reality some inequity in access, where the public sector patients appear to have a lesser or more delayed (possibly less senior and/or experienced specialist care) access to some of the more special medical or surgical services.4 Such a disparity to a certain extent, poses some degree of unfairness on the system as a whole, and creates perhaps a 2-tier approach for our patients—one for the poor and the other for the better-off.

So there is this wish to consolidate and streamline the system so that these two streams could be integrated to provide greater ‘solidarity’ for our rakyat without the need to consider the ability to pay. This seems to be the ideal.5 But in reality perhaps this is pushing fairness and equality too much. As I have tried to explain, our system has indeed an inbuilt pro-poor mechanism that is progressive, relatively fair and to some degree based on cross-subsidisation on the part of those who can afford to pay more in the private sector. Conversely, the government and the public sector cater to those who are poor or who have less disposable household income, albeit with some inconvenience and possibly some unavoidable delays due to rationing economics and triaging of services based on need and urgencies.

Attempt to slow down rising costs of healthcare

There can be no denying that healthcare costs are rising everywhere. The question is whether this health cost escalation is more disproportionately so in Malaysia. I have argued that this is not altogether true. Most Malaysians can afford our current healthcare services—each according to their means—although sometimes begrudgingly!

We have relatively low household expenditure on necessary or catastrophic healthcare services, with arguably the lowest tendency toward medical bankruptcies in the entire Asia Pacific region.6 So the fear that our relatively high out-of-pocket (OOP) payments for healthcare is probably unfounded and not based on the research data available.7 I would challenge our health officials to provide proof that we indeed have a problem with excessive OOP payments that contributes to household impoverishment.

Perhaps more realistic is the policy-shift by the government to consider healthcare as a capital-intensive and resource-consuming ‘unproductive’ economic activity, so much so that the budgetary allotments appear to be reaping low or no returns. Increasingly there has been official talk that this healthcare budget is too much of a ‘subsidy’, which could be reduced in fiscal monetary economics consideration. I argue that this is actually a government prerogative to provide as a mandatory social good, as part of all good civil governance. This is a must in ensuring the basic tenet of human rights to health! The 2 per cent of GDP spent on healthcare, I would argue is a necessary social good, which the public demands. More should and must be allocated.

Government policy shift to reduce health care subsidy

The budgeted amount for health care is simply too low.8 It is argued that the lack of concomitant increase in allocation from government tax revenues over the years, is what has made that proportion of health care spending appear as if there was a huge surge in out-of-pocket spending for the individual or household. Of course, this is reflected and stimulated by the stupendous growth in our private sector healthcare, which was encouraged by the government since the mid 1980s. Overall, there is widespread belief that there is gross underfunding on the part of the government. And that this contributes to the lower morale and lesser competencies of the public health sector.

I have elaborated at length that we have to seriously explore alternative approaches to health equity for Malaysians, where out-of-pocket, OOP payment is just one aspect. Taken together with other health economic parameters and analyses, our health system to date appears ‘progressive’ (i.e. fair and equitable) in terms of health financing options and mechanisms. Of course, the system can and should be improved, but this might simply require some elaborate and painstaking tweaking rather than a wholesale revamp!

Indeed, will the proposed de facto ‘socialisation’ or corporatisation of our health care systems through the proposed integration of public-private sectors, be the correct mechanism to forestall the trajectory of escalating health care costs, while promoting health care access and equity as envisioned by the government?9

Or, would allocating or injecting more public funds into the public sector to boost services be the more immediate and more cost-effective approach towards increasing universal access and widening the already available basket of services to the public, at little or no cost? After all over several decades now the government has only been spending just around 2 per cent of the nation’s GDP toward health care. What if this allocation were to be increased to say 4 per cent, even it this means diverting or cannibalizing some funds from other areas such as defence, or other non-critical services?

Healthcare subsidy would almost certainly benefit more people as a whole, while increasing healthcare accessibility without the threat of inability-to-pay. Our public increasingly feels that our tax revenues could be put to better and more sensible use, and would certainly welcome such an increase in healthcare funding.

I believe the public will consider this as a generous bequest from a prudent and caring government. This will stimulate growth and capacity for the public sector and probably strengthen the delivery of services to the public especially those in the lower income stream, so as to narrow the perceived gap of public-private disparities. When this sector is improved, the private sector would be forced to compete even more aggressively and cost-effectively so that overall, the delivery of health services across the board would be enhanced!

So what about this obsession with our out-of-pocket (OOP) payment for health being too high? I am not particularly impressed about this risk, taking into consideration the peculiarities within our Malaysian health system.

Can medical bankruptcies or impoverishment be prevented if our out-of-pocket payments are reduced enough, through another mechanism of healthcare reimbursement plan i.e. an additional compulsory tax of sorts, via the social health insurance? Other neighbouring countries such as Singapore have even higher OOP payment percentage but have done well.

WHO’s recommends Primary Care-led Universal Coverage…

This appears to be one of the main reasons, our health officials feel we should show solidarity with global aspirations. However, the W.H.O. is essentially more concerned about universal coverage and access to health care for the underdeveloped nations around the third world. Arguably these levels of development of health systems have been way below our own. These arguments generally do not apply to the more developed first world nations.

The different W.H.O. officials whom I have met and discussed with have also cautioned against too drastic a health reform, urging instead for more public consultations, systematic pilot projects as well as improving tailored systems and delivery based on our strengths. Some have urged for graduated evolution of reform because there is no system the world over that is the right one for healthcare delivery. Local and regional conditions and peculiarities should be considered and factored in.

In fact Dr Margaret Chan, the W.H.O. Director-General has said that ““no single mix of policy options will work well in every setting… Any effective strategy for health financing needs to be home-grown. Health systems are complex adaptive systems, and their different components can interact in unexpected ways. By covering failures and setbacks as well as successes, the report helps countries anticipate unwelcome surprises and avoid them. Trade-offs are inevitable, and decisions will need to strike the right balance between the proportion of the population covered, the range of services included, and the costs to be covered.” Thus, no ‘one-size-fits-all’ model exists for the perfect health care system!10

It is true however, that the W.H.O. has been big in urging for a primary care-led health delivery system.11 This is underpinned by economic considerations that the primary care-led health initiative can help slow the trajectory of healthcare costs, by serving as a gate-keeper and helping to ration healthcare to meet finite healthcare resources. It is argued that when patients have unfettered access to secondary and tertiary care at will and on demand, specialist care often trumps cost considerations because, health needs almost always carry unregulated individual moral hazards and conflicts of interests!

Moreover, with the primary care-led system, some degree of orderliness and rationing can help provide at least a modicum of basic healthcare services for everyone, the quantum or the size of the basket of services would necessarily depend on the capacity of the state to provide, but would need constant negotiated enhancement over time.

What about for Malaysia? Our GP services already cater to about 62 per cent of all the primary care needs of the population, even if this was via OOP payment mechanisms; while the public outpatient clinics cater to the other 38 per cent of the poorer population. If the public clinics cannot cope with the patient load, it has been argued that the GPs should be roped in to help provide the decongesting exercise. The public sector can actually purchase GP services to help offload the patient congestion at public institutions. This is actually the mechanism of healthcare partnership in most of the European health systems from France to Germany. It is in the finding of workable solutions and bureaucratic reimbursement mechanisms that is at present holding back this potential partnership.

Social Health Insurance and Authority, another GLC?

What about having a social health insurance at this point in time? Are Malaysians ready for this form of individual or family-group taxation i.e. contributing towards a community-rated health insurance scheme, which will be run by an appointed autonomous authority that will control and disburse all funds from ‘womb to tomb’ for all health-related problems? Not every health policy expert agrees that SHI is superior to tax-based health payment mechanism, indeed SHI have many detractors.12

Many countries such as Australia, Canada, Finland, Ireland, New Zealand and the United Kingdom have maintained predominantly tax-financed systems since the 1960s. In fact, the NHS of UK is almost 88 per cent funded from tax revenue allocations. Other countries that have maintained a SHI system since the early 1960s, includes Austria, Belgium, France, Germany, Japan, Korea, Luxembourg, Mexico, the Netherlands, Switzerland and Turkey. One major criticism about the SHI model is that healthcare spending per capita tends to rise more than tax-based health systems, although achieving less coverage.13 These gaps and inequalities in coverage in SHI systems are likely to translate into inequalities in per capita health spending, which in turn produce below average levels and delivery of health care. In fact, some countries improve their universal coverage only when they switch more toward tax-based systems of health financing, e.g. southern European countries.14

Are Malaysians ready to relinquish control of their health dollars to an independent authority, which is sanctioned by the government? Is this one other form of a GLC (Government-linked corporation), which could potentially be an affirmative-action patronage-linked connotation? This is not likely to persuade many Malaysians towards its acceptability. Why empower another huge conglomerate, where we cannot control, but which can limit our choices while also costing us more immediately?15

Can we accept perhaps a more limited and constrained version of health care access, but which would provide a modicum of guarantees against the vagaries of catastrophic illness, so that as a whole, our eventual health care costs would be lower in the long run?

Can we accept that there might even be some reduction in the basket of healthcare services, medicines or therapies, which are deemed too costly or not ready to be included? How much copayment would we be willing to accept while we are already mandated to contribute some percentage of our wages toward this Social Health Insurance?

Would Malaysians become more patient and accepting that some non-urgent medical care might not need to be sought immediately, every time? That, many ailments could be safely waited upon, albeit with some slightly prolonged discomfort and possibly pain, so as to preserve and spare our finite healthcare resources more efficiently?

Malaysians would have to learn and accept that this is the usual response time for most ailments, which are non-medical emergencies. But changing such ingrained mindsets take time, and would need the appropriate inculcation of values and buy-in options from the public. It would be foolhardy to push through such radical reforms that could potentially disrupt our hitherto vaunted and respected even if imperfect, health services!

Are Alternative Health Reforms Possible?

Perhaps, we should work towards some structure of reform in a more gradual manner. Let the system evolve by setting up pilot projects of change first within the already hugely subsidized public sector. For our civil servants and their dependents, they could be absorbed into this enhanced system, where the general government revenues can be allocated more concretely. Perhaps, the government could start some SHI model at the same time, thus involving some 1.2 million civil servants and their dependents, to see if this manner of co-contribution to some risk-pooling insurance could work well.

Other private sector companies would necessarily be viewing this development with keen interests and they too could be incentivized to participate or join in voluntarily, if and when they see the practical and cost-benefits of the ‘new’ system, for their own employees. However, we must caution that they should not be coerced into accepting some basket of health services for their charges, which are inferior to what is currently available–change must be for the better and not the other way round! It is critical that the transformed public sector is seen to function seamlessly and competently, so that those outside its reach would feel justified that this is the possible better option.

Currently, most companies big and small, purchase some forms of company assisted health insurance or some negotiated empanelling of GP clinic groups to provide healthcare benefits for their employees. These have been serving most companies well all this while. However, as with any new model it is possible that in time, these companies could see the benefits and preference for the government initiative. Then over some decades perhaps, this could be expanded to include more and more of our citizens, because this is indeed the better way forward. This would ensure gradual buy-in on the part of the public, when they can be assured that the option of SHI is the best method of health care reimbursement for most nations. But let the rakyat have that choice and make it themselves!

Implications & Concerns of Single Payer Gate-keeping Primary Care

Malaysians are accustomed to our current healthcare system where they can consult or even change any doctor or specialist at will, when they fall ill. It is true that sometimes this can be a costly exercise, which has led to duplication of services, investigations and wastage of unconsumed medications and lack of continuity of care.

However, it is debatable whether these doctor hopping or shopping practices among some of us, are such a major problem that we have be devise an entirely new scheme to curtail this. Would this make much sense if only a small minority does this, or is this simply a command or arbitrary health economic measure that the government wishes to impose, just because it can?

Under the new proposed 1Care system, unless deemed necessary and referred by a gate-keeping primary care doctor, any other self-referral to another non-designated doctor or specialist would not be reimbursable. In other words, you will be required to pay out of pocket if you choose to bypass the new system, and see second or third opinions when not referred by designated doctors. Remember that these doctors have been contractually advised and are also controlled by the new authorities, to only refer when they think is necessary, and that their performance or failure to carry out some of these measures, might also not be reimbursed or might even be penalized!16

Knowing the penchant for Malaysians to be quite critical and choosy, and in some ways empowered, there is that distinct possibility that many people might continue to do this and thereupon incur even more self-paying for services that they demand. Can we wean the public out of this kind of thinking or practice? Or should we allow the free market to determine and dictate the terms of reference of how they can access their own preferred doctor, based on the concept that our rakyat should have the right to decide and to choose?

What if gate-keeping doctors fail to be as competent or as satisfactory as they are supposed to be? Especially, when these designated doctors are often not from personal or free choice. Would there be any recourse to any form of dispute resolution or arbitration for change or complaint? Could this lead to uncalled-for delay of diagnosis, treatment or even serious consequences, which the system will tolerate? Would medico-legal challenges be allowed if negligence and poor outcomes occur, and would patients have a choice to pursue some remedial recourse for themselves or their loved ones?

During the 2010 General Practitioner’s Summit, some 300-odd doctors spent 2 whole days debating their roles and the merits and concerns about the proposed 1Care health reform.17 While most agree on some consensus of supporting a primary care-led health system, many were very concerned as to the scope and extent of the far-reaching reform proposals. Gate-keeping might be an acceptable model to adopt to regulate unwarranted access to specialist health care referral, but flexibility was considered critical for the public to buy in.

There were also fears of the mandatory social health insurance, the single payer system, capitation or global budget fee arrangements, and the need for the GPs to be under layers of bureaucrats whether family medicine specialists or so-called quality or safety officers from different agencies, which could only increase logistic as well as running costs! Ultimately there is fear that higher costs of practices would be passed on down to the public and the patients.18

So, are Malaysians ready to evolve into a system of healthcare, which is controlled and restricted in large measure by a designated family physician or GP, i.e. primary care-led, and an overarching National Health Authority? What about checks and balances of misuse, abuse or simply technical glitches from venal or incompetent practitioners or armchair medical managers?

These are the concerns that are difficult to dispel. Because the possible limitations of the proposed single authority could easily stifle access and promote extraordinary expenses out-of-pocket for a sizable portion of our citizens, who might find this single payer mechanism too tiresome and bureaucratic, what with the enforced gate-keeping and possible inefficiency adding as a serious stumbling block to free choice!

If it ain’t broke…

Again, the system isn’t broke, and public acceptance of our current dichotomy of services appears strong without the compelling need to change and/or abolish this functioning system at this point in time.

With an established private sector system in full flight, the 1Care reform plans have cast distracting shadows on the future of private health facilities and private medical practitioners. Are we resorting to some form of de facto ‘socialization’ or underhand corporatization of our health services? Is this compatible with our free-market economic practice, with our established concomitant and much vaunted public health sector safety nets? Would this plan spook investors in the health care sector? Would this also contribute towards more talent migration and capital flight? Most importantly, would the public actually benefit or suffer more from such a radical change?

Or, is this an attempt to create another huge quasi-corporatisation exercise worth tens of billions of ringgit? Still, is this reform going to concentrate all the nation’s health resources into the reach and control of onemega-conglomerate or government-linked corporate body? Would this once again stifle true competition and allow rent-seeking patronage practices now so entrenched and yet so reviled by our enlightened citizens?19

There is great fear that by concentrating all the power, the financing and the discretion to access healthcare in the hands of one authority, many people could be worse off, and might be shortchanged even further due to bureaucratic or possibly biased practices and flawed implementation. Ironically as feared by many, we might be forced into paying more than we have to date, and yet might get much less in return for our healthcare needs, in the so-called reformed future!

Preferential and selective referrals or designations of primary care doctors are also feared possibilities, in sharp contrast to our current approach where this is decided by free choice. To make matters worse, if one bypasses this gate-keeper pathway to healthcare (which we fear will happen, if dissatisfaction, glitches and delays occur with the new system), then one is saddled with having to pay out-of-pocket once again, thereby defeating the premise of why this reform is needed in the first place. Excessive out-of-pocket (OOP) payment is one of the major why’s the proposed health reform is touted to be necessary in the first place, the aim being to abolish or reduce this aspect of reimbursement!

So perhaps for once, before this actually materialize, the public must be protected from poorly conceived and potentially commandeered plans to benefit questionable parties, which could drastically impact Malaysians for the worse!

There remains serious confusion, uncertainties and huge but foreboding unknowns pertaining to the proposed health reform of 1Care. If our system ain’t broke, don’t change it so drastically so as to make it potentially much worse! For goodness sake, please for once, listen to the people!20

*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 donplaypuks on Saturday, 11 February 2012 - 2:13 pm

    Follow the money trail and you get the answer and real motivation for this new TAX.

    It’s estimated that a 10% National Insurance Tax will generate $44 Billion, of which $4 Billion will be the admin cost.

    At first BUMNO/BN Govt will handle it and then “Sub-contract” it out to a Bumi crony who will inject it into a Plc and become an instant billionaire (just as they did with Fomema , to a hospital group then controlled by Mahathir’s son). In the meantime, healthcare cost will become astronomical and services will go to the dogs.

    Then, BUMNO/BN Govt will bail out the listed Plc at $8 a share when the market price is $4. Sounds familiar? That’s the sick game plan!

    we are all of 1 Race, the Human Race

  2. #2 by Loh on Saturday, 11 February 2012 - 5:52 pm

    ///Dr Hasan had offered an explanation yesterday in which he clarified that RM34 billion has been set aside by the government and the private sector for this new scheme and that under the scheme all costs related to medical visits and treatments will be borne by a central government agency which will pool contributions from “the government employer employee and those self-employed ”.///–MalaysianInsider

    It is precisely the polling of resources to be managed by a central government agency that causes problems. We simply do not believe that a government agency run by the civil servants is better in managing funds for taking care of the health concerns of the individuals. Government has misused funds to the extent of giving soft loans to politically connected persons for them to use as they please. There will certainly be new NFC-type of examples if a central agency is entrusted with money given to them by 1Care. Now the government intends to use 1Care to force private sector to pay into the fund controlled by a government agency. Thus the health ministry is not doing what they do best in terms of the medical technical know how on treating the sick. The ministry is involved in managing the people, and the allocation of resources. Why should a country that believes in free enterprise choose to impose on workers and employers to pay into government fund money which they now pay to the health insurance to take care of their health services need? Worse, they are asked to pay more than their insurance premiums.

    LTL, the Health Minister said that 1Care is an upgrade. A upgrade would relate to improvement of health services provided by the government. Dr Hasan’s understanding of 1Care involves no upgrade of health services; it is an upgrade of robbery by the government of the rights of the private sector employees on how they finance their health care needs.

    The 11 technical groups should work only on upgrade of health services as mentioned by LTL. That upgrade should only be based on the budget available to them from existing government resources, without new taxes. They should only base on the expected increase in the number of patients who depend on government health services.

    With or without the 1Care all citizens are entitled to using government health services. The government should be grateful to the people who choose to go to private health services providers, using their own funds. That reduce the demand for services provided by the government. It is unfair twice over to make non-government dependent patients to pay into 1Care and yet limit their choice. Worse they are expected to pay much more than they have to health insurance company. All told, the people who do not burden the government for health care are required to subsidize a government scheme, which is most likely a scam to enrich a certain corporation who might tender for 1Care.

    1care will only come into force if BN is returned to power. All persons who are not government employees should stop BN returning to PutraJaya.

  3. #3 by monsterball on Saturday, 11 February 2012 - 10:59 pm

    Where there is an idea to squeezed money from Malaysians….you can leave it to the UMNO b experts…who keep ignoring public’s concern and questioned asked.
    Such is the “People First” policy…which is nonsense.
    It’s always “Umno First” whatever it is.

  4. #4 by HJ Angus on Saturday, 11 February 2012 - 11:11 pm

    It sounds like a good scheme to be tried out on the civil service where medical costs are very high. This will enable the insurance company, the medical profession and the patients to work out the fine details.
    After it works well for say 5 years, we can consider making it necessary for all working Malaysians; but it should be a fixed amount and not a percentage of salary….maybe the older the worker the higher the premium.

  5. #5 by k1980 on Sunday, 12 February 2012 - 7:31 am

    //It sounds like a good scheme to be tried out on the civil service..//

    A large % of civil servants are getting by on a thousand ringgit or so a month. Cutting 10% off their monthly paychecks will cause them to seek more side income. Eg. the cops will have to ambush more errant motorists who are ready to act when asked “macam mana selesai?”

  6. #6 by Loh on Sunday, 12 February 2012 - 11:00 am

    There is trust deficit of this BN government, and so we do not believe that 1Care is motivated for the benefits of the people rather than for an opportunity to milk government funds through the newly invented robbery scheme of making employees in the private sector pay for health-care-without-choice.

    If the government is truly interested to help, then it should create an in-between public and private sector health services. Public hospitals can create a separate services wing to cater to self-paying patients at professional fees about half the rate charged in top private hospitals, and with drugs sold at cost. That would be an incentives to doctors serving the government, and it would also cap on private sector health services charge.

    But would the government bother about this if there is nothing for their cronies.

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