The Galen Centre for Health and Social Policy, an independent public policy research and advocacy organisation based in Kuala Lumpur, says that a co-payment option in health insurance could expose households to financial catastrophe.
This warning followed an announcement by Bank Negara Malaysia (BNM) that it would require insurance and takaful operators (ITOs) to provide a co-payment option for their medical and health insurance and takaful (MHIT) products by 1 September this year.
The option is to be made available for at least one individual medical product, with a minimum co-payment amount of no less than 5% co-insurance and/ or MYR500 ($106) deductible per policy or certificate year. This co-payment feature also applies to the renewal of existing MHIT policies or certificates.
Galen Centre chief executive Azrul Mohd Khalib said in a statement, “By introducing a co-payment feature which will eventually replace existing products, insured patients could face large out-of-pocket payments beyond their means in the case of a major illness. Ironically, it could create the very situation which individuals expect to be protected from by having health insurance.”
“Household out-of-pocket payments on health expenditures currently approaching 35%, would and will jump.”
In response to comments on the co-payment requirements, BNM said that with the option, consumers can avail themselves of lower-cost health insurance products based on their financial circumstances and needs. The BNM statement said, “Health insurance plans with co-payment features are not new in the Malaysian market. It is observed that the premium/contribution level for MHIT (Medical & health insurance/ takaful) products with co-payment features is 19% to 68% lower compared to similar products without co-payment features depending on the level of co-payment. ITOs are expected to offer a range of co-payment levels that cater to various financial needs and circumstances of consumers. Co-payments are also subject to a maximum cap set by ITOs which serves to limit the amount of expenses borne by policy owners/ takaful participants.”
BNM added that to further promote affordability and safeguard consumer interests, the Policy Document on Medical and Health Insurance/Takaful Business also sets out the following requirements to be observed by ITOs:
- Co-payments shall not apply in the following circumstances:
- Emergency treatment, including in accident cases;
- Outpatient treatment for follow-up treatments arising from critical illnesses such as cancer or kidney dialysis; and
- Treatment sought at a government healthcare facility.
Life Insurance Association of Malaysia (LIAM) CEO Mark O’Dell told Bernama News Agency that customers can still decide whether to purchase a policy with co-payment or without co-payment at higher premiums.”
Echoing BNM’s remarks, he said that increasing the adoption of co-payment MHIT products is expected to help curb over-consumption of health services and control medical cost inflation that has risen by 36.3% cumulatively from 2020 to 2022.