Living with a rising medical inflation

The healthcare inflation rate in the country is projected to rise to 12.5% this year, according to MD

By DASHVEENJIT KAUR / Pic By BERNAMA

Malaysia posted the third-highest healthcare inflation increase in Asia after the Philippines and Indonesia, according to a survey, and the cost is expected to continue to rise and hit the low-earnings groups.

Marsh Insurance Brokers (M) Sdn Bhd MD and deputy CEO Sean Chou said the country’s medical inflation has been rising from 11.5% in 2016 to 11.6% last year, and many insurers expect the figure to rise again next year.

“The healthcare inflation rate is projected to rise to 12.5% this year,” he said on the sidelines of Marsh Insurance Brokers’ conference in Kuala Lumpur yesterday.

Malaysians are already complaining about the high healthcare costs from hospital admissions, to surgeries and medications.

Many resorted to seek medical services from government hospitals due their lower price compared to private hospitals.

Medical-related associations had defended the rise, citing massive improvements in medical facilities and technologies.

“The advances in healthcare and the higher cost of drugs and treatments play a role in the rate rise,” Chou said.

The increasing investment by healthcare providers and costly equipment are among the factors driving the inflation.

The results of the survey by Marsh Insurance Brokers showed all the participants in Malaysia expect the predicted change in rates next year will be higher than 2018’s projection.

The annual medical survey was conducted between February and March 2018, involving 63 countries. Asian countries involved in the survey are China, Hong Kong, India, Indonesia, the Philippines, Singapore, South Korea, Taiwan, Thailand and Vietnam.

The survey also identified that a rising number of people getting sick, an ageing population and costly technologies are the top three reasons behind the rise.

Chou said employers have an important role to influence the rise in healthcare inflation.

“There should be equal responsibilities between the employees and corporate employers in curbing high healthcare inflation,” he said, adding that the focus should not be wasted on containing costs as medical premiums are expected to rise.

Chou said employers should have the right incentives and health culture to positively impact the workforce health as a way to reduce medical service demands.

On affordable health insurance, he said Bank Negara Malaysia’s (BNM) effort to come up with plans to fit the needs of the bottom 40% group is commendable.

“To increase the awareness, targeted needs has to be understood because insurance is still not appealing to large segments of our population who are still devoid of any form of protection,” he added.

BNM last year launched “Perlindungan Tenang”, an affordable insurance and takaful scheme aimed at getting 75% of the population and micro enterprises insured by 2020.

Targeted to reach out to eight million working-age people and over 700,000 micro enterprises, the initiative is a collaborative effort between the central bank, the Life Insurance Association of Malaysia, the Malaysian Takaful Association and the General Insurance Association of Malaysia.