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Health Care Financing (HCF):
What Options for Malaysia?
Pusat Penyelidikan Perlindungan Sosial Fakulti Ekonomi &
Pentadbiran, Universiti Malaya 27th. Sept 2012
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1. Background and where are we in HCF
2. Various Models 3. What’s Next?
3 Things I Want To Share With You Today…
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Background
Important for policy makers to understand how these financial
resources are generated and managed
Sustainable health care systems depends on reliable access to
human, capital and consumable resources
Securing these resources requires financial resources
Constant pressure because expenditure is increasing and
resources are scarce
Contain costs, increase funding or both
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Function of Healthcare Systems
Revenue Collection
Fund Pooling
Purchasing
Personal Health
Services
Non-personal Health Services
Provision
Financing
Source: Adapted from Murry and Frenk (2000)
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Total Health Expenditure, 1997 -2009
8,414 9,144 10,136
12,130 13,628
15,178
19,126 20,681 20,891
25,131
27,360
31,712
34,900
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5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
2009
Expenditure
Source: MNHA: Health Expenditure Report: Revised Time Series
(1997-2008) & Health Expenditure Report (2009)
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Total Health Expenditure by Source of Financing by Public and
Private Sectors, 1997-2009
1997 4,540 56.4 3,504 43.6 8,044
1998 4,879 55.8 3,873 44.2 8,752
1999 5,424 55.9 4,288 44.1 9,712
2000 6,479 55.7 5,156 44.3 11,635
2001 7,669 58.2 5,513 41.8 13,182
2002 8,310 60.0 6,278 40.0 14,588
2003 10,856 59.0 7,543 41.0 18,399
2004 11,092 55.7 8,820 44.3 19,912
2005 10,227 50.8 9,904 49.2 20,131
2006 13,216 54.6 11,012 45.4 24,228
2007 14,098 53.4 12,291 46.6 26,389
2008 16,524 54.0 14,077 46.0 30,601
2009 18,401 54.6 15,291 45.4 33,692
Year Public % Private % Total
Source: MNHA: Health Expenditure Report: Revised Time Series
(1997-2008) & Health Expenditure Report (2009)
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0.0
1.0
2.0
3.0
4.0
5.0
6.0
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
2009
GDP
Healthcare as % of GDP
Source: MNHA: Health Expenditure Report: Revised Time Series
(1997-2008) & Health Expenditure Report (2009)
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8th. and 9th. Malaysia Plan
“… cost sharing concept through health care financing scheme
will be introduced to provide consumers with a wider choice in the
purchase of health services from both the public and private
sectors. In this regard, a suitable mechanism to institute and
manage a health care financing mechanism will be implemented..”
“.. implementation of the health care financing mechanism will
further enhance accessibility and equity through the provision of
high quality, efficient, integrated and comprehensive health care
coverage for the population..”
8th Malaysia
Plan
9th Malaysia
Plan
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“… transformation of healthcare delivery system calls for the
restructuring of the national health system, both public and
private, to enhance coverage for all.
The approach will require greater collaboration between the
public and private healthcare systems to allow effective delivery,
greater efficiency and affordable costs”
“..A review of financing options that allow management of rising
costs, while ensuring that healthcare remains accessible and
affordable to the people.
This includes the introduction of cost sharing options that
allow Malaysians a wider choice in the purchase of health
services..”
10th. Malaysia Plan
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Health Care Financing (HCF) What are the issues and
challenges?
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Escalating Health Care Costs
Rising
Expectation Demographic
Changes
Changes in
disease
patterns
Diseases of life-
styles and
affluence
Emerging and
unknown
pathogens
1 2 3
5 6 7
Increase in
elderly
population
4
Labour intensive,
like “handcraft
industry”
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9 10 11
Increased
standards of
living
Pressure
of
providers
Rapid
innovation in
new drugs,
medical devices
and vaccines
Fee-for service
reimbursement
system in the
private sector
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Equity
Equity
Growth of Private
Healthcare
Brain drain
GLCs involvement in
private healthcare
Usage of private
insurance
Private healthcare providers
Out of pocket
expenditure
Utilisation of health
personnel
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Equity
“ the size of the private sector has to be one of the three key
indicators of inequity in Australian health policy..”
(Mooney, 1996)
Is this true for Malaysia?
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Hospital Beds
Medical Practitioners
2000 2011
Public
Private
Public
Private
34,573 (92.1%)
2,946 (7.9%)
41,716 (75.5%)
13,568 (24.5%)
3,021 (43.1%)
3,991 (66.9%)
25,845 (70.6%)
10,762 (29.4%)
Source: Ministry of Health, Health Facts 2012
Mixed Delivery Mechanism
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Health Human Resources, 2011
Dentists
Private Public
1,801 (42.4%)
2,452 (57.6%)
3,344 (39.8 %)
5,288 (61.2 %) Pharmacists
Nurses 24,725 (33.1 %)
50,063 (66.9 %)
Source: Ministry of Health, Health Facts 2012
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Healthcare Facilities, Admissions and Attendances,2011
Source: Ministry of Health, Health Facts 2012
Types of Facilities MOH Non-MOH Private
Hospitals Admissions 2,139,392
(67.3 % )
134,118
(4.2 % )
904,816
(28.5 % )
Special Medical Institutions -
Admission
7,570
Hospital Outpatients 18,328,343
(78%)
1,909,163
(9%)
3,505,591
(13%)
Special Medical Institutions -
Outpatients
117,960
Public Health Facilities 28,656,444
Dental Clinics 10,318,298
Ante-Natal (Maternal & Child
Clinics)
5,433,463
Post-Natal (Maternal & Child
Clinics)
556,346
Child (Maternal & Child Clinics) 7,359,129
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“In 2000, WHO ranked Malaysia 122th position in terms of
fairness contribution because of high OPP
Malaysia has met Target Indicators in Health Financing Strategy
For Asia Pacific Region, WHO (2010-2015), the criteria of
universal coverage of healthcare
Equity
Drifting apart into 2 separate
systems
Nothing to hold them together
No policy of private
healthcare
Equity
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0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
40.0
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
2009
OPP
Source: MNHA: Health Expenditure Report: Revised Time Series
(1997-2008) & Health Expenditure Report (2009)
Malaysia National Health Accounts: % of Out-of-Pocket
Payment
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Providers Amount %
Hospitals 4,989 41.6
Providers of ambulatory care 4,446 37.1
Retail sale and other providers of medical goods
2,194 18.3
Institutions providing health related services
357 3.0
Total 11,050 100.0
Cross- Classification of Household Out-of-Pocket Expenditure by
Provider of Health Services in 2009
Source: MNHA: Health Expenditure Report: Revised Time Series
(1997-2008) & Health Expenditure Report (2009)
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So, what are the options?
All the above studies recommend a National Health Insurance
ADB Health Services National Health Financing
Study by Westinghouse,
1984-85
National Health Security Fund Study by Birch
and Davis, 1987-89
WHO Consultant, Mr. JR Herms,
1997
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Other Studies and Options
Medical savings account (MSA)
Social health insurance
Earmarked tax
As recommended by Rashid Hussain Bhd. with Prof. William Hsiao
in 1997
As recommended by Insurgress Sdn Bhd, Malaysian Health Care
Deliveries and Financing System (MEDIFIS) in 2001
As recommended by UNDP NHFM Study by Karol Consulting, 2006 (did
not complete)
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3
Other studies and
options
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Key Issues in Deciding Options
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What options?
OPP and Tax
Revenue
Earmarked Tax
Medical Savings Account
National Health
Insurance
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Earmarked Tax
• More visible and used specifically for health
• Used to fund specific priority programme
• On certain goods and activities that have adverse health
implications
• Fair balance between tax revenue and cost related to
treatment
• Difficult to administer, politically unpopular and even
regressive
Earmarked Tax
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Medical Savings Account (MSA)
• Another form of dedicated tax
• Contribute to a personal savings account
• Compulsory basis for health care of that person and family
• Can avoid certain issues in traditional health insurance
schemes like moral hazard, adverse selection and cream skimming
• Subject to depreciation
• Limited capacity for risk pool
Medical Savings Account
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Social Health Insurance
• Regulated by government and law
• Compulsory coverage and premium payment
• Premiums are based on community rating and not
risk-related
• Contributions according to their means
• Pooling of health risks and funds
• Able to get access to health care and protected from financial
catastrophe associated with illness
National Health
Insurance
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Social Health Insurance (cont’d)
• Reduce budgetary pressures on governments
• Usually administered by a single national agency, the risks
are pooled country-wide
• For the informal sector, a challenge to cover them
• Promotes high-cost, hospital-based and doctor-centred curative
care
National Health
Insurance
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Conclusion (1)
Health care is a sensitive and emotional issue
Finance is the last thing one wants to think when one is
sick
Health care covers everyone within the country and those who
come into this country, visitors, migrant workers (legal or
illegal)
Everyone wants the best of health care
But at the same time, many are taking health care risks
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Conclusion (2)
Efforts at health education have not been effective
Sickness is unpredictable
Some illness are hereditary
Many are caused by environment and surroundings
Everyone wants health when one is ill
Everyone must play their role in improving their lifestyle for a
better health
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Conclusion (3)
Must Rich must subsidise the poor and healthy the sick?
Must decide what type of financing mechanism
Take incremental steps
Set-up a multi-agency team and given a date-line
Will 1CARE Healthcare Reform (based on social health insurance)
with a new national health financing scheme and delivery system
lead to a better health care system and a healthier Malaysia?
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End of Presentation Thank You
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