While cost-effective practices such as using generic medications and efficient technologies are embraced , he emphasises the ongoing challenge of balancing affordability and sustainability . He underscored the continuing tug-of-war between insurers seeking cost-effective solutions and healthcare providers advocating for patient choice and maintaining quality care standards .

Drawing inspiration from successful models in countries like Singapore , Indonesia , and India , Dr Kuljit pointed out that effective government intervention , without disrupting the private sector , has significantly improved accessibility for the general population .

He highlighted the progress made by Indonesia and India , countries with vast populations , demonstrating that thoughtful collaboration can yield positive outcomes .

Furthermore , Dr Kuljit stressed the importance of learning from global successes and tailoring those strategies to the unique needs of Malaysia ’ s healthcare landscape . He emphasised that a one-size-fits-all approach is not suitable , but rather , a nuanced understanding of local challenges and strengths is vital for crafting effective solutions .

GOVERNMENT INTERVENTION FOR AFFORDABLE HEALTHCARE

Dr Kuljit and Marimuthu underscored the pressing need for the government to play

Datuk Dr Kuljit Singh

a more active role in providing affordable healthcare .

Dr Kuljit asserts that if affordability becomes a challenge within private healthcare , the government must be crucial in ensuring public access to healthcare services .

He said a shared responsibility where the government acts as a safety net for those unable to afford private healthcare aligns with the broader goals of healthcare accessibility .

Marimuthu said : “ The Malaysian public healthcare system is under severe pressure , being overburdened by too many patients and facing extremely limited resources .

“ Two of the biggest challenges in the

TO DELVE into the underlying causes of the escalation of medical costs and medical insurance premiums and provide clarity on the matter , the Insurance and Takaful Industry Medical Cost Containment Task Force ( MCCTF ) conducted a comprehensive study on the drivers of medical costs and medical insurance premium inflation in 2020 .

The MCCTF was comprised of representatives from the Life Insurance Association of Malaysia ( LIAM ), Persatuan Insurans Am Malaysia ( PIAM ), and Malaysian Takaful Association ( MTA ). It was established following a request from Bank Negara Malaysia ( BNM ) to investigate the drivers behind the escalating medical insurance premiums .

Actuarial Partners Consulting ( APC ) was commissioned to conduct the study utilising data from insurance and takaful companies , surveys and interviews with Third-Party Administrators ( TPAs ) and private hospitals .

FINDINGS ON MEDICAL INFLATION

According to the study , the average annual rate of medical claims inflation experienced by the insurance and takaful industry continued to show an upward trend from 2013 to 2018 .

The findings revealed a significant increase in non-surgical and surgical treatment costs during this period , with non-surgical treatments experiencing a 9.3 per cent annual rise and surgical treatments seeing a 7.8 per cent increase annually .

The study attributed this upward trend to several factors , including

• Prevalence of Non-Communicable Diseases ( NCDs ) shifting treatment types .

• Regulatory changes , including the 2014 revision of the Thirteenth Schedule regulating doctors ’ and surgical fees .

• The depreciation of the Ringgit in 2015 impacted costs for advanced medical technologies . The study also identified Hospital Supplies and Services ( HSS ) as the primary cost driver , constituting 70 per cent of non-surgical treatment costs and 59 per cent of surgical treatment costs . The annual increase in HSS costs surpasses other components , contributing significantly to overall medical inflation .

Although the Thirteenth Schedule has helped control doctors ’ and surgical fees since 2016 , medical costs continue to rise due to the persistent escalation of HSS expenses . Crosssubsidisation between room & board charges and HSS costs may also influence overall pricing dynamics within private hospitals .

Addressing escalating HSS expenses is crucial for mitigating the broader impact of medical inflation within the insurance and takaful industry . Drivers of medical premium inflation Medical premium inflation is influenced by various factors , including :

• Increasing cost of care ( medical inflation ): Year-on-year rise in treatment costs directly impacts Hospitalisation and Surgical Insurance ( HSI ) product premiums . This trend is a significant driver of premium inflation , exerting upward pressure on insurance costs .

• “ Age-curve ” effect : Premiums increase with the insured ’ s age due to higher healthcare utilisation and associated risks .

This demographic factor contributes to the complex dynamics of premium adjustments over time .

• Anti-selection : Healthy individuals may seek coverage elsewhere in response to repricing exercises , leading to adverse claims experience within insurance pools . This phenomenon exacerbates premium inflation as insurers strive to maintain the sustainability of insurance pools .

• Product design : The availability of cashless and high-limit policies encourages over-consumption and unnecessary costs ; a phenomenon dubbed the “ buffet syndrome ”.

• Consumer behaviour : Preference for premium healthcare facilities further drives up expenses , as insured individuals opt for more expensive treatment options without immediate financial repercussions .

REPRICING EXERCISE

Insurance and takaful companies will periodically revise the products at a higher