The Health March 2021 | Page 13

march , 2021 | The Health

Rising hospital charges

Insurance companies often cite increasing medical inflation as a reason for hiking premiums . For example , the 2020 Global Medical Trends Survey by Willis Towers Watson found that Malaysia ranked among the highest in South East Asia in terms of expected increases in medical costs . The survey projected medical spend to rise from 11.6 per cent in 2019 to 12.6 per cent in 2020 .

Another report by Aon ’ s 2019 Global Medical Trend Rates Report cited Malaysia ’ s cost of medical care as having risen above the global average in recent years and experienced double-digit medical inflation at 13.6 per cent in 2019 , an increase from the 12.4 per cent in 2018 .

So , is medical inflation a good reason for raising premiums ?

Marimuthu said no studies have been done on such claims , and there was no substantial evidence to prove this .

“ All the statistics are given by insurance companies , and we are not too sure of them as no independent body or BNM have verified it .

“ Looking at the last year , there were not many claims made by policyholders as the Association of Private Hospitals of Malaysia ( APHM ) has stated that was a drop in in-patients at all private hospitals .

“ In other words , the insurance companies should take this into consideration before imposing the hike . Furthermore , all patients who were Covid- 19 positive were taken to government hospitals , and indirectly there would have been fewer claims or pay-outs in claims by insurance companies .”

Asked on medical inflation , Dr Jeyakumar said private doctors and private hospitals were no angels either .

“ Many of them mark up prices and over-investigate and over-treat when there is a third-party payer . Medical treatment should not be provided by for-profit-parties , whether insurers or doctors .

“ There is too much conflict of interest , and there is a severe asymmetry in information . Patients have great difficulty in discerning when their doctor is overtreating ,” he said .

APHM President Datuk Dr Kuljit Singh said private hospitals always tried to keep costs to the patient as low as possible .

“ People may think they have a lot of income . But it is not as much as we believe because we have a lot of expenditure to keep the hospitals up to a particular standard , including upgrading .

“ We try to reduce our cost to the patient as low as possible , and though it may look very high , it is already low enough , and we cannot go any lower than that ,” he told The Health previously .

He said medical costs were rising as most healthcare products purchased , including by the government , were bought from abroad .

“ Hardly anything is manufactured in Malaysia , except for gloves or maybe Personal Protective Equipment ( PPE ), but medication and equipment are all from Europe and the US .

“ The cost is also going higher . With the exchange rate of US $ 1 to RM4 in the last 10 years , products coming from those countries are getting expensive .

“ If we look at the government ’ s budget , they spend billions to keep healthcare growing . In fact , their budget has been going up for the last 10 years ,” Dr Kuljit added .

Average medical trend rates by Asia-Pacific countries , 2018-2020

Country

Gross cost trend Net cost trend ( of general inflation )

2018 2019 2020 * 2018 2019 2020 * Australia 3.4 3.7 3.2 104 1.6 0.9 China 9.2 10.1 9.8 7.1 7.8 7.3 Hong Kong 7.5 8.2 8.3 5.1 5.8 5.8 India 11.0 11.3 12.0 7.5 7.5 7.8 Indonesia 9.0 9.8 11.0 5.8 6.4 7.4 Malaysia 11.9 11.6 12.6 11.0 9.6 10.1 New Zealand 7.0 7.5 6.0 5.4 5.5 4.1 Philippines 5.3 7.9 8.2 0.1 4.0 4.9 Singapore 8.8 8.3 9.3 8.3 6.9 7.9 South Korea 3.8 4.0 4.0 2.3 2.6 2.5 Taiwan 6.0 6.1 6.3 4.5 5.0 5.0 Thailand 8.1 9.0 9.2 7.0 8.0 8.0 Vietnam 9.7 10.9 12.1 6.2 7.8 8.8 * Projected medical trend for 2020

Solution must be found

The General Insurance Association of Malaysia ( PIAM ) had reported that total health expenditure in 2018 was RM60.147 billion . Of this , 52 per cent was funded by the government and the rest paid by private households ( 35 per cent ), private insurance ( seven per cent ), corporations ( four per cent ) and other agencies ( two per cent ).

At the time of writing , PIAM had yet to respond to The Health ’ s queries .

So , what could be the solution to resolving increasing health insurance premiums ?

Said Marimuthu : “ There must be an independent body entrusted with this task comprising officials from BNM , the MoH , representatives from private hospitals , the insurance industry and consumers associations .

“ In some countries , they have set up an RCI for issues related to insurance so that consumers , insurance companies and private hospitals get a fair hearing .

“ In the US , there is an Affordable Care Act designed to bring comprehensive health insurance reforms , hold insurance carriers accountable for costs as well as give more consumer access to healthcare .”

Dr Jeyakumar said the government should increase its outlay on health to four per cent of GDP . Currently , it is only 2.2 per cent .

“ We need more government hospitals and clinics . Malaysian GPs should be brought into a National Health Service-like ( NHS ) system and paid by capitation .

“ However , to do this , the government will need to find financial resources . And that is a huge topic by itself ,” Dr Jeyakumar said . — The Health

Source : 2020 Global Medical Trends Survey by Willis Towers Watson

Dr Jeyakumar

Dr Kuljit

Insurance companies often cite medical inflation as a reason for hiking health insurance premiums . The hike could exceed 30 per cent for some policyholders .

However , policyholders feel insurers should provide a more precise explanation and provide details for the steep rise in premiums . Their reason is often quite vague with no details and does little to convince policyholders .

Prudential Malaysia cited rising healthcare costs and increases in medical treatment costs , and technology advancement as the main reasons .

It informed policyholders in a note that medical inflation had registered double-digit increases in recent years .

“ Having carefully considered the rise in healthcare costs , we will be revising the medical insurance charges .”

Similarly , AIA told policyholders that it reviews its medical plans regularly against healthcare costs and noted that these costs continued to rise at a double-digit pace .

“ With the number expecting to rise further and outpace the general inflation rate , we have to make the necessary adjustments to your medical plan ’ s premiums so that they can keep up with healthcare inflation ,“ it informed policyholders .

In its note to policyholders , Great Eastern said the increased premiums were due to growing medical costs and medical services utilisation .