The HEALTH | July-August . 2024

Transforming healthcare financing through co-payments

BY ZAFIRAH ZAFRUDDIN

This signifies a shared responsibility between the insured party and the insurance provider in covering medical expenses .

This initiative is designed to enhance the affordability and sustainability of MHIT products . The introduction of co-payment is also a strategic move to manage the medical cost inflation in Malaysia , which soared to 12.6 per cent in 2023 , significantly higher than the global average of 5.6 per cent .

Starting from Sep 1 , 2024 , Insurers and Takaful Operators ( ITOs ) are expected to introduce co-payment options .

However , ITOs may still offer MHIT products without co-payment features to new consumers , providing them with the flexibility to choose based on their financial needs .

BNM has provided reassurance that existing policyholders with MHIT products that do not include a co-payment feature can maintain their current coverage upon renewal . This ensures a sense of security for policyholders .

ITOs are expected to offer a range of co-payment levels to meet the diverse financial needs of consumers . This variety ensures that consumers feel catered to . Notably , MHIT products with co-payment features generally offer reduced premiums .

It ranges from 19-68 per cent lower than similar plans without copayments . However , this is based on the co-payment level , which is the share of medical costs that the insured agrees to pay .

To safeguard policyholders from incurring excessively high out-ofpocket costs , a maximum cap will be imposed on co-payments . This cap will limit the highest amount that patients must pay themselves for medical services .

The Policy Document on Medical and Health , Insurance / Takaful Business specifies that co-payments will not apply in certain circumstances :

• Emergency treatments

• Outpatient follow-up treatments for critical illnesses

• Treatments at government healthcare facilities The following prerequisites are to be observed by ITOs , who are authorised to waive co-payments . This means that ITOs can choose not to impose co-payments on certain policyholders if it is deemed appropriate given their circumstances .

CHOICE AND COVERAGE

Life Insurance Association of Malaysia ( LIAM ) CEO Mark O ’ Dell reassures that consumers have complete freedom to decide whether they want to purchase an MHIT plan with or without co-payment .

According to O ’ Dell , the co-payment feature has been in the Malaysian market for some time now . Some ITOs in Malaysia have previously offered products that include a co-payment feature . This indicates that the market is familiar with the concept of co-payment .

Co-payment can occur through coinsurance or a deductible . Co-insurance is where consumers pay a percentage of medical costs . The minimum coinsurance amount is set at five per cent of the total hospital bills .

On the other hand , a deductible is where the insured individual must pay a minimum amount of RM500 from the hospital bill .

“ Customers would be encouraged to take a more active role in using healthcare services , promoting responsible use of healthcare , reducing fraudulent medical claims , and ensuring that medical insurance and takaful remain affordable for Malaysians .”

– Mark O ’ Dell

There are also MHIT products that incorporate both co-insurance and deductible options . This combination suits those with tighter financial constraints .

The market response is expected to be positive , with a strong take-up rate for life insurance , takaful , and general insurance products observed in the first half of 2024 .

This suggests a positive reception to the introduction of co-payment options despite some repricing in medical pro-

Mark O ’ Dell

tection plans .

O ’ Dell expects a gradual uptake of co-payment MHIT products driven by regulatory requirements in addition to consumer interest in affordable insurance options . The inclusion of cost-sharing features is seen as more sustainable in the long term .

“ Customers would be encouraged to take a more active role in using healthcare services , promoting responsible use of healthcare , reducing fraudulent medical claims , and ensuring that medical insurance and takaful remain affordable for Malaysians ,” said O ’ Dell .

Ensuring affordability is a long-term goal , as the insurance industry aims to maintain affordable premiums for a broader demographic by reducing overall costs and promoting responsible use .

Insurers may exercise discretion in waiving co-payments for policyholders facing financial hardships or extenuating circumstances , ensuring essential healthcare remains accessible to those in need . – The HEALTH