Malaysia's health expenditure has largely focused on curative care services, amounting to 68% of total health spending in 2019
The Health Policy Summit 2022, which was held in August, has advanced efforts to reform the Malaysian healthcare system. The government has confirmed its intention to table a Health White Paper in parliament in November.
The Health White Paper's goal? To keep 10 million Malaysians healthy and out of hospitals over the next 10 years. Covid-19 has already shown that undermining a nation's health can disrupt education, the economy and society at large.
Evidently, there is a need for healthcare system reform and greatly increased investment in healthcare in order to build a nation where "health is for all" and the people enjoy "universal healthcare".
5% of GDP for public healthcare
In his keynote address at the summit, Health Minister Khairy Jamaluddin committed to increasing the annual budget allocation for public healthcare to 5% of gross domestic product over the next few years. Such public funding should be ring-fenced in subsequent budgets. Other sources of funding should be clearly supplementary, not substitutive.
The Khazanah Research Institute's (KRI) 2021 paper on "Health and Social Protection: Continuing Universal Health Coverage" recommends that there be a commitment to greater government financing of public healthcare. As of 2019, government expenditure on health amounted to only 1.9% of GDP.
Retaining tax-based healthcare financing ensures the best financial pooling mechanism. Funds can be mobilised according to ability to pay, and spent to meet needs regardless of health status, income or occupation. This pools risk and increases resources for health services for the entire population.
KRI had previously cautioned against turning to social health insurance (SHI) due to the unnecessary financial burdens it would place on Malaysians. SHI would also impose significantly higher administrative charges without improving health outcomes.
The institute also warned against relying on voluntary private insurance (VHI), which would certainly worsen inequities. VHI would also expose the population to greater public health risks, and families to greater financial risk due to catastrophic medical expenses.
Insufficient health spending
As Malaysia's population grows older, demand for healthcare will rise. Malaysians are living longer, but not healthier, as highlighted by a 2019 KRI report.
Malaysia is set to become an aged society, where the share of those aged 65 and older is projected to reach 14% by 2045. The share of lives spent in poor health increases with age, increasing healthcare spending.
This deterioration is mainly due to the increasing prevalence of non-communicable diseases (NCDs). Notably, the incidence of being overweight and obese among Malaysian adults has escalated significantly over recent decades. This is a well-known risk factor associated with many NCDs, leading to more people requiring costly healthcare that should be avoidable.
Although Malaysia is an upper middle-income country, its total health spending in 2019 — including spending by sources such as government, private households and private insurance — was 4.3% of GDP, lagging behind the 6.3% average for upper middle-income countries.
Malaysia's health expenditure currently ranks seventh among Asean's 10 countries, behind countries such as Cambodia and Vietnam. Considering the needs of Malaysians, the case for increased fiscal allocations for health is clear.
Spending more on prevention
Increasing the healthcare budget is important, but it also matters what the spending is for. Malaysia's health expenditure has largely focused on curative care services, amounting to 68% of total health spending in 2019.
By contrast, public health spending — especially programmes emphasising prevention — came to a meagre 6.8%.
Indeed, the health minister's call to reform the system, and to move away from "sick care", signifies the government's acknowledgement of the need to shift its approach to healthcare.
KRI has previously advocated for the country to focus beyond curative care services to emphasise long-term prevention and invest more in public health services. This means not only looking at tackling infectious diseases, but also NCDs, many related to unhealthy diets and lifestyles.
For example, the new joint report by the Ministry of Health (MoH) and World Health Organization (WHO), "The Direct Health-Care Cost of Noncommunicable Diseases in Malaysia" (August 2022) estimated that the total direct healthcare costs of cardiovascular diseases, diabetes and cancer amounted to RM9.65 billion in 2017.
Since the most common causes of NCDs are largely preventable, appropriate public health investments are very effective in reducing the disease toll and increasing returns to society.
Modernising public healthcare
KRI has also advocated for implementing a comprehensive national system enabling seamless electronic sharing of health records across facilities. The health minister also stressed the need for a system facilitating patient flows among healthcare providers to ensure more effective use of resources.
Ultimately, investments in basic digital solutions to healthcare that can benefit the whole population are key to facilitating person-centred continuity of care and promoting preventive services. These can also generate cost savings by improving healthcare delivery efficacy.
Health, a vital investment
Importantly, what is much needed is a continued and increased commitment to public financing of Malaysia's healthcare, alongside a shift in focus towards more effective health expenditure on public health services that include health promotion and prevention.
Reforming the country's healthcare system is also a shared responsibility, with "whole-of-government" and "all-of-society" approaches needed to enhance healthcare inclusion and MoH accountability.
Healthcare is an investment, not just an expenditure. Investing in healthcare generates social and economic benefits apart from obvious health gains. Therefore, it is crucial to focus not only on short-term spending, but on long-term investment to secure a healthy future for all Malaysians.
Ilyana Mukhriz, Teoh Ai Ni and Puteri Marjan are research associates at the Khazanah Research Institute, a not-for-profit organisation that carries out research on pressing national issues to recommend policies to improve the well-being of Malaysians
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