The public healthcare system is suffering from severe staffing shortage and waiting time is long, including for critical life-saving surgeries. Staff, including specialists and surgeons, are overworked and not well paid, and the good ones are leaving for private hospitals and/or overseas. Some public hospitals have resorted to establishing a separate private wing and charge patients “premium economy” services (higher than public hospital charges but lower than private hospital fees) to generate additional revenue to fund their operations and increase incomes for doctors to retain them. Therefore, many Malaysians who can afford it have increasingly turned to the private sector, paid for primarily with medical insurance (see Chart 1). This is why the recent sharp hike in insurance premiums is such a great concern.
Just like the deteriorating quality of public education, the unchecked upward spiral in healthcare costs is a major concern for all Malaysians. The crisis came to a head recently, after the insurance industry passed on escalating costs — due to the sharp increase in the number of claims as well as increasing cost per claim — to customers via a hefty 40% to 70% hike in insurance premiums.
As we wrote last week, over the years the government has (intentionally or otherwise) outsourced education and healthcare for the middle class and above to the private sector, due in part to funding constraints. (Malaysia is a low-productivity, low-income nation with a comparatively small number of taxpayers but huge government spending on social transfers and benefits.)
