Health Minister Dzulkefly Ahmad is championing a new government-backed private health insurance product designed to combat rising medical costs in Malaysia. The initiative, which will be developed in collaboration with both the public and private sectors, aims to provide Malaysians with affordable health care coverage while encouraging greater private sector participation.
In an op-ed published in The Edge on Tuesday, Dzulkefly outlined the vision for a “modernised voluntary private health insurance/takaful base product.” This product will be developed by various government ministries and agencies, in partnership with private insurers and takaful operators. The health minister suggested that this new plan could eventually become the default option for Malaysians seeking private healthcare.
“This initiative will target private sector employees, including those in government-linked companies and small and medium enterprises, and their families,” Dzulkefly wrote. He emphasized that the product would offer comprehensive coverage across a person’s life, promoting early enrollment for young and healthy individuals, while also providing continuity of care as people change employers or retire. The plan will also include provisions for individuals with pre-existing conditions.
The health minister outlined several key features of the new product, focusing on its value-based health care model. This model would prioritize cost-effective treatments and ensure affordability through an evidence-based benefits package. A central component of this approach will involve transitioning from traditional fee-for-service models to a more efficient system based on diagnosis-related groups (DRGs), which emphasize quality care over quantity.
Dzulkefly further assured that the new health insurance plan would take a balanced and evidence-driven approach towards expensive treatments, such as high-cost oncology drugs and robotic surgeries, as well as generics.
The new insurance product will also leverage a broad provider network, including mid-tier private hospitals, non-profit hospitals, and the Ministry of Health’s soon-to-be-launched “premium economy” services under the Rakan KKM program. This public-private initiative, which aims to enhance healthcare access without straining the public budget, has received RM25 million in funding as part of Malaysia’s Budget 2025.
In a recent announcement, Deputy Prime Minister Ahmad Zahid Hamidi confirmed that Bank Negara Malaysia (BNM), the Ministry of Health (MOH), and the Employees Provident Fund (EPF) are working together to create basic health insurance and takaful products with an emphasis on value-based healthcare.
Dzulkefly also highlighted the potential for additional funding through the Ministry of Finance (MOF) and EPF, exploring ways to optimize tax incentives for employers and employees. The EPF’s i-Lindung platform, which allows members to purchase insurance products for themselves and their families, could unlock additional private sector financing without placing a burden on taxpayers or employers, the minister suggested.
The health minister concluded his op-ed by inviting suggestions for a name for the new health insurance product, encouraging the public to share their ideas via his Twitter handle (@DrDzul).
Dzulkefly’s op-ed also mentioned the Rakan KKM program, a public-private partnership designed to improve healthcare access through collaborations with government-linked investment companies (GLICs). Although details about the program’s business model remain scarce, the health minister reiterated that it is currently in a pre-operational phase and expected to begin accepting patients later this year.
The Rakan KKM initiative, which is part of the government’s broader healthcare strategy, will receive significant financial backing, with RM25 million allocated for the program in Budget 2025. The Ministry of Finance has also indicated that the EPF will partner with the government to invest in sustainable healthcare solutions, including the development of private wings in public hospitals.
Dzulkefly further pointed out that hospital usage in Malaysia is increasingly shifting toward the private sector, citing a 42 percent year-on-year increase in private hospital admissions from 2022 to 2023. He explained that the initiatives outlined in his op-ed, including Rakan KKM, work in tandem with ongoing efforts to strengthen the public healthcare system. By reducing reliance on government funds for certain healthcare services, these private sector initiatives can help free up resources for public hospitals, ensuring that financial resources are distributed more equitably across the healthcare system.
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