REGIONAL REFORM AND CHANGE

POR HEONG HONG

Universiti Sains Malaysia

The Unfinalized Healthcare Reform
in Malaysia

There is a long history of proposals to reform the Malaysian healthcare system. Yet, no clear plan has ever been finalized, and the two-tier public/private structure, and financing mechanism of the public health sector remains unchanged. The reforms propose to create a scheme based on contributions from the public. Resistance to change comes from the private healthcare sector and private health insurers, both with their vested interests, as well as public interest groups that worry about the impact on the general public. The author argues that a financing scheme to raise funds from the public as mandatory contributions would relieve the Ministry of Health from internal budget competition with other governmental departments, but would also entail extra taxation, which is unlikely to gain popular support in a time of worsening global and local economies induced by both the Covid-19 pandemic and the war in Ukraine.

Following the change of government on August 26, 2021, Khairy Jamaluddin became Malaysia’s new minister of health under the Barisan Nasional administration. Since January 2022, Khairy has several times proposed reforming the country’s healthcare system.   

Characterized by a two-tier structure, Malaysia’s healthcare system consists of a general revenue-funded public healthcare sector and a significant profit-oriented private healthcare sector. Khairy is not the first person to propose healthcare reform. Over the last five decades, there have been several calls, from both the government as well as the civil society, to reform the system. These reform proposals were informed by three factors: global trends, local needs, and political dynamics. One major proposal is to transform the general revenue-funded public healthcare system into a social health insurance system with mandatory contribution. This suggestion aims not only to expand the financial base of the public health sector, but also to change the financing mechanism altogether, and integrate the private health sector.

The Malaysian Medical Association (MMA) alone has published at least four reports, proposing the adoption of contributory social security scheme of some sort, without rejecting voluntary private health insurance (MMA, 1976; MMA, 1980; MMA, 1987; MMA, 1999). The government, too, has conducted several studies on the financing mechanism of the healthcare system and made similar suggestion.[1]

The first study was conducted in 1984-1985 by the Economic Planning Unit of the Prime Minister’s Department. The second, a Feasibility Study on National Health Security Fund was sponsored by the Asian Development Bank and completed between 1987-1988. The third, a National Health Plan Study, was conducted between 1990 and 1992. The fourth, initiated by the Ministry of Health (MOH) in 2002, was carried out by World Health Organization consultants. The fifth was funded by the United Nations Development Program and implemented by an Australian company, Karol Consultation, in 2006. And the sixth was initiated and funded by the MOH, but outsourced to World Bank health economist William Hsiao and his team in 2009. During the short-lived rule of Pakatan Harapan (Alliance of Hope, from May 2018-Feb 2020), its health minister Dzulkefly Ahmad, too, proposed replacing the general revenue-funded health system with a health insurance model.

Despite so many studies and proposals, no clear plan has ever been finalized, and the two-tier structure and the financing mechanism of the public health sector remains unchanged today. The resistance comes from the private healthcare sector, the private health insurance sector, and also public interest groups, such as Citizen’s Health Initiative (CHI). While the first two were to protect their vested interest, including their autonomous status under the existing system, CHI was more concerned with the impact of the changes in the financing scheme on the general public.

In general, they all lacked faith in the Barisan Nasional administration, which was responsible for healthcare privatization and subsequent rising healthcare costs. They also feared that a contributory scheme with a centralized fund would likely benefit profit-oriented corporate hospitals more than the general public, not to mention that such scheme also means extra tax burden on the latter, and implies burgeoning bureaucracy and administration costs.

In his recent call for health reform, Khairy, like many of his predecessors, claims that “there’s chronic under-investment in the public health care system,” and aims to increase public health expenditure so as to benchmark Malaysia with other upper middle-income countries.[2] According to the latest MOH report, the ministry operates 144 hospitals with 42,936 beds nationwide, which are linked to an extensive network of over 1,800 health clinics and mobile health services. Meanwhile, the private health sector consists of 208 hospitals and 16,469 beds. In terms of spending, the total national health expenditure increased nearly eightfold from RM 8.6 billion (US$ 2 billion) in 1997 to RM 64.2 billion (US$ 15 billion) in 2018. The increase is in line with the abundant growth of the country’s GDP, which increased from RM 282 billion (US$ 63 billion) in 1997 to RM 1,511 billion (US$ 340 billion) in 2019. Over the same period of time, government spending on health as a share of total national health expenditure fluctuated between 46 per cent and 54 percent. If calculated as a share of the country’s GDP, government spending on health rarely exceeds two percent (Table 1). In comparison with its Southeast Asian counterparts, Malaysia’s government health expenditure at US$ 611 per capita (in terms of purchasing power parity) in 2018, was the third highest in the region, after Singapore and Brunei. However, government spending as a share of general government expenditure has increased from 4.6 percent in 2000 to 8.5 percent in 2019, signaling increasingly intense competition for the budget between different departments at the level of central government.

Table 1: Malaysia’s Health Expenditure

Source: https://apps.who.int/ and https://data.worldbank.org/indicator/SH.XPD.PVTD.CH.ZS?locations=MY.

Rising public health costs are partly due to the expansion of the health workforce. Back in 2009, the government employed only 20,192 medical doctors whose numbers increased more than twofold to 48,478 in 2018. In comparison, medical doctors in the private sector increased only 49 per cent over the same period of time, from 10,344 in 2009 to 15,457 physicians in 2018. Correspondingly, the doctor to population ratio has increased from 6.73 per 10,000 population in 2000 to 22.86 per 10,000 in 2020, bringing Malaysia closer to its developed counterparts in other parts of Asia (Table 2). The rising number of medical doctors is attributable to the liberalization of medical education, and the mushrooming of private medical colleges over the last two decades. Over the last few years, at least 23,000 medical graduates have been absorbed, who now work as contract doctors in the government hospitals. Their services were much needed during the Covid-19 pandemic, but their work condition has been precarious. On July 26, 2021, some contract doctors organized a strike, urging the government to take all junior doctors into permanent positions. In response to the protest, the health ministry promised to extend junior doctors’ contracts for two more years, instead of offering them permanent positions. Bearing in mind that caring, usually carried out by paramedical personnel like nurses, is as significant a part of a healthcare system, especially in non-pandemic times.

Table 2: Health Workforce in Selected Asian Countries (Calculated in Medical Doctor per 10,000 population)

Source: https://apps.who.int/.

With a larger workforce, the government health sector shoulders a much larger share of responsibility than its private counterparts. In 2018, the government hospitals handled 2,648,080 admissions and 46 million outpatients respectively; while its private counterparts processed 1,170,558 admissions and only 3.5 million outpatient attendances. The brain drain from public to private sector as a result of workload disparity and income gap between the two sectors has been unresolved for more than three decades. For many years, the quality of government health services, especially specialist services, has been impacted by the brain drain.

While the multiple challenges mentioned above are real, how Khairy’s proposed reforms will solve these issues remains unclear. As a financing scheme, social insurance will surely expand the financial base of the public health system. With such a scheme in place, a centralized fund, collected from mandatory contributions, specific for the public health purpose, will relieve the MOH from internal budget competition with other governmental departments. Nonetheless, such reform also entails extra taxation, which is unlikely to gain popular support in a time of worsening global and local economies induced by both the Covid-19 pandemic and the Russia-Ukraine War. Pertinently, how several corruption cases involving high-profile leaders will be resolved, will also determine popular perception of the public institutions and the public’s willingness to hand in more tax to the government.

Note on the Author

Por Heong Hong is a Lecturer at the School of Social Sciences, Universiti Sains Malaysia. Por’s research interests lie at the convergence of postcolonial inquiries and cultural politics of issues pertaining to medicine, health and diseases, bodies, modernity, and nationalism. Her geographical focus is mainly Southeast Asia and East Asia. Over the past few years, she has collected oral histories of ordinary people who lived through the post-independence era and the political turmoil of 1960s in Malaysia. She also merges historical research with the study of memory politics and heritage politics. Over the past decade, she has published widely on the politics of healthcare in Malaysia, politics of memory, and politics of heritage in Malaysia. Her publications can be found in prestigious peer reviewed journals, including Modern Asian Studies, Inter-Asia Cultural Studies, East Asia Science, Technology and Society: An International Journal, Journal of the Malaysian Branch of the Royal Asiatic Society, Kajian Malaysia, International Journal of Asia Pacific Studies, etc., and in edited books published by Oxford University Press, Palgrave, and Routledge. Her article will appear in an edited book published by Bangkok-based Silkworm Books. Details of her publications can be accessed via Heong Hong Por (0000-0001-8362-0202) (orcid.org). She can be reached at porheonghong@usm.my or porhh2020@gmail.com.

END NOTES

[1] “Bringing Health to the Rakyat,” Malaysian Medical Association, Berita MMA Vol. 8, no. 3 (Sept/Oct 1976): pp. 1 and 14; “The Future of the Health Services in Malaysia,” MMA (1980); “Health Assurance and Health Insurance for All Malaysians,” MMA (1987); “Health For All: Reforming Health Care In Malaysia,” MMA (1999); “Health Facts,” Ministry of Health, Putrajaya (2009); and “Health Facts,” Ministry of Health, 2020.

[2] “Health Reform White Paper Expected in November, Khairy Admits ‘Chronic Under investment’ in Health,” CodeBlue, March 15, 2022, galencentre.org. https://codeblue.galencentre.org/2022/03/15/health-reform-white-paper-expected-in-november-khairy-admits-chronic-underinvestment-in-health/.