One of the more contentious issues in the private health insurance landscape in Malaysia is the issue of the challenges in accessing medical insurance by those with predisposing conditions — due to their potentially higher risk.

I had previously put forward the case of the US — a health system predominantly financed through private health insurance, and pointed out how they managed to, via the Affordable Care Act or Obamacare, include everyone with predisposing conditions into the risk-pool while still managing to keep the system afloat.

Can this be practically done within the Malaysian private health insurance landscape?

Here are some possible suggestions on how this could be done, as well as the factors that need to be in place to
make it happen.

Two key conditions are required to admit individuals with predisposing conditions into the risk-pool.

First, the risk-pool has to be widened. This means that everyone should come into the risk pool, that is, all individuals should be enrolled into the medical insurance pool.

Second, subsidies need to be provided to a significant number of people to enable them to purchase insurance, especially those from lower incomes or underprivileged groups.

Let’s tackle the practicalities of actualising the first condition. The problem with the medical insurance landscape in Malaysia is that it is a voluntary, private market. Only those able and willing to pay the premiums for insurance do so.

In order to get a wide enough risk-pool to allow everyone to be provided coverage, groups such as the young (including children), and healthy individuals who have been averse to purchasing insurance must all be enrolled in the insurance risk-pool.

However, there are some concerns about the practicality of this in the current landscape. There are so many companies offering so many different medical insurance products; and all of them are not having a common risk-pool currently as each company operates independently.

Also, each medical insurance product is costed differently, with different benefits as well, with the additional complexity of individuals enrolling into them being risk-rated on an individual level- requiring different premiums.

Currently, the only exception to this is group insurance, where individuals are lumped together and risk-rated as a group — a practice called community risk-rating without any consideration of their individual risk.

In this way, one premium is available for a common product which all employees of a group or an organisation then subscribe to and employers pay for.

Thus, this may be the mechanism to emulate, as mandating everyone to subscribe to medical insurance will require a common product with a common premium price for all.

Currently, the variability of medical insurance products will prove to be an insurmountable challenge in terms of mandating enrolment, and it is precisely due to this that Bank Negara Malaysia, the health ministry and other players have gone down the road of building a common medical health insurance/takaful product (MHIT).

Another innovation making its way into the medical insurance landscape is the idea of family-based medical insurance, where everyone in a family unit is enrolled together. This may assist in incentivising families to enrol together as well as to assist in further smoothening overall risk.

In summary, with a common product and a common premium, it will prove much easier to ensure that everyone is enrolled into a common risk-pool, including those with predisposing conditions.

Though it sounds terribly innovative and world-shattering, building a common product with a common premium which all insurers can offer is something that we have done easily before, namely with the Perlindungan Tenang scheme which continues to provide simple, affordable life insurance products fronted by multiple insurers and supported by the government.

Medical insurance may not be as easy to formulate as life insurance, but it is possible — and this is where the MHIT product is probably going to be placed into the market.

This dovetails nicely into the second condition.

There are always going to be young, healthy individuals with low-risk profiles who are from low-income groups unable to easily subscribe to medical insurance.

Their premiums need to be subsidised or paid for entirely by the government.

How, one may ask? There are already clear mechanisms in which the government is providing targeted aid to the low-income and underprivileged, and this will just be another form of targeted aid that can be provided in the form of financial protection via medical insurance.

Another successful mechanism could be via the provision of subsidised medical insurance products through entities such as the Employees Provident Fund (EPF).

Already, high value, affordable life and critical insurance products are being offered through the i-Lindung initiative for EPF members; and this could be an avenue to roll out these products as already mentioned by the government.

However, it must be stated that mandating that every Malaysian (and even non-Malaysian residents) must purchase insurance may be a task no government may be willing to take on, especially since Malaysia already provides highly subsidised public healthcare services.

Merely encouraging the uptake of a common private medical insurance product may not get the buy-in and the numbers needed to keep the risk pool large enough, and it will then be at risk of being overwhelmed by the claims being made of it.

Mandating enrolment for all must be a core function of any such effort to widen the risk pool, or else it is bound to fail.

On a side note, pertaining to Obamacare, it is also worth to note that successive non-Democrat administrations have been trying to dismantle the Affordable Care Act in portions, resulting in worsening conditions in terms of medical insurance coverage in the US currently.

It is interesting to also note that this is due to political differences rather than the health system falling apart, as some may allege.

The latest effort includes a suggestion from President Donald Trump to directly channel monetary subsidies to consumers and allow them to use the money to purchase their insurance rather than to subsidise premiums as was previously done.

Money in the pocket for consumers may not be used to purchase insurance and may act to undermine the entire system, but really only time will tell on whether this will be carried out and whether it will be detrimental to the entire risk-pool.

Enrolling individuals with predisposing conditions is possible, but it is just one small piece of fixing the problems inherent within the local medical insurance landscape. But that is another piece of the jigsaw puzzle to be revealed in the days to come.

The views expressed are those of the writer and do not necessarily reflect those of FMT.