This MOH presentation proposes the wholesale reform and privatisation of the Malaysian healthcare system, instead of reforming and strengthening the present system.

1. FUTURE OF HEALTH CARE
FINANCING IN MALAYSIA
DR ABD RAHIM MOHAMAD
PLANNING & DEVELOPMENT DIVISION
MINISTRY OF HEALTH
18TH JANUARY 2009

2. PRESENTATION OUTLINE
 Scope of Healthcare Financing
 Aim
 Objectives
 Problem Statements
 Current Issues
 Options
 Principles
 NHFA
 Benefit Packages
 Conclusion

3. SCOPE OF HEALTHCARE
FINANCING
1. Revenue Collection
 Source of Financing
 Structure
 Collection mechanism
2. Pooling of Funds
 Managed by an intermediary body
3. Purchasing – from health providers

4. NATIONAL HEALTHCARE FINANCING MECHANISM
THE SCOPE / SPECTRUM
INTERMEDIARY PROVIDER HEALTH
SOURCES CONTRIBUTION BODY PAYMENT CARE
OF NHFA MECHANISM DELIVERY
FINANCING SYSTEM
GOVERNMENT
BUDGET casemix
e.g. NHI, Govt. GOVERNANCE global budget
•CORPORATE
ESSENTIAL
budget, etc capitation
•CLINICAL HEALTH
fee-for-
CARE BENEFITS
services
PACKAGES
PATIENTS /
CONSUMERS

5. Aim of Healthcare Financing
 Provision of accessible healthcare and peace of
mind
 Comprehensive healthcare protection
 Improve health through prevention
 More choice of service
 Right mix of financing option to deliver health
care
 Government will still be main player
 Complemented by NHI

6. NATIONAL HEALTHCARE FINANCING:
OBJECTIVES
NHFM
Mobilize Greater Better
Resources Enhance integration in regulation
“Risk efficiency Health: of health
sharing” & & quality 1 0 , 20 , 3 0 care
pooling of Public / private providers
Primary care as gatekeeper
resources
(Community
rated NHI
Achieve greater
System) &
equity & accessibility
manage rate
of health
spending
Enhance national integration, social solidarity and
caring society
6
NOT to change the present system if these goals are not met

7. WHY DO WE NEED CHANGE

8. PROBLEM STATEMENTS
 Issues raised concerning public medical
services
 Long waiting time
 Postponed cases
 Overworked staff in 3rd class wards – impersonal…..
 Lack of choice
 Inadequate amenities
 Issues raised concerning private sector
 Exorbitant charges
 Increasing private insurance premium
 adverse selection vs cherry picking
 Appropriateness of care vs. overservicing

9. PROBLEM STATEMENTS 2
 National Health Account Study 2006
 Out-of-pocket (OOP) spending in Malaysia is high (40% of THE)
 RM 9805 million
 OOP spending in developed countries is low <20%
 Health Expenditure trend in Malaysia
 Equity
 High cost private healthcare– available only to those who can
afford, insured or covered by employer
 Fairness in financing – high OOP payment (inequitable financing
and can lead to impoverishment due to catastrophic health
expenditure)
 Economics
 More efficient use of resources (especially HR)

10. CURRENT ISSUES-1
1. Highly subsidised services & overdependence
on government health facilities (also
patronised by those who can afford)
 Heavy workload
 Long waiting time
2. Inadequate integration in health, especially
between public & private sectors
 “Brain drain” to private sector – non-optimal resource use
 Need for better regulation of private healthcare providers
 Fragmented care and clinical record
10

11. CURRENT ISSUES-2
3. Rising healthcare expenditure
• rising demand and expectations
• expensive high tech medicine
4. “Gaps” in present healthcare delivery system
eg. Equity, efficiency, accessibility, quality of
service.
5. Changing demographic &
epidemiological patterns
 Increase in the ageing population
 Increase in chronic diseases
11

12. Trend of Total Expenditure on Health (TEH), 1997-2006
(RM, Nominal Value)
30 5.0
4.5 4.5
4.3 4.5
4.2
25
3.8 4.0
3.7 24
21 22
3.4
3.5
3.2 3.2
20 19
2.9
3.0
15 14 2.5
13
12
%
G
D
P
Y
2
2.0
)
(
M
B
R
Y
n
o
1
)
(
l
i
10
10 9
8 1.5
1.0
5
0.5
- -
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Year
TEH TEH as percentage of GDP
Source : MNHA 12

13. Proportion of Public vs Private Sectors
Expenditures
PUBLIC VS PRIVATE
NHFS MNHA MNHA
HEALTH (1984/85) (2002) (2006)
EXPENDITURES
PUBLIC 76 % 56% 45.2%
PRIVATE 24% 44% 54.8%
NHFS: National Health Financing Study
MNHA: Malaysian National Health Account

14. Per Capita Spending on Health, 1997-2006
(RM, Nominal Value)
1000 917
900 829 826
800 756
700
560
600 501
529
500 406 432
M
R
381
400
300
200
100
0
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Year
Per Capita Spending on Health
14

15. Operating and Development Expenditure, MOH
1990-2004
10,000.0
9,000.0
8,000.0
7,000.0
6,000.0
RM Million
5,000.0
Operating
Development
4,000.0 Total
3,000.0
2,000.0
1,000.0
-
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Year
Note: Using Current Prices
Source: Finance Division, MOH

16. TOTAL HEALTH EXPENDITURE AS PERCENTAGE OF GDP IN
SELECTED OECD COUNTIRES AND MALAYSIA, 2005
Source: MNHA Study 2003-2006, Health At A Glance 2007- OECD Indicators 16

17. CURRENT ISSUES-3
6. Increasing healthcare charges in private sector
 Greater inequity & public outcry if not controlled
 Increasing trend of private health expenditure
(esp. Out-of-pocket expenditure – financial risk upon
unexpected health events)
 ‘Supplier-induced demand’
 Equity in access to private sector
Physical : Concentrated in urban areas
Financial : Access to private services is mainly for those
who can afford esp. inpatient care
17

18. Private Health Expenditure (PHE)
(MNHA 2006)
 Total PHE: RM 13,393 million
 OOP: RM 9,804 million (73%)
OOP from 2003 to 2006: rising trend
(quantum)

19. CURRENT ISSUES-4
7. Challenges of globalization & liberalization:
 Cross border flow (human, life-stock, etc)
 Transmission of diseases
 Cross border transactions and practice –
ethics, credentials and quality
 Foreign workers
 Utilizing subsidised services
 Health insurance coverage not mandated
currently
 Outsourcing / offshore activities
 Health tourism – competing with local
consumers for resources 19

20. Health Expenditure Trends in Malaysia
(MNHA 2006)
 Increasing Total Expenditure of Health
(TEH)
 Plateauing TEH as % of GDP
 OOP rising
 Private Expenditure exceeded public
expenditure since 2004

21. WHERE DO WE GO FROM
HERE?

22. OPTIONS
1. Change present system
 Introduce NHI through community rating
 Further integrate public-private health sectors
AND / OR
2. Strengthen present system
 Improve efficiency and quality of public and
private sectors
 Further regulate private sector to improve quality
and contain cost

23. Financing Strategy
 Introduce a National Health Financing
Mechanism & restructuring of MOH hospitals
and clinics.
 Develop National Health Insurance with
government intermediary body (National
Health Financing Authority) as a single fund
manager.

24. PROPOSED PRINCIPLES OF HEALTH CARE
FINANCING MECHANISM
Superior to existing system
Single healthcare financing system / single fund manager
(National Health Insurance fund/ Government Revenue)
If contribution based (NHI)
 Mandatory- those who can afford to pay must pay
 Government assistance for disadvantaged group.
 NHFA
Not-for-profit
Government owned accountable to MOH & should not be privatised
 Greater equity, access, quality, efficiency & choice
 Greater integration in healthcare (public-private, primary-secondary)
 Viable & sustainable
 Improvement of health status of population
 In line with:
 National solidarity & a caring society
 Vision for Health & Vision 2020, etc.

25. PROPOSAL:
NATIONAL HEALTH FINANCING AUTHORITY (NHFA)
THE GOVERNANCE OF THE NATIONAL HEALTH FUND
Government owned
Proposed Functions:
Accountable to MOH 2. Policy, research & corporate
health planning
Statutory Body 4. Health benefit packages
5. Assessment of healthcare
NHFA Not-for-profit 6. ICT planning & applications
7. Utilisation data
8. Health financing data
Not to be privatised 9. Fund
collection/disbursement
8. Strategic human resource
planning & training
Single fund manager 9. Provider
payment/negotiation

26. PROPOSAL:
ESSENTIAL HEALTHCARE PACKAGES (EHP)
ESSENTIAL HEALTHCARE PACKAGES (EHP)
SOURCE: - In line with wellness paradigm
NATIONAL - Covers selected preventive, promotive,
HEALTH curative & rehabilitative services
INSURANCE - Available from public & private sectors
NON-ESSENTIAL/
OTHER
OPTIONAL HEALTHCARE PACKAGES
SOURCES - Voluntary/ means tested
e.g. PHI, Employer, - For optional coverage not covered
OOP, etc. in the essential health care packages
- Available from public & private sectors
Taiwan – Wide benefit coverage (includes traditional medicine)
Korea – Narrow benefit coverage
NOTE: Need to consider affordability and sustainability in developing EHP

27. PROPOSAL:
- PREMIUM LEVEL & INCENTIVES
 AFFORDABLE & ACCEPTABLE PREMIUM
 According to ability to pay (Progressive)
 GOVERNMENT ASSISTANCE
 For the disadvantaged group.

28. NATIONAL HEALTHCARE FINANCING MECHANISM
THE SCOPE / SPECTRUM
Ministry of Health
F
Monitoring, Evaluation, Regulation & Enforcement U
T
U
R
E
PROVIDER
SOURCES MANDATORY HEALTH
CONTRIBUTION
PAYMENT H
OF NATIONAL MECHANISM CARE E
FINANCING HEALTH DELIVERY A
LEVEL & SYSTEM
CEILING OF FUND casemix L
e.g. National global budget
CONTRIBUTION ESSENTIAL T
Health & capitation
GOVERNANCE HEALTH H
Insurance, CO-PAYMENT, fee-for-services
MEANS TEST i.e INTER- CARE BENEFITS
govt.budget PACKAGES
MEDIARY S
BODY Y
(NHFA) PATIENTS / S
CONSUMERS T
E
M

29. PROPOSED HEALTHCARE SYSTEM
Government
Consolidated Revenue MOH New
role
of MOH
M R
A
N
E
ESSENTIAL RESTRUCTU- D
D
A
Premium
National HEALTH RED MOH
U
Employee
T
O Health BENEFIT
PACKAGES
HOSPITALS &
CLINICS C
Employer,
Self-employed,
R
Y Fund E
Foreign- NHFA
workers V
O
(Those who can L Savings, EXTRA PRIVATE G
COVERAGE / SECTOR
afford) U Out-of-pocket,
ADDED
A
N Private
T Insurance VALUE P
A
R
PACKAGES S
Y

30. ROLL-OUT OF NHFM
Recommendations of previous consultants
 Adopt incremental approach
o E.g. Population coverage (formal vs. Informal sector)
o Service coverage (outpatient vs. inpatient)
o Accessibility (public vs. private)
 Path dependent – while adopting good practices of
other countries
 Implement certain activities during 9MP
o Case-mix
 Accuracy of Diagnosis
o Unit costing
o Social Advocacy (meeting with stakeholders)

31. Assurance
 Government will still be main source of healthcare
fund
 Government will subsidise the disadvantaged.
 MOH will monitor the following:
 Access
 Utilization
 Quality and safety

32. Press comments on Proposed
Privatisation of IJN by IJN staff
“Hospital staff deny demand for higher pay
linked to proposal. Medical consultants at the
National Heart Institute (IJN) have reiterated their
commitment to serve IJN in its current form”
“However, the perception that the privatisation
proposal is in response to demands for higher
remunerations by its medical staff is
misconceived and must be corrected
accordingly to safeguard and preserve the trust
placed upon us by our patients”
The Star, 20th December 2008

33. Press comments by IJN pioneer
surgeon
“It (IJN) was never meant to be commercial
institute. It was meant to be a centre of
research, a premier academic institute.”
“Therefore, I am rather suspicious of the
privatisation idea. It is not as if the hospital is
not doing well. Ideally, a health institution such
as IJN should be physician-led”
Tan Sri Dr. Yahya Awang
The Star, 21st December 2008

34. CONCLUSION
Implementation of the NHFM should be:
 Incremental
 Path Dependent
 Most appropriate for the country (Creative and
Innovative)
“Innovative thinking in developing the most appropriate financing
mechanism (choice and design) best suited for the country”
Diane McIntyre

35. If you would like to give input and comments,
please visit:
http://malaysianhealthcaresystem.blogspot.com/