After the three strikes, I decided to invest a bit more time and attention to my medical insurance policy.

My new policy, as expected, is wordy. And, this time with annexures. Yes, annexures. Like an annex, an additional or supplementary document. With more words to read and digest. I made sense of most of it. The three takeaways worthy of note from my now supped-up medical booster policy, accurately or not, are a no-limit hospital stay from 120 days previously, a higher overall annual limit with an add-on of RM100,000. And, a RM500 preventive care rebate which includes medical check-ups, diagnostic tests, and/or vaccinations. I’m only entitled to the RM500 rebate in the preceding year if I’ve made zero claim in the current year. Hmm.

While I still didn’t quite understand my premium structure, I managed to half understand the premium story that has been percolating, and still unfolding around me. I learnt ‘Malaysia had a medical cost inflation of 12.6 per cent in 2023, which is higher than the global average of 5.6 per cent.[1]’  Singapore’s average cost of medical care rose by 10.3 per cent in 2023, and is expected to rise by close to 10.7 per cent in 2024. A poll of 260 insurers in 66 countries also noted that a 9.9 per cent rise in costs is projected for the Asia Pacific region in 2024.[2]

Hmm and why?

Bank Negara Malaysia (BNM) or the central bank, in its 2019 Annual Report, had underlined that higher medical costs may be due to factors like healthcare providers charging more if patients have medical insurance – this was based on anecdotes. It also cited the “buffet syndrome” which was in reference to people trying to maximise the value of the insurance premiums paid by using medical services with little consideration to costs as it was covered by insurance.

The same report added that insurance claims data from 2013 to 2018 showed that hospital supplies and services were the largest component of medical claims costs. And, in BNM’s more recent 2023 annual report, it stated that around two-thirds of hospital bills comprised hospital supplies and services. This could be attributed to factors such as drug prices, advancements in medical technologies and increase in the use of health services after elective medical procedures resumed following the pandemic[3]. Interesting.

The Aon Global Medical Trend Rates Report 2023 further reinforced the current state and upward trajectory of healthcare costs in Malaysia. It highlighted an average yearly increase of 14.2% in medical costs due to reasons like developments in medical technology, an ageing population that needed more extensive healthcare, and the escalating costs of medical plans. It also pointed out that the introduction of new, costly medical technologies and treatments, together with the growing need for long-term care for chronic conditions such as diabetes, heart diseases, and obesity – will further increase the financial pressures on the healthcare system[4].

So how? Too high and too frequent increases in medical insurance premiums have been an issue since at least 2020. Sun Life Malaysia CEO and president Raymond Lew said, ‘Medical insurance premiums have increased by 50%, or even doubled in some cases, over the past three to four years. If the trend persists, it will render medical insurance unaffordable for many Malaysians.’[5]

Some factors that contributed to higher premiums were a weaker ringgit that made imported medical equipment purchased in US dollars more expensive, and the increased number of claims made in a given period.

I didn’t know this. BNM regulates insurance premiums. Apparently, insurers cannot randomly decide on how much medical insurance premiums can be increased. Insurers also do not have control over hospital charges for certain treatments, the cost of treatments or the cost of drugs used – all of which impact premiums[6].

So how, again? Co-insurance. From September 1, all insurers (conventional and takaful/Islamic medical and health insurance providers) must offer co-insurance options such as co-payment (a percentage) or deductible (a fixed amount) for medical/health insurance products. This means the insured and insurance company will share the costs of medical bills. The insured pays at least a 5 per cent co-payment or RM500 deductible, and the insurance company pays the balance.

My current medical insurance policy already has a deductible for claimable procedures. I also remember having to pay a deposit, prior to admission, when I was hospitalised some 12 years ago. I am not sure how much that was but my policy had a deposit/deductible/co-payment feature even then.

Generally, the co-payment model is intended to lower premiums, incentivise responsible healthcare use, reduce abuse and fraudulent claims. And, hopefully keep medical insurance affordable in light of the ever increasing medical costs. Is this a good way forward? Depending on who you ask.

That said, some announcements are expected soon on measures/details on managing medical insurance premiums. Hmm.