Manulife Holdings Bhd group chief executive officer Vibha Coburn.
KUALA LUMPUR: The recent move by Bank Negara in mandating co-payment options for all new health insurance products effective Sept 1 has raised some concerns.
One of the main grouses is that many people, especially those from the low and middle-income brackets, may find it challenging to fork out a lump sum for medical costs when treatment is sought.
However, co-payment, which is a feature where insurance companies and customers share the costs for medical treatments, will help rein in the fast-rising medical cost inflation in Malaysia.
Bank Negara said Malaysia recorded a medical cost inflation of 12.6% in 2023 versus the global average of 5.6%.
“There is a huge correlation between co-pay and and the rate of medical inflation. Research has shown that when people have co-pay, the medical inflation rate is lower.
“It should come down by between 1% and 3%, because it is demand and supply, basically.
“That is why the co-pay is being introduced more than anything else.
“If some Malaysians start thinking that health insurance is unaffordable, then this group will definitely go for co-pay,” Manulife Holdings Bhd
group chief executive officer Vibha Coburn told StarBiz at the sidelines after a briefing on Manulife Asia Care Survey (ACS) 2024 findings.
She added that due to the rising medical inflation, the premium repricing of medical health insurance will make it unaffordable eventually.
“So, I think co-pay will gain momentum. I think it will take time initially as people are understanding it.
“It is very new. But I think to keep affordability going, to make sure that more Malaysians are covered, it is a perfect way to go and I think it will gradually gain traction,” she pointed out.
Essentially, medical health insurance or takaful products with co-payment features can lower premiums, reduce the need for frequent repricing and hopefully mitigate rising healthcare costs.
According to Bank Negara, insurance policies with co-payment features could result in premiums or contributions that are between 19% to 68% lower than insurance policies without such features, depending on the level of co-payment.
“Rightfully, people who never claim think, why is my premium going up? You cannot have somebody subsidising others. You have to do it by cohort. You have to be fair to everybody. So, the co-pay will mitigate those kinds of issues,” Coburn added.
The central bank said more consumers taking up medical and health insurance with co-payment features will help to control the medical cost inflation in Malaysia by controlling the over-consumption of health services.
Meanwhile, Coburn said findings from its annual survey showed that Malaysians worry about the prospect of critical illnesses, particularly heart disease.
The survey spotlights the need for better financial and health planning, including purchasing effective medical insurance, and finding savings vehicles to ensure sufficient retirement funds and pension benefits to secure their financial well-being in old age.
“Healthcare inflation is a perceived and real issue for Malaysians and it contributes to uncertainty about future financial preparedness. That is why Manulife remains committed to ensuring accessibility and affordability for our customers.
“We proactively engage healthcare providers to find ways to address the rise in costs and we use data analytics to find the best solution for customers,” Coburn said.
