KUALA LUMPUR: Bank Negara Malaysia (BNM) has required insurance and takaful operators (ITOs) to begin providing a co-payment option for their medical and health insurance and takaful (MHIT) products by September this year.
These co-payments are additional out-of-pocket payments that insured patients have to pay when they get treatment for covered illnesses — on top of their regular premiums paid before they encounter illness.
The Rule
The Policy Document on Medical and Health Insurance/Takaful Business aims to promote more sustainable and affordable MHIT offerings amid the continued increase in medical cost inflation.
Last year, Malaysia recorded medical cost inflation of 12.6 per cent, which is significantly higher than the global average of 5.6 per cent.
With effect from Sept 1, this year, ITOs must offer consumers an option to purchase MHIT products with a co-payment feature.
Consumers who have already purchased MHIT products without a co-payment feature can continue with their existing MHIT products at renewal.
ITOs can also continue to offer MHIT products without a co-payment feature to new consumers.
Concerns
The Galen Centre for Health and Social Policy warned the central bank that its new requirement of a co-payment option in health insurance could expose households to financial catastrophe.
For example, if an insured patient receives an RM50,000 hospital bill, a five per cent co-payment means that the patient has to pay RM2,500 in cash out of pocket—– even though they have been regularly paying monthly or annual premiums.
The policy also has no cap on co-payments.
Beginning next year, ITOs are no longer permitted to design new medical reimbursement insurance or takaful products without the minimum co-payment feature.
The Galen Centre also said the co-payment feature, which will eventually replace existing products, will lead to insured patients facing large out-of-pocket payments beyond their means in the case of a major illness, the very reason health insurance was needed in the first place.
BNM's Explanation
BNM said greater take-up of co-payment MHIT products over time aims to help contain medical cost inflation in Malaysia by controlling the overconsumption of health services, alongside other healthcare reforms envisaged in the Health White Paper published by the government.
These include improving the transparency of medical costs to support consumers in making more informed choices when seeking treatment and transforming the delivery of health services.
To further promote affordability and safeguard consumer interests, the Policy Document on Medical and Health Insurance/Takaful Business also sets out the following requirements to be observed by ITOs:
Co-payments shall not apply in the following circumstances:
— Emergency treatment, including in accident cases;
— Outpatient treatment for follow-up treatments arising from critical illnesses such as cancer or kidney dialysis; and,
— Treatment sought at a government healthcare facility.
— ITOs shall give due consideration to any financial hardships or extenuating circumstances faced by a policy owner/takaful participant and may apply their discretion to waive co-payments in such circumstances.
Who are affected and unaffected
Unaffected:
— Existing health insurance/takaful policyholders who do not intend to change their policy in terms of benefits, limits, and additional coverage (riders).
Affected:
— New buyers of health insurance and takaful products.
— Existing policyholders who wish to make changes to their policy in terms of benefits, limits, riders, etc.
— Both of the above groups must accept policies with co-payment features for health insurance/takaful products.