Malaysia needs an equitable healthcare system

A few years ago, the government announced its intention to restructure the country’s health system, particularly the financing and delivery of health services. Are the increasing privatisation and marketisation of health services desirable? How can Malaysia’s healthcare system be made more equitable?

Malaysia’s relatively equitable health system of the past

Any humane society must adopt the principle that healthcare is a right of all its citizens and the Universal Declaration of Human Rights recognises “the right of everyone to the enjoyment of the highest attainable standard of physical and mental health.” A system that provides for universal and comprehensive health benefits to all must be put in place. Access to healthcare should be based on need and not ability to pay.

Until the mid-1980s, the Malaysian government did a reasonably good job of providing a satisfactory healthcare service to all. This was achieved through the setting up of rural health clinics, including maternity clinics and hospitals, which were all publicly funded, except for a few not-for-profit private hospitals and private clinics in urban areas. The emphasis then was on the provision of primary healthcare. There was also an effective public health system; public health activities included disease control, family health, school health programmes, food quality control and health education.

The improvement of Malaysian health standards since Merdeka was recognised by the World Health Organisation (WHO) and held out as a model for other developing countries to emulate. We were able to keep costs down while at the same time provide relatively equitable and adequate healthcare.

Although there were some private sector health service providers, the government was the main health service provider. Services rendered were financed out of general taxation, so that for the bulk of patients, health services were obtained for almost nothing. It is important to note that the over-utilisation of specialists (that regularly occurs today), was averted as general practitioners (GPs) played an effective role as gatekeepers.

Partial privatisation of healthcare services

Since the mid-1980s, problems and challenges began to emerge as a result of increasing privatisation and marketisation of health services. Likewise, the burden of financing the total costs of health services is now shared between the public and private sectors – where co-payment of certain services has now been introduced, instead of the government financing it all.

Under the principle of co-payments, patients are now required to pay high collateral payments for the treatment of several procedures, including orthopaedic procedures which require plates and nails, lenses for cataracts, clips for surgical procedures, drug-coated stents for angioplasties and certain anti-cancer drugs. This jeopardises the principle of equitable access to health services for all Malaysians, some of whom may not be able to afford these treatments.

Such increasing reliance on the private healthcare sector has been very heavily influenced by the neo-liberal economic ideology advocated by the International Monetary Fund and the World Bank. Hospital services such as cleaning, laundry and clinical waste management have been outsourced to the private sector. Ironically, such privatisation has increased the cost of servicing the health system.

Private hospitals have proliferated over the last two decades, adding to the supply capacity of private healthcare delivery, which now comprises GPs, specialist clinics, hospitals, diagnostic and dialysis centres, dental clinics and pharmacies. While most of these are for-profit, there are some that are run on a voluntary, charitable and not-for profit basis. The contributions of these not-for-profit private healthcare service providers towards helping improve access, especially by the poor, to critical life-saving services, have been immense. But the establishment and operation of these not-for-profit health centres also highlight the need for critical life-saving services that has been largely unmet by the public sector health system.

Meanwhile, the government continues to subject the provision of more and more health services to market forces; for instance the establishment of private dispensaries and private wings in government hospitals, promoting of health tourism in several private hospitals and raising the fees for foreign workers. Part of the capacity in the Putrajaya and Selayang Hospitals has been utilised for the provision of services to patients who will be charged according to what they can bear. Meanwhile, private clinics (after 5pm) have been set up in Universiti Hospital and a few other public hospitals in several parts of the country.



Problems arising from partial privatisation of health services

Equitable access to healthcare is no longer assured and increasingly, the government is shifting part of the burden of financing the costs of health services to the general public. The excuse is that costs have escalated and may reach levels beyond the means of the government, unless controlled.

Currently, the federal government’s spending on health (as a percentage of gross domestic product [GDP]) is less than what WHO has proposed for developing countries.

The continued expansion of private healthcare providers has led to a distortion in the allocation of resources. Under the two-tier system, which has come to characterise our country’s health system, such allocation is driven increasingly by profit. Medical specialists and other para-medical staff continue to leave the public for the private sector, at the same time as more and more patients seek treatment and care in the public sector.

This has led to a mismatch of supply and demand. It is estimated that 75% of all admissions are to government hospitals but only 25%–30% of the total number of medical specialists work in these hospitals. This mismatch has led to a relatively poorer quality of healthcare, as the capacity to treat critical illnesses in public hospitals is unable to match the demand for it. The victims of this increasingly distorted system are of course the poor, irrespective of race and gender.

Meanwhile, the richer segments of society enjoy better treatment in private hospitals. This has no doubt further widened the divide between rich and poor in Malaysian society, a divide that is fast growing due to the unequal distribution of income, and unequal access to basic needs such as housing, transport and education.

In the private sector, where services are rationed on the ability to pay, consumers who can afford to pay for access to costly medical check-ups and treatments, etc. do not need to be screened by GPs (performing the role of gatekeepers). This is unlike the public sector where patients have to be carefully screened over a few rounds by medical officers before they can get to see specialists. Long waiting lists in the public healthcare sector are not uncommon.

How does Malaysia’s healthcare become more equitable?

Illnesses and healthcare should not be viewed as commodities and hence as a source of huge profits. When healthcare is viewed as a commodity, there will be pressure for its rationing through the price system which tends to yield unequal access.

Those in favour of increasing marketisation of health services will no doubt argue that consumers ought to have some freedom of choice as to whether to seek healthcare in the public or private sector. But this freedom is clearly only enjoyed by those with the ability to pay while those who cannot aff ord to will fi nd this freedom of choice to be bereft of any practical meaning. For those of us who want universal access to healthcare not just quantitatively but qualitatively as well, we must respect the fact that all Malaysian citizens and residents are equal and that greater wealth cannot buy more or bett er health.

A more equitable system can only come about through a national health system that is financed out of general taxation. I have to be quick to point out my opposition to the use of value-added tax (VAT) as a source of financing healthcare as VAT is largely regressive and can be burdensome to the poor. It has been suggested that the poor can be exempted after passing a means test, however experiences in other countries have shown that means tests lead to delays and more oft en than not exclude the poor from enjoying this exemption. An alternative is a social insurance scheme providing cover to all Malaysians, with the government being the sole payer.

The government should remain the key provider of healthcare to be fi nanced out of income taxation. It has to assume the responsibility of ensuring that eff ective and equitable healthcare be delivered to the entire population. As such, allocations for healthcare can and must continue to rise until we achieve at least the standard set by WHO – five per cent of GDP. The financing of this can easily be raised from income tax and corporation tax (which includes contributions from Petroliam Nasional Berhad [Petronas]).


Developing countries need to learn one important lesson – controlling health expenditure, while hoping to provide universal coverage and equal access to healthcare, cannot be achieved through the market mechanism.

A public insurance system for the financing of healthcare services that is largely funded through general taxation could improve access to healthcare and could also play an important role in “nation building” and community solidarity, as it emphasises a fundamental equality among citizens.

On the other end of the scale, private health insurance is not a viable option for fi nancing healthcare as it oft en engages in “cream skimming”, by excluding the very people most in need of protection – the poor and the unhealthy – while providing protection to the rich and healthy.

Finally, the government ought to involve representative civil society groups, political parties and consumer groups representing the interest of the poor and marginalised in any reformulation of the country’s health system. Only by taking their views seriously can there be a chance of a new health system that is just, equitable, efficient and cost-effective.

Toh Kin Woon was an elected three-erm state assemblyman in the Penang State Legislative Assembly. He is now a senior research fellow at SERI.


Healthcare costs & challenges for Malaysia

“While the government is determined to improve access to healthcare for more and more Malaysians, underlying logistical problems and manpower constraints appear to hamper its smoother implementation of a more comprehensive cohesive system. Perhaps one issue which has not been adequately addressed or debated is that of healthcare costs. Improving and modernising healthcare systems and enhancing remuneration benefi ts incur huge costs. How to fi nd the funding needed will pose a serious problem, if not now, then surely in the near future.”

“The emphasis on medical tourism as another engine of growth for the economy is also overstated, given the small potential addition to the country’s coff ers — the forecast growth to RM2bil target by 2015 (from RM399mil in 2008) will only be a very small percentage of the country’s overall gross domestic product (GDP) of more than RM700bil.”

“ What is Malaysia Medical Association’s (MMA) stand on the issue of Full Paying Patients (FPPs)? Th e MMA has always supported bett er remuneration for doctors and specialists in the public health sector, although in this particular issue of FPPs, the MMA has some reservations. We have always been working closely with the Ministry of Health (MOH) and the government including the Public Service Department (JPA) for better conditions and wages and other perks for our doctors. We recognise that doctors who opt to remain in service oft en place a lot of their potential earnings on hold and sacrifi ce a lot for their civic duty and responsibilities.

“So in this context, should the MOH allow specialists in the public hospitals to be given a choice to have private practice? Earlier this was in the form of limited private practice at private medical centres and the universities to help make their service conditions more att ractive, and perhaps to help retain their much-needed services in the public sector. Whilst this has possibly helped to stem the outfl ow of experienced staff to the private sector, this approach has been criticised for some abuses, especially when found within the same hospital’s private wing.

“It has been pointed out repeatedly that some specialists appeared to spend more time in private practice than in the public health facilities, thus undermining the services provided for the less privileged. Some poor patients have also been asked to go to the private wing or centres for quicker access for some surgeries or procedures, which has caused complaints of unfair rationing, pressure and preferential treatment.

“Therefore the MMA supports that bett er regulatory limits be put in place to clearly defi ne how many hours doctors can work in the private sector vs. the public institutions, where the patient load is far more onerous.

“The approach of using public hospitals for FPPs may put the pressure on doctors to subconsciously prefer these patients and may encourage queue jumping and even undermine natural justice of fair waiting times and queues for limited resources. Th is may be a natural human response to immediate ‘reward’ for services, but is unfair in the context of a public sector expectation, where equitable care should be the standard.

“So we hope the MOH and government would seriously reconsider this move. Particularly at this time when the economy is far from being healthy, and many people are still reeling from the fi nancial crisis. Perhaps a bett er system of healthcare fi nancing or insurance can be put in place before embarking on this sort of ‘luxury’ or ‘Cadillac’ buying move for healthcare services.”

“Nevertheless, the MMA has always been worried about our very heavily subsidised healthcare, so much so that our rakyat do not seem to understand that healthcare is not free, someone has to pay for it! Having a system where the poor pay only RM1 for clinic visits and medications is not sustainable in the long term, no matt er that this seems to be politically correct, and popular!

So the government has painted itself into a corner. We recognise that the government would love to continue to provide nearly free medical and healthcare for everyone, but the mechanism for financing this is far from adequate or structured suffi ciently well. We do not have enough allocation for such a heavily subsidised system of healthcare. Th ere has to be a form of tax or insurance buying that is big enough and purely allocated for healthcare for this to work. But are the rakyat ready for this new form of tax or social insurance scheme? Perhaps the time has come to bite the bullet and expose the reality behind the healthcare costs— there are no short-term measures just for political grandstanding moves, which cannot be sustained.”

Malaysia’s two-tier health system

“The trickle of doctors to the private sector is now a fl ood which takes place at the expense of the public sector. Encouraging health tourism is a sure way to further encourage this internal brain drain. Is health tourism a priority for this country?”

“ When you have a hammer in your hand, everything looks like a nail. Rather than going to GPs for an annual health check, patients are turning to private specialists who can off er a wide range of sometimes unnecessary tests.”

“Although medicines in Malaysia are regulated carefully there is no regulation for the import of medical devices – there are more MRI scanners in the Klang Valley than there are in the entire Australia!”

Datuk Seri Dr T Devaraj, chairman, Malaysian Hospice Council

Source: Penang Monthly. Date: February 2016.