Meanwhile, the proposed diagnosis-related group (DRG) pricing system — which is intended to provide greater pricing transparency and prevent overcharging — that was initially slated for rollout in 2Q2025 was delayed to 2026 and again, to 2027. And then, there is the proposed voluntary basic Medical and Health Insurance and Takaful (MHIT) product, that could be paid for from our Employees Provident Fund (EPF) savings. This is totally not helpful, as it does not address the underlying issue of escalating healthcare costs and, worse, will only eat into our already low savings and raise the risks of Malaysians retiring in poverty.
Singapore, on the other hand, has just announced additional measures to curb rising healthcare costs and insurance premiums. All insurance policies in Singapore — national MediShield Life and private insurance Integrated Shield Plan (IP) — currently include mandatory deductibles that patients must pay out-of-pocket before any insurance kicks in, typically ranging from S$1,500 to S$3,500 (depending on plan/age/ward) and co-insurance (patient share of total claimable amount, tiered by bill size from 10% to 5% to 3%). Insurers, however, have been offering IP riders (optional add-ons) that provide almost “to the last dollar” protection — where policyholders pay additional premiums to cover their deductibles and/or capping co-insurance (minimum 5%) share of hospital bills. Under the latest measure, starting from April 2026, riders will no longer be permitted to cover the deductibles and the minimum 5% protection for co-insurance cap will be raised from S$3,000 to S$6,000 post-deductibles (meaning insurers can only cover co-insurance exceeding S$6,000). Deductibles and coinsurance can be paid using MediSave, a mandatory CPF savings account.
As we wrote in our March 3, 2025, article, “High cost of private healthcare — who is (ir)responsible and how to mitigate?” (see excerpt), over-the-top comprehensive coverage only serves to encourage the “buffet syndrome”, where patients will choose the most expensive and often unnecessary tests and procedures simply because they don’t have to foot the bill. And that leads to over-servicing (including for minor incidences and non-essential admission), straining the healthcare system and driving up healthcare costs and premiums for everyone, including policyholders who have made no claims. Remember, insurance companies are profit-driven entities. Worse, under-pricing insurance policies — not properly pricing in the cost escalation that must eventually happen with such comprehensive coverage — gives the illusion of affordability. When the premium hikes come (and they will), policyholders are left with no choice — either pay up or give up.
Making policyholders share a higher proportion of hospital bills will instil greater self-governance and discipline, reduce non-essential medical services demand and the raft of small claims that eventually adds up and are passed through to all policyholders via higher premiums. This is evidenced in Singapore’s Ministry of Health data that shows private hospital IP policyholders with riders were 1.4 times as likely to make a claim, and that their average claim size, at S$14,300, is 1.4 times that of those without riders. Incidentally, Singapore had introduced Fee Benchmarks and a related reference price framework in 2018, as part of its cost containment and premium stabilisation efforts.
See also: Outlook for the ringgit: Between structural drag and cyclical relief
None of what we have previously articulated, or Singapore’s previous and recent measures, are novel. It’s not rocket science. Why is it then so embarrassingly difficult for Malaysia to execute? When will the interest of the average Malaysian be prioritised?
