Study Supply Chain To Find Out Medical Inflation S Root Causes Govt Told

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Malaysia’s medical inflation reached 15% last year, which was significantly higher than the global and Asia-Pacific average of 10%, according to Bank Negara Malaysia. (AP pic)
PETALING JAYA: The government should conduct a comprehensive study of the medical supply chain to investigate the root causes of Malaysia’s medical inflation, says Shahril Hamdan.
Shahril, a former economic adviser in the Prime Minister’s Office, said the study is needed as data has shown that both insurance companies and private hospitals “have not profited greatly” from the rising private hospital bills and medical insurance premiums.
“Our private hospitals’ profit margin of 10% is lower than the global average, and Bank Negara Malaysia (BNM) has stated that insurance companies’ net underwriting income has decreased. So who’s profiting here?” Shahril asked during today’s episode of his Keluar Sekejap podcast.
“It might be that (the costs) in the supply chain have gone up. I don’t have the complete answer, but the government can carry out a study to reveal the specifics.
“There might be a significant problem within the medical supply industry and ecosystem,” he added.
His Keluar Sekejap co-host Khairy Jamaluddin agreed, adding that the prices of raw materials, medicines, equipment, and manpower have increased over the years.
Khairy, a former health minister, said these factors have contributed to an “inflationary medical environment”.
“We can’t blame everything on the insurance companies or private hospitals. We must consider the entire supply chain related to health services,” he said.
“We also have to acknowledge that geopolitical factors, demand factors, and the labour market have contributed to this somewhat uncontrollable (medical) inflation.”
Khairy called for the government to consider increasing the annual budget for the health ministry from 3% to 5% of the gross domestic product (GDP) if the study reveals that the factors leading to medical inflation are beyond its control.
“That’s the only way our government can help without market intervention and ensure our public healthcare system can accommodate more people who can’t afford private healthcare,” he added.
Last December, BNM announced several interim measures to mitigate the impact of the expected increase of between 40% and 70% in health insurance premiums.
In a statement, the central bank said insurance and takaful operators will be required to spread out the increase in premiums over a minimum of three years.
BNM said Malaysia’s medical inflation reached 15% last year, which was significantly higher than the global and Asia-Pacific average of 10%.
The central bank said this was driven by medical technology advancements and the rising prevalence of non-communicable diseases among Malaysians, triggering a greater demand for healthcare services.
This has led to claims paid out by insurers rising faster than premiums collected, it added. - FMT

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