Background

Malaysia has a two­tier healthcare system consisting of the public and private sectors

which coexist in parallel. Ministry of Health (MOH) is the main provider of public health

care services in the country (1). The government subsidized about 98% of the health services

provided by MOH. The private healthcare sector however, provides services on a

non­subsidized, fee­for­service basis and charge patients accordingly to maintain their

facilities. Therefore, private sector mainly serves for those who can afford to pay. There are 5

types of financing sources that keeps this two­tier system running, which are indirect tax,

direct tax, EPF and SOCSO, out­of­pocket payment and private insurance premiums. The

latter 2 sources mainly contributes to the private sectors while the previous 3 sources

contributes to public sectors. However, SOCSO and EPF (Employee Provident Fund) do

provide some coverage to private sector employees (2).

There are strong proofs that implementation of indirect tax (GST) is tipping off the

equitable balance of finance in Malaysia (3). This social intervention causes the poorer

groups to contribute more to the tax­financed system, but in return received lower health

outcomes due to private­public dichotomy issue. Implementation of GST regardless of

inequities indicates the current fund pooling system can no longer cater the ever rising

healthcare expenditure and is in need of reform. Apart from forming unified regulatory body

to decrease variation in qualities between public and private sector, equity should be instilled

into the health care policy. Healthcare should not be viewed as a commodities but a basic

human rights and any minimization of cost by insurers should be promptly addressed by care

standard (3).

Regulatory body and change in mindset alone is not enough to fully address the issue

but a revamp of health system is needed. By forming a Single­Payer National Health

Insurance, it is possible to create a universal health financing system by transforming the role

of budget funding from directly subsidizing provision to subsidizing the purchase of services

on behalf of the entire population. The integration of services between the public and private

sector is very much needed, at a cost the people can afford. At present, there is no national

health insurance scheme in place.

Improving Equity, Democracy and Justice in Malaysian Healthcare.

A healthcare system is said to be in inequalities if the patients of different genetic

factors, external environment/controllable factors receiving same type of treatment results in

a different therapeutic outcome. It is unavoidable as genetic factors play a big role. However,

in terms of inequities, the patients could come from same external environment, but due to

different in social status or income, they are denied to both access to healthcare and a better

therapeutic outcome. In both cases, one population has better healthcare advantage over the

other, but the latter being avoidable. (WHO 2015) Equity can be achieved if citizens from

each socioeconomic group contributes to the healthcare funding pool according to their

Ability­To­Pay (ATP) and not on a uniform flat rate basis. This can be done by careful

implementation of finance policy. Besides that, the quality of service received should be

regulated and standardized regardless of their social status and income.

A first ever study is carried out to measure the progressivity of each finance sources

and the whole financing system in Malaysia in a comprehensive manner by using Kakwani

Progressivity Indices. Kakwani Progressivity Indices is a tool widely used to assess a finance

policy whether the outcome is equitable. The result shows that the tax­financed system in

Malaysia, together with two­tier system (private and public sector) was progressive,

indicating it was equitable, and it is leading nation towards an egalitarian society (3). In

addition, the study shows that the richer affluent contribute more towards direct taxes, social

insurance, private insurance premiums and out­of­pocket payments while the poor contribute

more towards indirect tax. Therefore, increasing tax on either of the progressive (regressive)

financing source will ultimately affect the rich (poor) and will tip off the equitable balance.

It is advised that a financing strategies should increase reliance on the four

progressive (where richer group contributes more) finance sources and reduce reliance on the

regressive (where poorer group contributes more) indirect taxes to improve equity in health

care financing (3). However, recent implementation of GST is doing completely opposite of

that and driving the healthcare finance towards inequities, shifting the health financial burden

towards the poor. Furthermore, public­private dichotomy issue continue to decrease

efficiency of health service in public sector (9). This is due to outflow of providers to

lucrative private sectors. In context, the poor who are heavily relying on highly subsidized

public sector are paying more for a less health outcome. It is matter of time before the health

inequalities between the rich and the poor gets bigger and the healthcare system in Malaysia

spiral down towards dystopia.

Implementation of GST regardless of inequities show that the pooling system of fund

can no longer support ever rising of health expenditure and is in desperate need of reform.

Increasing funding will only be a short term solution if cost of healthcare is not effectively

controlled. Due to increase in customer’s state of wealth, demand on the private sector

increases. This phenomenon has accentuated disparity between public and private healthcare

(9). Besides that, there is lack of a unified body to control and standardize pricing and quality

of service between public and private sector. The lethal combination of increase demand and

lack of regulating bodies in private sector cause health expenditure to went spiral. Therefore,

implementing a unified body to control pricing of medicine is equally important for welfare

of the citizens.

Apart from a well enforced regulating body, a single payer/purchaser scheme to

healthcare providers will provide better control of the pricing of healthcare system. The

single­payer/purchaser scheme, or Single­Payer National Health Insurance is derived from

combination of both Bismarck model and Beveridge model. Instead of subsidizing the health

care service of individual, this scheme subsidize the purchase of services on behalf of the

entire population by redirecting them into the health insurance fund. Because only a single

body is collecting the financial source, the fund can be used on a complementary manner to

enable a creation of a unified, universal system. This scheme together with a regulating body

will ensure equal access to equal quality of health care service regardless of socioeconomic

status. With this reformation, it will improve cost efficacy and restores the equitable balance

of the nation. Further details on the scheme will be discussed later in this paper.

The problem arises are the scheme is going to affect the private sectors negatively as

the demand will be shifted towards public sector. The citizens are more likely to choose

public over private health care due to higher subsidy and equal quality. Can the public sector

cater the increase in demand of healthcare? Are previously profit­driven providers willing to

return to the public sector to serve their hippocratic oath? What about private sector? Can

they survive this non­profitable scheme? Equity can only be achieved when we realize that

healthcare is not a form of a commodities, but a basic human rights. From a change of

mindset, any attempt to minimize costs in healthcare will be promptly regulated by care

standards from all parties (3).

Single­Payer National Health Insurance

Health Care Financing Models Available Worldwide.

National health model: Also known as the Beveridge model is characterized by health care

coverage of all citizens by a central government. It is financed by general tax revenues.

Central and regional governments either own or control health care providers. Governments

controls service distribution and provider payments (4).

Social insurance model: Also known as the Bismarck model is characterized by healthcare

coverage that is funded by employer, individual and private insurance funds. Government or

private entities control and own factors of production. It is also referred to as tax based

insurance. The Funding is derived from employment taxes (4). E.g. SOCSO & EPF in

Malaysia.

Private insurance model: This model is characterized by employment based or individual

purchase of private health insurance financed by individual and/or employer contributions.

Private entities operating in an open market own and manage service delivery and financing

(4).

The National Health Insurance Model:This model is amalgamation of both Beveridge and

Bismarck. Payment comes from a government run insurance program that every citizen pays

into. There is no requirement marketing in this model so there is no financial ground to deny

claims. The single payer system have more market power to negotiate for lower prices from

pharmaceutical companies and others.

The NHI system is found in Canada. Some newly industrialized countries like Taiwan and

South Korea have also adopted this model (6).

No country, however, maintains a health care delivery model in its pure form (4). A

mix­match between different models is needed to cater different stability of economic and

political situation of a country. A pure Bismarck model is not suitable for a our country that

are progressing towards aging population. This is due to smaller portion of total population

will be “economically active”. Besides that, international competition to attract firms and

maintain/increase employment will put downward pressure on labor taxes. Ultimately,

universal coverage is not sustainable.

With the transformation of healthcare services being planned, a Single­Payer National

Health Insurance can be implemented as an effort to improve the current healthcare system. It

is a combination between Bismarck and Beveridge models which has advantage of

convergence on sources and reduction in dependent on labor market and a single body that

control over both tier. Single­payer system is defined as a system in which a single public or

quasi­public agency organizes health care financing, and has sole control over public and

private sector. Nonetheless, the term “single­payer” only refers to the mode of funding and

purchasing but not the mechanism of the delivery of health care services. With the

single­payer system in place, a new government authority can be established under the

Ministry of Health (MOH) to oversee and manage the funds collected for financing health

care services. Single­payer system serves to transform the role of budget funding from

directly subsidizing provision to subsidizing the purchase of services on behalf of the entire

population.

After analyzing the costs of insurers, employers, doctors, hospitals, nursing homes

and home­care agencies in U.S. it was found that administration consumes 31.0 percent of

total health spending (7) and universal coverage system and a single payer in U.S. as in

Canada can save administrative costs (10% of total health spending) that would be enough to

cover the expense of universal coverage (8).

Because only a single body is collecting the financial source, the fund can be used on

a complementary and rational manner to enable a creation of a unified, universal system. This

reduces overlapping of health expenditure on this private­public dual system and properly

distribute sources to both sectors. This reduces duplication of services, and in turn captures

wastage of resources and redirect them to utilization of high­end technologies and treatment.

It is not necessary to choose between Beveridge and Bismarck; well­defined policy can

enable their complementary co­existence in a unified universal health system as

“Single­Payer National Health Insurance”.

Conclusion

With the transformation of healthcare services being planned, it is perceived that the

integration of services between the public and private sector is very much needed, at a cost

the people can afford. The major question that arises with the planned integration of services

relates to the issue of who will bear the cost of services because, at present, there is no

national health insurance scheme in place. The Single­Payer National Health Insurance is

well tailored to cater our current economical status and effectively reduce cost and increases

accessibility of healthcare regardless socioeconomic status. Ultimately an equitable

healthcare system is conserved.

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