Galen Centre raises concerns over BNM’s new co-payment policy for medical insurance

KUCHING: The Galen Centre for Health & Social Policy has raised concerns about the potential negative impacts of Bank Negara Malaysia’s (BNM) new policy requiring insurance and takaful operators (ITOs) to implement a co-payment option for medical products by September 2024.

With the new policy, policyholders will need to pay a fixed percentage of total claimable expenses, affecting all new medical reimbursement products starting next year.

Deputy Finance Minister Lim Hui Ying announced this policy during the Dewan Rakyat Special Chamber session on July 1.

Galen Centre CEO Azrul Mohd Khalib cautioned that the co-payment feature could lead to significant out-of-pocket expenses for insured patients, potentially beyond their financial means in cases of major illness.

He noted that household out-of-pocket payments on health expenditures, already approaching 35 per cent, could increase further.

“’The buffet table syndrome’ has been used as one of the main arguments to justify this policy.

“It describes policyholders with zero co-payment coverage or full riders, who are unwell and sick availing themselves of medical treatments and medication in the belief that they should maximise their insurance policy coverage.

“This increases the average claims per insured and subsequently leads to higher insurance premiums,” he said in a statement.

However, Azrul argued that not all policyholders abuse their plans, and many do not choose to get seriously ill to utilise their insurance.

Azrul also warned that the introduction of co-payments might prompt people to cancel their insurance policies, opting to rely on the public healthcare system, thereby increasing the load on government clinics and hospitals.

“This would be a tragedy and reverse the gains made over the past decade in insurance coverage. For the moment, this policy is not retrospectively applicable to those who have existing policies, but this could change,” he added.

He further stressed the need for clear guidelines on co-payment caps and maximum annual amounts, as BNM’s February 2024 policy document leaves these critical decisions to insurers.

“Will patients be forced to tap into their Employees Provident Fund savings to pay their co-payments if they lack the money? What if they cannot pay? What happens then?” he asked.

He reiterated that the Galen Centre supports responsible use of medical insurance and a co-payment approach within a national health insurance model for sustainability.

However, they question whether full riders are the main reason for premium increases or if other factors, such as rising hospital and doctor fees, contribute significantly.