Making sense of MHIT: Is RM100,000 annual limit really enough?

KUCHING (Feb 23): When a medical emergency strikes, the first call is often to 999. The next call, however, depends on something more personal: whether you can afford the costs of your treatment and where you will be treated.

For most, an ambulance ride ends at the nearest public hospital. For some, it involves a choice: public or private? That choice, more often than not, hinges on whether one holds a medical and health insurance or takaful (MHIT) policy.

Yet the number of Malaysians who can make that decision is smaller than one might assume, with only circa 39 per cent of total private healthcare spending covered by MHIT policies.

Over the years, policymakers have floated various ideas to raise MHIT penetration, from compulsory universal coverage to lower premiums and simplified enrolment.

Still, adoption remains modest, with only 56.1 per cent of Malaysians holding some form of medical/life insurance.

Cost remains the most frequently cited barrier, but many also question the necessity of private coverage altogether, arguing that the affordable public healthcare is sufficient.

However, affordability is not the same as accessibility.

Roughly 70 per cent of Malaysia’s 34.1 million population relies on public healthcare, even as just 4.7 per cent of GDP is allocated to the healthcare sector well below the Organisation for Economic Cooperation and Development’s (OECD) average of 8 to 10 per cent.

The strain is visible: public hospitals are stretched, healthcare workers are overworked, and waiting times for non-emergency procedures can stretch into months, sometimes years. For working adults, such delays not only inconvenient, they are also economically disruptive.

Private hospitals offer speedier treatments, but without insurance or substantial savings, they remain out of reach for the average Malaysian.

Even those with existing MHIT policies have not been spared. Post-pandemic medical inflation and repricing exercises have caused premiums to soar, forcing some policyholders to downgrade coverage or drop it entirely.

The result is a structural imbalance: an overburdened public system and an underutilised private one. And within this context, the proposed base MHIT was conceived.

When Bank Negara Malaysia (BNM), together with the Ministry of Health (MOH) and Ministry of Finance (MOF), unveiled the White Paper on the base MHIT plan, the initiative was framed not as another product launch, but as a structural recalibration of how Malaysians access and finance private healthcare.

Part of the broader RESET strategy under the Joint Ministerial Committee on Private Healthcare Costs, the base MHIT aims to widen access while introducing cost discipline into a system strained by medical inflation. A pilot is slated for the second half of 2026, with nationwide rollout targeted for early 2027.

At its core, the base MHIT introduces a standardised floor of protection : annual limits of RM100,000 to RM150,000, accompanied by a two-tier co-payment structure designed to encourage in-network hospital usage and minimise unnecessary medical claims.

Its most significant departure from market practice, however, is the extension of coverage to those traditionally ineligible from MHIT plans individuals with pre-existing illnesses.

The proposal has been broadly welcomed across the healthcare ecosystem, but it has also raised an unavoidable question: Is RM100,000 to RM150,000 a year truly sufficient medical protection in Malaysia today?

The answer, as healthcare professionals and analysts point out, is neither straightforward nor universal. It depends on the illness, the stage at diagnosis and, in some cases, geography.

The clinical divide: Enough for more than a heart attack?

For the past two decades, ischaemic heart disease has remained the leading cause of death in Malaysia, accounting for 13 per cent of all medically certified deaths in 2024.

If one were to stress-test the base MHIT, heart disease would be a logical benchmark, and fortunately from a cardiology standpoint, the base MHIT annual limits appear to be adequate.

In an interview with The Borneo Post, Sarawak-based Cardiologist Dr Tang Sie Hing describes the base MHIT as very good in principle and when it comes to cost sufficiency, Dr Tang argues that RM100,000 to RM150,000 is generally more than adequate for acute cardiac events.

When you re talking about heart disease, a minimum of RM100,000 to RM150,000 is actually more than enough as a private hospital admission for a heart attack without surgery may cost approximately RM10,000, angioplasty procedures typically range between RM20k and RM25k, while more complex cases may reach RM60,000 to RM80,000.

Even at the higher end of this spectrum, the annual limit is sufficient, and in the event that it isn t, the cost of stabilisation for cardiac events is not that high, meaning that patients can be stabilised in private hospitals before being referred to public hospitals for further treatment, Dr Tang said.

For acute, high-impact episodes like heart attacks, the base MHIT appears to function as designed, acting as a financial buffer that enables rapid intervention before patients transition, if necessary, to the public system for longer-term care.

Cancer care, however, follows a different financial trajectory.

Sarawak-based oncologist Dr Heng Fook Yew explains that while conventional chemotherapy may only cost RM3,000 to RM4,000 per cycle, newer targeted therapies or immunotherapies can cost between RM15,000 and RM20,000 per cycle.

He guided that a six-month course of targeted therapy, involving eight cycles, can easily exceed RM100,000.

In more advanced cases, particularly stage four cancers where treatment may continue indefinitely, the annual limit becomes far less adequate.

RM100,000 to RM150,000 is probably enough for one-off scenarios like appendicitis or lung infections, but cancer care is entirely different.

For early stage one cases, the RM100,000 to RM150,000 might be enough because we are giving treatment to prevent recurrence and there is an end in sight, for example 6 to 8 cycles, but if you are talking about treatment for stage four cancers, I can tell you forget about it, RM100,000 to RM150,000 is definitely not enough, he lamented.

The contrast between the two diseases underscores a structural reality: one-off interventions such as cardiac procedures fit within defined cost boundaries, but cancer treatment, particularly for advanced stages, often entails prolonged, high-cost treatments that defy annual caps.

In theory, once base MHIT coverage is exhausted, patients can fall back on the public healthcare system, but Dr Heng cautions that for cancer care in particular, geography complicates this assumption.

He notes that Malaysia s oncology challenge is less about absolute numbers of specialists and more about distribution as a disproportionate number of oncologists are based in the Klang Valley.

In Sarawak, fewer than 10 public oncologists are estimated to serve a population of 2.5 million well below the recommended benchmark of 10 oncologists per one million people, as recommended by the International Atomic Energy Agency (IAEA) for adequate cancer workforce capacity.

All these oncologists are based in Kuching, Dr Heng said, which leaves patients from central and northern Sarawak with no choice but to frequently travel for treatment.

Even public healthcare, therefore, can become financially burdensome once travel costs, accommodation, time off work, and caregiver disruptions are factored in.

“For those in areas where cancer care is difficult to access, lower MHIT coverage limits may prove to be a dealbreaker.

“But even if coverage limits are sufficient, it cannot, by itself, correct manpower maldistribution and infrastructure constraints of cancer care, signalling that perhaps deeper reforms within the system should be considered,” Dr Heng stressed.

The co-payment debate: Discipline or deterrence?

A defining feature of the base MHIT is its co-payment structure. Under the standard plan, Tier 1 in-network hospitals require only a RM500 deductible, while Tier 2 out-of-network providers impose a 20 per cent co-share capped at RM3k.

The Association of Private Hospitals Malaysia (APHM) has framed this as necessary cultural reform, arguing that Malaysian patients have grown accustomed to treating medical cards like a credit card for minor ailments.

Thus, normalisation of cost-sharing would reduce moral hazard and encourage more prudent use of hospital resources.

Critics, however, warn of under-treatment as financial constraints shape clinical decisions.

For Dr Tang, co-payments or deductibles of several hundred ringgit are unlikely to create systemic deterrence in clinical care, but he cautions that older pay-and-claim structures that MHITs used to deploy in the past were detrimental, as they often caused patients to delay or abandon necessary procedures due to liquidity constraints.

On the other hand, Dr Heng acknowledged that cost considerations can influence treatment pathways as high co-payments may cause patients to opt for less expensive treatments or forgo higher-end therapies, potentially increasing cancer recurrence risk.

The policy tension therefore lies in balancing cost discipline against the risk of under-treatment.

Beyond this, Dr Heng believes that the normalisation of co-payments is helpful in preparing Malaysians for a healthcare system where individuals take greater responsibility for their own health.

The idea of the government providing all treatment for healthcare is no longer ideal nowadays, you see cost of living rising and subsidies undergoing rationalisations, yet public healthcare is still maintained at RM1 to RM5 per visit and admission to public hospitals at around RM10 per day.

This type of treatment is no longer sustainable in the long run when the cost of everything is rising, so the base MHIT is a good start to addressing this issue and the way forward.

Dr Heng added that even if consumers opt for higher-coverage conventional MHIT products, it does not stop there. He cautions that there are many treatments that are not covered by MHITs such as breast reconstruction after mastectomies.

My advice is that even if you buy a RM1 million coverage plan, you still need to be financially prudent and responsible and have some savings on your own.

“There are some treatments that are not covered by insurance/takaful so it is always better to have something to fall back on.

Perhaps the most transformative feature of the base MHIT is its inclusion of pre-existing conditions. In Malaysia s conventional insurance market, such conditions often result in premium loading or outright rejection by insurance takaful operators (ITOs).

Dr Tang recounts cases of patients unable to upgrade or obtain coverage after heart attacks. For these individuals, the base MHIT represents entry into a system from which they were previously excluded.

In a February 10 sector update, analysts from MBSB Investment Bank Bhd (MBSB Research) described the move as vital given Malaysia s chronic disease burden, where one in six adults have diabetes, one in three have hypertension, and 54.4 per cent are overweight or obese.

Many Malaysians are unaware they have these conditions until they apply for insurance and are rejected or loaded with high premiums. The base MHIT offers a pathway for these individuals to gain private coverage, the research arm noted.

The proposed inclusion of a no look-back policy which limits claim denials based on historical conditions after a defined coverage period also further shifts the insurance and takaful sector from exclusion-based underwriting toward broader social risk-pooling.

A starter rather than a comprehensive product

From a financial management perspective, the base MHIT should not be seen as a cure-all.

For licensed and certified financial planner, Loh Wei Chong, from Simply Better Finances, the base MHIT acts as a bridge rather than a comprehensive insurance product.

He describes it as a great initiative to address low insurance adoption and rising premium repricing, but stresses that suitability depends heavily on life stage, income stability and health profile.

Healthy young adults or individuals with lower disposable income may find it sufficient as a standalone plan, but using it as such requires financial discipline including adequate emergency savings and a stable income to absorb deductibles or shortfalls.

Meanwhile, household breadwinners and higher-risk individuals such as those with hereditary conditions should treat the base MHIT as a foundational base, layering coverage after determining how much protection they require.

If there is a gap between what you need and have, you can talk to licensed professionals, or even as a simple start, use a free template online.

Then, seek out an additional plan to increase your total annual limit, room and board limit, and to have coverage in place for what the base MHIT does not cover.

The total costs should end up lower than before base MHIT came into the picture, he stressed.

Standalone medical insurance products are often the more economical option but investment-linked plans (ILP) would offer additional flexibility through riders that can enhance coverage.

Those with employer-paid plans, however, are in the best position and may not even need to supplement with the base MHIT plan.

One of the strategies I recommend for my clients who are covered by an employee benefits insurance is to get a plan with a high deductible which would have much lower premiums, he said.

Providing an example, Loh explained that if a company health insurance provides an annual limit of RM50,000, employees could opt for a plan with a RM50,000 deductible.

This could translate to low premiums ranging from RM10 to RM20 monthly for coverage limits between RM110,000 and RM2.5 million.

This approach uses employer coverage as the first-loss layer while preserving affordability.

The option to fund premiums via EPF Account 2 withdrawals has been welcomed for improving accessibility and affordability.

However, Loh cautioned against normalising retirement drawdowns as a long-term funding strategy.

While medical protection is essential, so too is retirement security. Diverting EPF savings today reduces future compounding and may weaken long-term financial resilience.

Unless you have more than what you d need to retire, I cannot stress enough the importance of not touching your EPF accounts, regardless of what new official policies might say, even a RM200 monthly withdrawal is enough to delay your retirement by two to four years, he stressed.

Shifting towards volume-driven growth

Overall, industry analysts have remained broadly neutral on the proposed base MHIT, viewing it as a positive for increasing patient numbers at private healthcare operators but with limited impact to near-term earnings.

They also expect it to encourage a gradual shift towards a regulated multi-payer model, potentially laying the groundwork for a Diagnosis-Related Group (DRG) system, which Dr Tang strongly advocates for given that the DRG model has been widely adopted in countries such as the US and Australia, and proven effective in controlling medical costs and improving hospital efficiencies.

MBSB Research expects the plan to catalyse structural change shifting private healthcare from price-driven to volume-driven growth.

Operators such as KPJ Healthcare Bhd (KPJ) with its domestic-focused hospital network and spare bed capacity would be well positioned to absorb base MHIT patients, while IHH Healthcare Bhd (IHH) may face lower revenue per patient but could offset margin pressure through standardised, high-volume care packages aligned with the plan.

For insurers, co-sharing and risk-rating mechanisms may help mitigate exposure despite the inclusion of higher-risk policyholders.

When compared to conventional MHIT plans, the base MHIT s coverage limits may appear less competitive.

But it does not claim to be a cure-all. By design, it is just a floor of protection.

For those previously excluded from private insurance, it offers meaningful entry. For repriced middle-income households, it provides re-entry. For policymakers, it marks the first tangible structural milestone under RESET.

It will not eliminate medical inflation. It will not fully cover patients from any and all illnesses. It will not solve maldistribution of care across regions.

It will not satisfy every scenario but it was never intended to.

In a healthcare system grappling with fiscal constraints, rising chronic disease burdens, and an ageing population, the base MHIT represents something pragmatic: Not a panacea but a start to recalibration.

Based MHIT plan to reshape private healthcare

The government s proposed base MHIT is expected to reshape Malaysia s private healthcare industry by expanding insurance coverage to previously uninsurable patients, ultimately benefitting hospital players such as KPJ and IHH.

According to the research arm of MBSB Investment Bank Bhd (MBSB Research), the MHIT plan is expected to act as a standardised floor of protection plan rather than a premium comprehensive policy to address steep medical inflation.

One key policy shift announced in early February is the inclusion of pre-existing conditions, a major departure from existing commercial insurance plans. The Ministry of Health (MOH) announced that the inclusion would ensure that the plan would benefit the middle class.

MBSB Research guided that the move would restore access to private coverage for large segments of the population in Malaysia.

This is vital given Malaysia s high disease burden, where one in six adult have diabetes, one in three have hypertension, and 54.4 per cent of adults are overweight or obese.

Many Malaysians are unaware they have these conditions until they apply for insurance and are rejected or loaded with high premiums.

The Base MHIT offers a pathway for these individuals to gain private coverage, said the research arm.

Additionally, the MHIT is expected to incorporate a no look-back policy, which would limit insurers ability. To deny claims based on historical medical conditions after a defined coverage period.

That said, MBSB Research noted that industry analysts have highlighted several criticisms in the MHIT s design, particularly regarding their annual coverage limits which may be insufficient for catastrophic illnesses such as cancer, heart surgery or prolonged intensive care.

Note that the MHIT currently proposes a RM100k annual limit for those under 60 years of age, and a RM150k annual limit for those above 60 years of age.

Premiums for seniors above 75 years old could also reach RM500 to RM780 per month, raising concerns over affordability for retirees on fixed incomes.

The deductible of RM500 per illness for the standard MHIT plan and RM1,000 to RM1,500 for the standard-plus plan may also be unaffordable given that about 61 per cent of Malaysians struggle to raise RM1,000 for an emergency.

With the high deductibles, the financial risk is shifted back onto the household, making the plan uncompetitive compared to existing market products that offer higher coverage with lower deductibles, said the analyst.

MBSB Research also noted that market comparisons by CodeBlue, a health news website under the Galen Centre for Health & Social Policy, showed that the base MHIT frequently underperformed when compared to existing private products.

At least five commercial products currently offer significantly higher protection often 10 to 50 times the annual limit at premiums that are either comparable to or lower than the government-designed Standard plan, they shared.

And finally, the research arm argued that the proposal to treat certain illnesses such as dengue and pneumonia as outpatient cases is viewed as a safety risk as hospitalisation is necessary to monitor these conditions for sudden complications.

In order to address these raised concerns and transform the proposed MHIT plan into a durable solution, MBSB Research suggests that a private healthcare commission should be established to regulate hospital facility charges, profit margins, and oversee insurance claim decisions to prevent Deny, Delay, Revoke tactics.

Furthermore, the move from fee-for-service to diagnosis related group (DRG) system will also help ensure efficiency in terms of pricing and insurance claims.

To address the unaffordability of premiums, MBSB Research mooted the idea that there could be targeted cash subsidies for vulnerable groups such as unemployed and pensioners.

And finally, MBSB Research advocates that the MHIT needs to formalise making primary care or general practitioner (GP) doctors as first line of care for patients instead of hospitals.

This would allow GPs to manage chronic conditions under the insurance umbrella and prevent expensive and unnecessary treatments or hospitalisations.

The overall success of the Base MHIT Plan would depend on whether the government can successfully pair it with structural cost controls on hospitals. Without this integration, even the base plan will eventually become too expensive for the average Malaysian, said the analyst.

Despite these concerns, MBSB Research maintains that the plan is a potential catalyst for structural change in private healthcare from price-driven to volume-driven growth, ultimately benefitting major players such as KPJ and IHH.

KPJ, with its domestic-focused hospital network and spare bed capacity, is seen as particularly well positioned to absorb Base MHIT patients, while IHH may face lower revenue pressure per patient but could offset margin pressure through standardised, high-volume care packages that align with the base MHIT plan.

Overall, MBSB Research expects 2026 to serve as a standardisation and testing phase for the Base MHIT plan and with overall success hinging on clinal governance and coordination between regulators ,insurers and healthcare providers.

The success of this reset will depend on the government s ability to enforce clinical governance and the industry’s willingness to embrace value-based care, they opined.