On 23 March, Prudential notified its policyholders that it will be raising premiums due to a 19.6% increase in claims.

“The actual cost of your medical plan is directly linked to the number of policyowners who have made claims and their average medical claims amount,” CEO Lim Eng Seong said.

The notice sparked backlash from citizens. Many people started calling out insurance companies on their absurd price increases.

There are even people who chose to terminate their policies entirely, not because they can’t afford it, but because of the alleged profiteering.

Insurance companies continue to justify that they are forced to increase premiums because of:

• Malaysia transitioning into an aging population

• Rise in non-communicable diseases (from our unhealthy lifestyle and poor eating habits)

• Medical advancements and high cost of importing equipment

However, not everyone is convinced. A look at the financial statements of the top four insurance companies reveals that they reported significant net profits and declared millions in dividends in 2023.

To understand the situation better, I decided to conduct a series of interviews on people who are directly involved in the industry.

I reached out to several doctors and insurance agents, and fortunately, Dr. Jon (Ophthalmologist) and Dr. Gunalan (Anesthesiologist) agreed to share their insights.

You may watch both sessions here: https://linktr.ee/thefuturizts

Here’s what they’re saying about the current situation 👇

If you could summarize Malaysia’s healthcare sector in one sentence, what would it be?

Dr. Gunalan: Malaysia's healthcare system is fragmented and confusing.

The issue is that everyone has their own vested interests. While there is a strong push to offer quality healthcare products and services, sustainability remains a challenge.

Good healthcare is available, but it is not cheap. There are times when you can receive excellent care, but the waiting period is long. This is the current state of public healthcare. The challenge lies in bridging these three key issues—efficiency, speed, and affordability—to ensure that we deliver healthcare that is not only effective but also accessible to all.

The reality is that healthcare is expensive. We must acknowledge that modern medical treatments, such as cancer care, have significantly advanced.

In the past, a cancer diagnosis often meant little hope. However, with developments in early screening, surgery, molecular-level treatments, targeted therapy, and immunotherapy, patients now have a better chance at prolonging their lives.

However, these advancements come at a high cost. The technology and research involved in developing these treatments require substantial investment, primarily funded by private companies. Naturally, these companies expect a return on investment, which adds to the cost of healthcare.

Dr. Jon: The situation is dire but still salvageable.

Malaysia is fortunate to have a public healthcare system that is largely subsidized. Even if you can't afford private insurance, you can still see a doctor. Government clinics charge as little as RM1, while specialist consultations in public hospitals cost around RM15, making healthcare affordable for most people.

The dual system, comprising both public and private healthcare, offers flexibility. Public healthcare supports the majority of patients, while private healthcare provides faster access and advanced medical technology for those who can afford it. This is an advantage that many people overlook.

In contrast, countries like the United States operate on a fully privatized model. If you suffer a heart attack there, the first question the ambulance service asks is whether you have insurance. Without coverage, an ambulance ride alone can cost between $300 and $1,000, excluding treatment expenses. If you can’t afford it, then you’ll probably have to die on your bed.

Why are medical premiums increasing? Is it only about rising medical costs?

Dr. Gunalan: From a doctor’s perspective, our consultation fees have remained unchanged for decades. This has been stagnant since 1992, and it is atrocious.

However, medical technology has evolved tremendously. 

Take prostate surgery as an example. Previously, it was performed through open surgery, which resulted in significant blood loss and a long recovery time.

Now, robotic-assisted surgery is the standard. But investing in robotic surgery requires an initial investment of RM8-10 million to procure the equipment and train doctors.

Hospitals that introduce these technologies often rely on external investors, who then need to recover their costs. This leads to higher charges in private hospitals compared to public healthcare facilities.

Dr. Jon: While doctors' fees are regulated and capped, charges for other hospital services—such as bed linens, wheelchairs, medications, and nursing care—are not. Private hospitals have the freedom to mark up these costs as they see fit.

That said, I wouldn’t say this is the sole reason for rising insurance premiums, but it is a contributing factor. We must also talk about the number of new hospitals, especially in the Klang Valley and other key states.

Each hospital is striving to be more luxurious than the next, offering state-of-the-art facilities. Since these hospitals operate as businesses, they must generate profits. As a result, premium healthcare services come with premium price tags.

Another cost driver is the reliance on imported medical equipment. Malaysia does not manufacture high-end medical machinery, so we import from the United States, Germany, and other countries. A machine that costs $100,000 in the US may cost RM400,000 here due to import taxes and currency exchange rates. These additional costs inevitably impact overall healthcare expenses.

How can we resolve this issue before it becomes a national crisis?

Dr. Gunalan: We need to question private hospitals, insurance companies, and their agents.

While many operate ethically, some agents prioritize profit by fulfilling KPIs, without truly considering their clients’ needs. Some incentives they receive, such as luxury trips and million-dollar roundtable rewards, add unnecessary costs to healthcare without benefiting patients.

Internally, hospitals must also consider greater automation and digitalization to streamline operations and reduce expenses. We should focus on identifying the outliers—the hospitals and doctors who excessively mark up procedures and services—to curb unjustifiable charges.

If insurers and agents recognize that a particular hospital overcharges, they should have the authority to redirect clients to more reasonably priced facilities.

Dr. Jon: One policy I believe Malaysia should adopt is a national insurance scheme similar to Singapore's.

Under this system, the government would oversee healthcare funding while allowing hospitals to manage their own finances. Hospitals would generate revenue based on patient services and then claim reimbursements from the government’s insurance pool. This approach would create a more structured and transparent financial model for healthcare institutions.

There is a psychological aspect to consider. When people receive free healthcare, they may not fully appreciate its value.

By implementing a system where everyone contributes a nominal fee, we can create a greater sense of responsibility and sustainability in the healthcare sector.

This write up does not fully summarize the insights shared by both speakers. Some of the points may also be subjected to my own bias and misinterpretation.

Listen or watch the both sessions to get a clearer picture: https://linktr.ee/thefuturizts

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