The Reason For Rising Medical Inflation Rate In Malaysia
Medical inflation in Malaysia is a major driver of surging health insurance premium costs. As such, health insurance companies are continuously looking for different ways to manage medical inflation and keep premiums competitive and affordable for customers.
Unfortunately, medical inflation typically exceeds retail or consumer price inflation due to technological advancements, new drugs, and increasing lifespan, thus, requiring more medical care. Despite measures to combat claims management, fraud management, and case management, reversing medical inflation in Malaysia is still a struggle.
What is medical inflation?
By definition, medical inflation is the systemic increase in the median or unit cost of healthcare services over a defined historical period. Medical inflation can encompass both the utilisation and the unit costs of health services.
Overall, medical inflation principally denotes changes in the median healthcare expenditure per person in a country from year to year. However, medical inflation assumes the risk profile of the subject and benefit entitlements remain the same.
Why is medical inflation so high?
Medical inflation in Malaysia climbed at an average of 9 to 10% annually between 2013 and 2018. The main drivers of these numbers were advances in medical treatment, the high cost of imported equipment and medicine, an ageing population, increasing benefits and policy design, and a high prevalence of non-communicable diseases (NCDs).
Why does medical inflation happen?
Medical advancements
Because of continual advancements in medical technology and medication, the quality of healthcare in Malaysia has improved considerably over time. However, this has also translated into higher medical costs to fulfil the demand for quality health professionals and medical equipment.
Higher demand for health services
The demand for health services has increased over the last decade due to the prevalence of non-communicable diseases in Malaysia. So, as lifestyle diseases and illnesses become more common, the demand for medical treatment for older people drives up medical inflation.
Changes in cost per person
Incremental changes in cost per person trigger changes in the unit cost of specific ongoing medical treatments and procedures. This change can come in the form of hospital consumable costs, specialist doctor fees, and even expenses like rent or property costs.
Misuse and medical fraud
Misuse and medical fraud from health institutions and their employees can impact health inflation. This is because insurance companies serve as the main means for most Malaysian citizens to access affordable and quality healthcare.
So, if medical fraud and misuse are prevalent in the healthcare system, medical insurance companies have their hands tied in the efforts to counter medical inflation.
Unhealthy lifestyle choices
Non-communicable diseases like cardiovascular diseases and diabetes are a product of poor diet choices, occupational health and sedentary lifestyles. These conditions may require long-term treatment. Thus, exacerbating health costs incurred by individuals.
Changes in utilisation of health services per person
The utilisation of health services per person may vary over time as the health industry moves to newer and more costly treatments and medications. This change can occur due to the launch of new drugs and new-age technologies to diagnose and treat a disease which was earlier untreatable.
Consumer behaviour can also affect the utilisation of health services per person, as well as changes in the access and availability of healthcare.
Medical inflation rate in Malaysia 2022
According to Aon’s 2022 Global Medical Trend Rates Report, Malaysia’s estimated medical inflation rate is 12%, increasing on an average of 10%–15% annually. In contrast, the general inflation rate of Malaysia for goods and services is only estimated to be at approximately 2% in 2022.
How to deal with the rising medical inflation rate in Malaysia?
Medical insurance coverage
You can help curb the rising health inflation rates by obtaining a health insurance policy to help cover any unforeseen medical costs.
Essentially, with medical cover from a company like Prudential, you can pay a small monthly premium in exchange for medical coverage if you get a health scare.
These insurance plans typically cover hospital room and board, lab fees, nursing care and certain medicines. All this can be incredibly useful to cover medical costs that are continually rising.
Revise your medical insurance plan
Since medical expenses are constantly rising, your insurance company may periodically review its premium/contribution or insurance charges. This is referred to as medical plan revision.
Develop a healthy lifestyle
Consider minimising your medical expenses by living a healthy lifestyle. Practise healthy lifestyle habits like exercising regularly and managing any risk factors that may impact on your health.
This can help reduce your risk factors for diseases like heart attacks, cancer and diabetes that require long-term medical care.
Understand recommended procedures and avoid unnecessary ones
Have a comprehensive understanding of the surgical procedures recommended to you to avoid being overcharged for unnecessary ones.
Ask for itemised bills
Always ask for itemised bills with detailed descriptions of your treatment costs to help you negotiate, or avoid being unfairly charged.
Day surgery
If possible, opt for day surgeries which allow you to be admitted and discharged on the same day. This means you can avoid incurring overnight stay charges.
Conclusion
In summary, the main drivers of health spending growth in Malaysia cut across an ageing population, rising national income, and technological progress.
Health insurance organisations are helping combat inflation with regular reviews of their medical plans against current healthcare costs. This further helps to ensure that their customers reap the benefits of affordably priced long-term medical protection plans.
Furthermore, medical insurance plans like those from Prudential are a vital tool in encouraging Malaysians to live healthier via Pulse, an AI-powered health app. It provides relevant health insights, a fitness tracker and vaccine calendar, and online consultations.