Financing the healthcare system

Healthcare in Malaysia is funded through general taxation, social and private insurance and out-of-pocket payments. It has been reported that total expenditure on health for 2009 was RM33.7 billion, amounting to 4.96 per cent of gross domestic product (GDP) (World Bank, 2011). The government funds public health services through a consolidated revenue fund under the Ministry of Finance; other services are paid for through consumer contributions. Primary care services at public health clinics are delivered almost free of charge. Patients pay a nominal fee of RM1 (equivalent to US$0.31 in 2010) for each outpatient visit. Government employees, numbering 1.4 million, and their family members are also the beneficiaries of this system, even after retirement. The Ministry of Defence has its own healthcare unit for the health needs of its personnel. Secondary and tertiary care provided at public hospital facilities is highly subsidized by the government. A total of RM13.7 billion (US$4.4 billion) was allocated to the MOH for funding public health services in 2009 (MOH, 2010). Fees collected by the MOH constitute only about 2 per cent of the MOH budget, which means that about 98 per cent of the cost of MOH health services was funded directly by government (Yu et al., 2008).

Social insurance is provided through the Social Security Organization, established in 1971. This programme essentially covers local private sector workers, excluding the unemployed and self-employed (Yu et al., 2008). There is also an income cap for enrolment in this scheme and contributions are compulsory. Healthcare coverage is restricted to private primary care doctors, and private or public hospitals willing to work on a fixed fee schedule. Workplace accidents and work-related illnesses are also covered, with compensation being paid for both temporary and permanent lay-off. Migrant workers, numbering more than 2 million, are supported through a workers' compensation insurance scheme (Yu et al., 2008). The central Employees' Provident Fund also apportions an amount for healthcare.

The middle class use private healthcare services and pay high user fees, or co-payments if covered by private insurance. A 2006 World Health Organization (WHO) report found that the majority of private health finance was accounted for by out-of-pocket payments (73.8 per cent), with private insurance a minor component (13.7 per cent) (WHO, 2006). Private providers mainly focus on curative services through general practitioner clinics, medical centres and private hospitals. Hospitals in the private sector function as business entities, and medical practitioners are paid lucrative remuneration packages. But the vast majority of people, estimated at 60-70 per cent of the population, including the poor and disadvantaged, rely on government- provided public hospitals and healthcare centres (Ding, 2010). Of Malaysia's total health expenditure, government funding amounts to about 58 per cent, with private expenditure accounting for the remaining 42 per cent (Tarn et al., 2008).

Health is a federal responsibility (the state governments have little influence), and, while there is no single, comprehensive health policy, elements of such a policy are in place. A medicines policy was developed and endorsed by the Malaysian Cabinet in 2006, covering the areas of licensing, product safety, quality control, research and development (R&D) and rational use of medicines. This policy does not employ direct price controls. Instead, the government seeks to contain prices by fostering competition in the private market (Pharmaceutical Services Division, 2007).

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