M40 Households: The forgotten group in Malaysian healthcare financing

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M40 Households: The forgotten group in Malaysian healthcare financing

Theincomeclassification“M40”referstoMalaysianswhomake RM4850toRM10,959(USD1,170-2,635)permonthandarethe group that benefits least from government health financing programs.WhilethoseintheB40group(i.e.,thoseearningatthe bottom 40% of household incomes) receive government support such as PEKA B40 which funds surgeries and medical equipment, or MySalam which provides limited healthcare insurancecoverage,MalaysiansintheM40groupareexcluded. InstatessuchasSelangorandTerengganu,M40householdsare also excluded from subsidized healthcare programs such as PeduliSihat,causingthemtorelyheavilyontheirincometopay forhealthcare.

With81%ofMalaysiansusingtheirincometopayfortherising healthcare costs in Malaysia and only 22% of Malaysians who purchase health insurance, healthcare costs will be a major burdenforthoseintheM40group.Thisisespeciallytruegiven that 48% of M40 households received their outpatient healthcareservicesinprivate healthcare settingsin2019.This iscomparedto30%amongtheB40sand62%amongtheT20s. A third of these M40 Malaysians were admitted to private hospitals compared to 15% among the B40s and two-thirds of T20 Malaysians (those earning in the top 20% of household incomes). This means M40 Malaysians are seeking healthcare outside ofpublic healthcare facilities, ultimately payingout-ofpocketfortheseservices.

OnesolutionistodividetheM40groupintothreecategories–lower, middle, and upper – based on their household income thresholds. National healthcare programs should be expanded toreachthissegmentofthepopulation.Forexample,MySalam insurance could be provided at a higher, but still affordable, premiumthanfortheB40s.Withincomesnotmuchhigherthan theB40incomegroups,widercoveragewouldallowthelower M40 segment more options in accessing affordable healthcare services.

Fintechcanalsobeusedtoprovideadditionalsafetynetsforthe M40group.Forexample,insuranceproductscustomizedtothe needs of this group could be offered on Malaysian insurtech since 43% of Malaysians cannot afford to purchase health insurance, providing additional avenues for them to seek out affordablehealthinsurancecouldsolvethismajorbarrier.Even intheUnitedStatesofAmerica,risinginsurancepremiumsand deductibles are putting tremendous pressure on middle-class Americans so this issue is not uniquely limited to Malaysia. Additionally, the government of Malaysia could provide expanded tax credits to help M40 Malaysians to cover their healthcareinsurancepremiumsanddeductibles. Inadditiontotheseexpandedprograms,awarenessneedstobe raised about the importance of owning healthcare insurance. The percentage of monthly household incomes spent on healthcare had risen to 5.1% in 2019 so it is crucial for more Malaysians, especially those who are seeking care in private hospitals, to own health insurance. With almost half of M40 Malaysians utilizing private hospitals, health insurance is increasingly important. Currently, topics on health insurance havebeenincorporatedaspartofthenationalcurriculum.But muchmorecould

be done to educate M40s on the importance of owning health insurance. In the last two years, the COVID-19 pandemic was said to heighten the awareness of the need of having health insurance providing the much-needed fertile ground to plant awareness of the need for owning health insurance in middleincomepopulations. However,healthinsuranceisnottheonlysolution,andbuying healthinsuranceinMalaysiaisstilldifficult.Thecurrentrulesdo notallowMalaysianstobuyhealthinsuranceiftheyhaveapreexistingcondition,excludingmanyMalaysiansintheM40group. Additionally, the age limit imposed by some health insurance companies means M40 Malaysians would only have health insuranceasasafetynetuntilacertainage.IntheUnitedStates ofAmerica,theAffordabilityCareActhastriedtoreduceoneof these limitations by removing the exclusion based on preexisting conditions. Similarly, the government of Malaysia should play an active role in expanding health insurance coverage for M40 Malaysians with pre-existing conditions by deploying regulatory interventions or providing financial subsidies.

Toensuretheyavoiddebtfrommedicalexpenses,safetynetsin the form of government subsidies and affordable private insuranceplansmustbemadeavailableforthisgroup.National healthcare programs should expand to include middle-income Malaysians who also experience the heavy burden of out-ofpockethealthcareexpenses.