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CONCEPT PAPER
    MINISTRY OF HEALTH




  1Care for 1Malaysia:
      RESTRUCTURING
THE MALAYSIAN HEALTH SYSTEM




     MINISTRY OF HEALTH MALAYSIA
           11 AUGUST 2009
EXECUTIVE SUMMARY


     CONCEPT PAPER FROM THE MINISTRY OF HEALTH
                          1Care for 1Malaysia:
                                 RESTRUCTURING
                  THE MALAYSIAN HEALTH SYSTEM

This paper is presented to introduce the concept of a national health system named
1Care, in line with the government‟s 1Malaysia model towards greater unity. Input and
guidance of Economic Council members would help improve ideas in this concept paper.
With the approval of the cabinet, MOH, with assistance from various partner agencies
and stakeholders, will then undertake further systematic planning towards the
development of a full blueprint for the 1Care national health system within a 2-year time
frame. Phased implementation will be introduced with full evaluation and monitoring to
ensure that objectives of the 1Care proposal are achieved.

2.     Malaysia‟s health care system is acknowledged internationally as a successful,
modern government-regulated health system that provides effective health services.
Despite the accolades received, Malaysia, like many other countries, is apprehensive
that the present system of health care delivery and financing may not be sustainable in
the long term.


3.     The country faces several issues and challenges in order to put the population at
the forefront of health services and to increase the system performance and advance
quality of care. These challenges include ensuring that services provided meet clients‟
need; enhancing performance to improve equity of service; providing higher quality care;
and overcoming limited and mismatched health care resources such as human resource,
financial and physical infrastructure.



                                           1
4.     Malaysia‟s health care financing pattern mimics more that of lower and lower-
middle income countries while in reality we are an upper middle-income country striving
for high wage earning status. It is now timely to restructure the system in order to align
performance to the needs and expectation of the nation.

5.     1Care is the restructured national health system that is responsive and provides
choice of quality health care, ensuring universal coverage for the health care needs of
the population through the spirit of solidarity and equity.

6.     The proposed restructured Malaysian Health System will retain the existing
strengths of the current system. MOH will be streamlined to focus mainly on governance
and stewardship, and specific community health services. The daily task of patient care
will be devolved under an autonomous Malaysian Healthcare Delivery System with
integration of public and private health care providers and services congruent with the
1Care concept. These changes will lead to more competition between the providers,
higher quality and greater efficiency. The restructured system will be more responsive to
population health needs and expectations through increased autonomy. Some functions
will be placed under independent organisations owned by and accountable to the MOH.

7.     The linchpin of the restructured health financing system is the contribution by
individuals and companies into a social health insurance (SHI) fund publicly managed on
a not-for-profit basis. SHI premiums are estimated at 9.5% of household income, with
contributions from the government, employer and employee.            Two options in the
proportion of contributions are submitted for consideration.        The National Health
Financing Authority (NHFA) will safeguard the integrity of the system, its effectiveness to
control the rate of health care cost increases and ensure the equitable financing and
delivery of health services.

8.     Overall spending for health will increase from 4.7% of GDP in 2007 to an
estimated 6.2% of GDP. Nevertheless, government subsidy on health care will reduce
from an estimated 17.9% of TEH in 2007 to 15.6% in the proposed system through
improved targeting of vulnerable population.

Prepared by:
Ministry of Health
6 August 2009
                                               2
Contents

EXECUTIVE SUMMARY ............................................................................................................................1

CONCEPT PAPER FROM THE MINISTRY OF HEALTH .....................................................................4

OBJECTIVE ..................................................................................................................................................4

BACKGROUND ............................................................................................................................................4

   Current Health System ............................................................................................................................4

   Achievements ...........................................................................................................................................6

   Government‟s Commitment ....................................................................................................................7

   Challenges in the Current Malaysian Health System .........................................................................8

FEATURES OF THE PROPOSED RESTRUCTURED MODEL ........................................................17

FINANCING ARRANGEMENTS, COST & FINANCIAL IMPLICATIONS..........................................22

CAUTIONS AND CONCERNS ................................................................................................................28

BENEFITS ...................................................................................................................................................29

   Benefits to the Nation ............................................................................................................................29

   Benefits to the People ...........................................................................................................................30

   Benefits to Health Care Providers .......................................................................................................31

CONCLUSION ............................................................................................................................................31

REFERENCES ...........................................................................................................................................32

ANNEXES ...................................................................................................................................................34




                                                                              3
CONCEPT PAPER FROM THE MINISTRY OF HEALTH
                          1Care for 1Malaysia:
                                 RESTRUCTURING
                  THE MALAYSIAN HEALTH SYSTEM


OBJECTIVE
1.     The objective of this concept paper is to propose a restructured national health
system that will meet and sustain the future needs of the country. It introduces the
concept of 1Care in line with YAB Prime Minister‟s vision of 1Malaysia. 1Care is the
restructured national health system that is responsive and provides choice of quality
health care, ensuring universal coverage for the health care needs of the population
based on the spirit of solidarity and equity.

2.     The purpose of tabling this concept paper is to seek input and comments from the
Economic Council members. It is also to get approval to develop a detailed blueprint for
the restructured national health system.




BACKGROUND
Current Health System


3.     Malaysia has a dichotomous health care system where comprehensive health
care is offered by a government-led public sector co-existing with a thriving private sector
(Annex 1). The latter caters mainly for the personal care of individuals while the former
provides for both personal care and public health services to ensure overall population
health. There are many different financers and providers of health care serving various
population sub-groups. Nevertheless, the Ministry of Health (MOH) remains the main
provider and financer of health care in the country.



                                                4
4.    There are glaring imbalances and mismatches between the public and private
sector in terms of resources and workloads. In 2008, although only 11% of primary care
clinics are publicly owned, they handled 38% of total patient visits. While there are more
hospitals in the private system, the reality is 78% of hospital beds remain within the
public system, attending to 74% of admissions. Through concerted effort, 55% of doctors
are now within the public system. Despite the greater workload for providers in the public
system, more resources are spent through private financing (Figure 1).


      Figure 1: Public-Private Sector Resources and Workload (2008)

                     Health clinics (with doctors) 802                           6371

                            Outpatient visits (m)         38.4                     62.65

                                  No. of Hospitals        143                         209

                                    Hospital Beds                 41249                        11689

                                      Admissions                 2199310                     754378

                       Doctors (excl. Houseman)             12081                       10006

        Health Expenditure (RM billion) (2007)            13.54                      16.68

            Public      Private                      0%   20%       40%        60%          80%       100%
                                                                                                      10



                                                                   Source: Health Informatics Centre (HIC)




5.    A national referral system has been established within the MOH to provide a
systematic assessment and treatment of patients, along the continuum of appropriate
care. Patients access primary health care providers as the first point of contact and are
referred up to higher levels as needed. Cases are returned to the primary care providers
for follow-up, once close secondary or tertiary attention is no longer necessary. Despite
some bypassing in the public sector, there is a pre-determined referral system to
secondary or tertiary care, with primary care providers acting as gatekeepers (Annex 2).
However, bypassing is rampant in the private sector where patients self-refer freely into


                                                     5
any level of care (Annex 3). The practice of doctor-hopping among certain patients is a
matter of concern, as it does not promote prudent and desired health care practices.




Achievements
6.       Malaysia‟s health care system is acknowledged internationally as a successful,
modern government-regulated health system that provides effective health services
(Bloom G & Standing H, 2008). Malaysia has achieved notable successes in health
status and the health sector including:

        reduction in morbidity and mortality and increasing lifespan of citizens;
        an equitable public health sector;
        universal access to a comprehensive government health sector;
        an effective safety net for catastrophic expenditure for chronic illnesses;
        minimal or no co-payment for services within the public system;
        health service focused on health promotion and disease prevention; and
        private sector responsive to market forces.


7.       Since Independence, Malaysia has achieved great improvement in health as
reflected by certain key health indicators. Life expectancy at birth for both genders has
increased over the years, rising from 56 years for males and 58 for females in 1957 to 72
years for males and 76 years for females in 2006. (WHO, 2007). Infant mortality rate,
which is a good indicator of overall health system performance, reduced drastically to
levels comparable to developed countries. Nevertheless, Malaysia‟s health indicators
have plateaued over recent years, compared to other countries, some of whom invest
more into their health systems (Figure 2).




                                               6
Figure 2 : Selected Vital Statistics, Malaysia 1957-2006




Government’s Commitment
8.       The Government of Malaysia (GOM) has been committed, both conceptually and
operationally, to progressively improve the health and quality of life of Malaysians. The
Ministry of Health (MOH) strives to provide accessible, equitable and high quality health
care to the population.     Various public documents state the Government‟s role and
responsibility on health, notably the following:


        Article 74(1) of the Federal Constitution stipulates that the Federal Government
         has the authority to legislate health matters. (GOM, 2002)

        Vision 2020 states (among others) the aim to ensure the Nation provides
         adequate access to health facilities (Mahathir M, 1991).

        Chapter F (Medical 1974) of the General Order for the Civil Services incorporates
         the proviso for free medical benefits for civil servants and dependants at public
         facilities only (GOM, 2006);

        The EPF Act 1991 initiated the Employees Provident Fund (EPF) as a compulsory
         savings scheme for non-pensionable employees and includes provision allowing
         withdrawal of a portion for medical treatment (GOM, 1991).

                                              7
   Malaysia is a signatory to the Universal Declaration of Human Rights (1948)
         (General Assembly, United Nations) wherein Article 25 states that “Everyone has
         the right to a standard of living adequate for the health and well-being of himself
         and of his family, including … medical care and necessary social services, and
         the right to security in the event of unemployment, sickness, disability, … in
         circumstances beyond his control. Motherhood and childhood are entitled to
         special care and assistance”.

        Since the Fifth Malaysia Plan, Malaysia‟s 5-year Development Plans have
         included statements on cost sharing through health care financing mechanisms to
         provide wider choice and better quality of health services. Although efforts to
         study the sustainability and eventual introduction of a suitable financing scheme to
         replace the present one began in the 1980s, to date they have not lead to
         substantive action. Various reasons may have contributed to the inertia such as
         timing, political will, readiness of the government, people‟s acceptance and
         enabling infrastructure to accommodate the change.



Challenges in the Current Malaysian Health System

9.       Despite the accolades received, Malaysia, like many other countries, is
apprehensive that the present system of financing may not be sustainable in the long
term, given the rapid rise in health care spending and the high out-of-pocket proportion
of this spending. Furthermore, the country faces several issues and challenges in order
to put the population at the forefront of health services and to increase the system
performance and advance quality of care. The main challenges are:

        to ensure services provided meet clients‟ need;

        to enhance greater performance;

        to enhance equity of overall service delivery;

        to ensure higher quality of care; and

        to overcome limited and mismatched health care resources such as human
         resource, financial and physical infrastructure.




                                                 8
Challenges in Serving the People Better
10.     In striving to provide better services to the community, the public health care
system faces the constraints of higher consumer expectations, epidemiological and
socio-demographic shifts towards an aging population and the changing attitude towards
lifestyle, as well as a fairly rigid central administrative structure. The most common
complaint received by the MOH is the long waiting time for services and medical
procedures at all levels of the system.    Greater expectations and demands are the
natural evolution of better education, higher income, and more access to information.
Changing trends in socio-demography and disease patterns present a major challenge in
the containment of health care cost (Figure 3 and 4).


      Figure 3: Changing Demographic Trends




                                                        Source: Department of Statistics




                                           9
Figure 4: Changing Disease Trends in Peninsular Malaysia (1970 and 2008)




11.      The elderly are living longer as evidenced by an increase in life expectancy. An
increase in the aged population is associated with an increase in the prevalence of ill
health mainly chronic problems which require long term and continuous care. Elderly
patients are more likely to be admitted with serious and life threatening conditions
entailing high cost. The cost of health care will increase as the elderly population
increases in the future.


Challenges in Achieving Greater Performance
12.      While the population has benefited greatly from the publicly funded health system,
there are growing issues of inefficiency in the targeting of limited health funds.
Government spending on public health services benefit even those who can afford to pay
for care leading to leakages of public subsidy. Data from the National Health Morbidity
Survey II (NHMS II, 1996) showed that among the richest quintile of the population, more
than half (54%) still admit into public hospitals. It is necessary to encourage the rich to
utilise public facilities because they provide the much needed voice to counter-check the
system and maintain the critical patient mix. Nevertheless, leakages of public subsidy
can be circumvented if the affluent are required to pay amounts commensurate with
services rendered.

                                             10
13.    The issue of limited appraisal and reward for performance in the public system still
needs to be addressed. Poor working conditions, lower remuneration and rewards
coupled with heavy workload contributes to the continuous brain drain of experts and
experienced staff from the public to the private sector and overseas. A less recognised
problem is the high payment charged in the private sector even when care delivered
does not meet acceptable standards. When the MOH tries to tackle such matters
through legislation and enforcement, it is accused of conflicts of interest as MOH itself is
both the regulator and provider of services.


Challenges in Improving Equity
14.    In health care, both horizontal and vertical equity are relevant. Those with equal
need should receive equal care, while payment should be according to capacity to pay.
Moreover, such payment should not be required at the time of use but through a regular
prepayment mechanism. Regardless of the wide network of public and private sector
facilities in Malaysia, its distribution is unbalanced. Private facilities are concentrated
mainly in urban areas. Specialist services are available predominantly in larger towns.
Hence, rural communities do not receive comparable services. This has contributed to
the discrepancy of health outcomes between urban and rural population as shown in
Table 1.


      Table 1: Discrepancy in health outcomes by geographical location




                          Source: National Health and Morbidity Survey (NHMS) III, 2006
15.        Preferences for seeking care at various facilities are clearly income dependent
(Figure 5). When people earn more, they preferentially switch to seeking private health
                                               11
care. As Malaysia strives towards becoming a high-wage earning country, the relevance
of the public health system, as it exists now, is a major concern. Service charges at
public health facilities (both primary and hospital care) are nominal and may even be
waived on appeal. However, frequent media solicitations for financial assistance for
health care indicate a weakness in the system.                                                                               There is a need to increase the
responsiveness of the health care system and health providers to meet the needs and
expectation of the population.

      Figure 5: Health care Utilisation by Income

                                         government          private                                                                   Government               Private
                     100.0                                                                            100.0

                      90.0                                                                             90.0

                      80.0                                                                             80.0

                      70.0                                                                             70.0
        Prevalence




                      60.0                                                                             60.0

                      50.0                                                                             50.0

                      40.0                                                                             40.0

                      30.0                                                                             30.0

                      20.0                                                                             20.0

                      10.0                                                                             10.0

                       0.0                                                                              0.0
                             Less than RM400 - RM700 - RM1000 - RM2000 - RM3000 - RM4000 - RM5000 &           Less than   RM400 -   RM700 -   RM1000 -   RM2000 -   RM3000 -   RM4000 -   RM5000 &
                              RM400 RM699 RM999 RM1999 RM2999 RM3999 RM4999 above                              RM400       RM699     RM999     RM1999     RM2999     RM3999     RM4999     above



                                          Ambulator y care                                                                               Hospital care
                                                                                        Income Range                                                        Source : NHMS III, 2006




16.                  Since 2004, private spending on health overtook public spending (Figure 6). The
proportion of private sector expenditure has increased from 24% (Health Services
Financing Study, 1985) to 55.2% (HIC, 2009). This pattern does not augur well for the
health system because it has been shown that when majority of health care is privately
funded, there is less control on health care inflation. Consequently, cost of health care in
such situations will rise even faster (World Bank Institute,2007).




                                                                                                      12
Figure 6: Public-Private Expenditure on Health, 1997-2007.
                Real RM Value (2007)

           Source : MNHA (2007) &Public Private
                     Figure 6: HIC (2009)                                        Expenditure on Health, 1997-2007
                                                                                                                2.6
                     18,000                                                 Real RM Value (2007) 2.3 2.4
                                                                                            2.5            2.4
                                                                                           2.1             2.1
                                                                                                                                                                                   2.1
                                                                            1.8                                               2.1          2.2                                           2.0
                                                 1.6            1.7
                     16,000      1.5                                                                                                                 1.9         1.9          16,682
                                                                                           1.6             1.7
                                               1.5             1.6           1.6
                                 1.5
                                                                                                                                                                 14,360                  1.0
                     14,000
                                                                                                                                                    13,034                13,546




                                                                                                                                                                                                Percentage (%)
                                                                                                                                                                                         0.0
                                                                                                                         12,067
        RM million




                     12,000
                                                                                                                                  11,558                     11,542
                                                                                                                                           11,740
                                                                                                                                                    10,271                               -1.0
                     10,000
                                                                                                         9,083                10,079
                                                                                         8,727

                                                                                                                                                                                         -2.0
                      8,000
                                                                         7,320


                                                             6,351                                               7,208
                      6,000                   5,806                                              6,824                                                                                   -3.0
                              5,616                                              6,571

                                      5,658                      5,970
                                                     5,538


                      4,000                                                                                                                                                              -4.0
                               1997           1998            1999        2000            2001           2002             2003         2004         2005        2006         2007
                                                                                                  Year

                          PUBLIC (RM million) real RM2007 base                              PRIVATE                          Public as % GDP                   Private as % GDP          28




17.   Of greater concern is the pattern of spending for health in Malaysia (Figure 7).
Malaysia is noted to have very high out-of-pocket spending. At the time of illness and
vulnerability, people have to ensure that they have enough funds to seek care not only in
the private system, but also in the public system where purchases of certain prescribed
drugs, prostheses and equipment are not subsidised by government funds. This does
not provide adequate risk protection from possible impoverishment as a result of seeking
care during episodes of catastrophic illness such as cancers, renal failure and major
cardiovascular conditions.




                                                                                                  13
Figure 7: Ratio of Out-of-Pocket (OOP), Public & Private Expenditures
PERCENTAGES




                                                                    Source : World Bank, 2005
                                             COUNTRIES



         18.    There is some risk pooling mechanism available in the private sector in the form
         of voluntary private health insurance (PHI). These commercial for-profit organisations
         offer risk-rated insurance packages which are mainly affordable to healthy young
         financially independent people. Those who are in most need of financial security when
         seeking care such as the elderly who are not economically active and those with long-
         term chronic illnesses and pre-existing medical conditions, are unlikely to be accepted as
         insurers will deem them as very high risk. The PHI industry has grown tremendously in
         Malaysia in recent years. Unfortunately, to the health economist, this spells yet more bad
         news as PHI is another proven factor contributing to high health expenditure (World
         Bank Institute, 2007).

         19.    Malaysia‟s financing patterns mimics more that of a lower or lower-middle income
         country while in reality we are an upper middle-income country striving for high wage
         earning status. In these latter countries, social security infrastructure plays a significant
         role to garner private capacity into publicly managed fund-pooling mechanisms. In
         Malaysia, statutory bodies such as the Employee Provident Fund (EPF) and Social

                                                      14
Security Organisation (SOCSO) have only a minimal role in providing this social
protection in health financing.

Challenges in Quality of Care

20.    The dichotomy of public and private provision has had a major impact on the
quality of care between the two sectors. Variations arise from the significant difference
in infrastructure, such as facilities and equipment, as well as the clinical practice and
competency of providers and ancillary staff. Such variations have significant impact, not
just on perceived quality but more critically patient safety.


21.    At the same time, the unregulated growth of medical technology as well as its
ready assimilation into the private sector contributes not only to quality concerns but has
also been proven to contribute to the rising cost of health care (Annex 4). The MOH
Health Technology Assessment (HTA) section reports that of the 115 health
technologies assessed from 2004 to mid 2009, only 33% were recommended for routine
or selected use, 50% were not recommended while the balance should only be used in
the research environment. Although the introduction of the Private Health care Facilities
and Services Act (1998) has addressed some of these concerns, there is a need for a
more concerted effort regarding the control and distribution of technology as an effective
way to regulate the availability, use and equitable distribution of cost-effective technology
to achieve higher quality of care.


22.    A challenge to the harmonisation of quality standards and practices across the
health system is the lack of information and data sharing. This is further compounded by
low uptake of information communication technology (ICT) to assist clinical practice and
evaluation as well management practises.


Challenges in Limited Health Care Resources

23.    In considering resources for any sector, the main components are generally
human resource, physical infrastructure and financial resource.          Despite efforts to
increase the health care provider numbers in Malaysia, the country still lacks a significant
volume.    The current doctor-population ratio of 1:1,255 is higher than the WHO

                                              15
recommendation of 1:1000 (Oji, Utsumi & Uwaje, 2005). Moreover, skilled personnel are
not necessarily distributed according to health needs of the nation (Annex 5). Private
facilities in particular, responding to higher purchasing power, are concentrated in urban
areas.

24.      Given the volume of patients that utilise public hospitals, it is not surprising that
overcrowding is an issue that frustrates the government‟s efforts to provide more
creature comfort to patients and visitors. MOH primary health care providers treat more
patients with chronic illnesses compared to private general practitioners (GPs) who treat
more „healthy ill‟ (ACG Project Team, 2007). For public sector specialists, about 70% of
their patient workload consists of complex cases, compared to 25% for private sector
specialists (Abu Bakar S. et. al. 1993). In such a stressful environment, it is perhaps not
surprising that there are substantial unhappiness from both clients and staff in the public
sector.

25.      Although Malaysia is an upper middle income country, its level of health
expenditure mimics more that of a lower middle income country (Figure 8). The system
is clearly under tremendous pressure. It is time to revamp the situation in order to align
performance to the needs and expectation of the nation. It is time for “business unusual”.
(Mohd. Ismail M., 2009)

Figure 8: Total Expenditure on Health as percentage of GDP for Countries
           according to Income Level (2005)




                                              16
FEATURES OF THE PROPOSED RESTRUCTURED MODEL
Main Objectives of Restructuring

26.       Given the many challenges now facing the Malaysian health system, the
objectives of the proposed restructuring are manifold. The newly restructured system will
have to be BETTER than what Malaysians already enjoy today, with enhancement of
universal coverage in line with the 1Malaysia philosophy. The concept of 1Care ensures
horizontal integration between the public and private sectors and vertical integration
between the various levels of care within the health care delivery system. Through this
integration, the development of a national health system will promote greater technical
and allocative efficiency.

27.       Health services will become more affordable through a publicly-managed
prepayment scheme, designed to ensure sustainability and appropriateness of the
system to the needs of a progressive nation. The restructuring will undertake measures
to improve equity in terms of access to better quality of care and financial risk protection.
This includes effective safety nets for catastrophic spending due to illness in a
responsive and caring health care system.

28.       It is envisaged that increased personalised and community care will lead to
greater client satisfaction and health outcomes. A more conducive work environment will
eventually lead to the reduction of the brain drain of highly skilled health care personnel
from the country and from the public to the private sector.

Features of the proposed restructured model

29.       The proposed restructured Malaysian Health System will retain the existing
strengths of the current system. The role of the MOH will be more streamlined in 3
broad functions:

         Governance and stewardship
         Selected public health services
         Personal health care services devolved to the Malaysian Healthcare Delivery
          System (MHDS)

30.       Its main focus within the new public health functions would be the governance and
stewardship of the national health system. The role of community health services and
                                              17
the function of communicable disease control are critically important as witnessed by the
current pandemic of H1N1 Influenza 2009 ravaging our country and indeed the world.
This public good will remain protected and guaranteed as it remains within the MOH, but
with a more specialised role. The MOH of the future will be managed as a tight ship of
highly skilled senior experts, functioning cohesively in a matrix organisation.

31.       The daily routine of patient care will be devolved under an autonomous Malaysian
Healthcare Delivery System (MHDS). The formation of MHDS will change the health
care system in two major aspects:

         the separation of purchaser-provider functions from MOH, allowing the role of
          MOH in governing and financing the health system to be more effective and with
          fewer issues pertaining to conflict of interest; and

         the integration of public and private health care providers and services congruent
          with the 1Care concept.

32.       In the restructured system, Primary Health Care (PHC) will be the thrust of health
care delivery in Malaysia. This change will result in better collaboration between public
and private providers who now perform on equal footing, utilising similar care pathways
and performance tools; thus leading to higher quality and efficiency. The MHDS will be
more responsive to individual health needs and expectations through increased
autonomy. To this end, some functions will be placed under independent organisations
owned by and accountable to the MOH. These autonomous bodies, which are run by
their own management board, will have the flexibility to engage and remunerate staff
based on capability and performance. Staff and facility performance will also be the main
criteria for service payments.

Functional Relationship of the proposed restructured model

33.       The schematic in Annex 6 highlights the functions of the restructured health
system. This paper is designed to introduce the broad skeletal concepts of 1Care and
the restructured health system. The substance of the structure and detailed
organisational arrangements will be developed in a blueprint for the restructured system
when general approval to proceed is secured.

New Public Health Functions

                                              18
34.       The New Public Health Functions denoted in the chart includes policy and
regulations, public health services and any other services deemed necessary.

The Policy & Regulation function includes those related to the following:

         Policy and Development - responsible to formulate and review all national level
          policies related to the health system planning including (but not confined to)
          standard setting, quality assurance, guidelines for good practice and adoption of
          cost-effective measures, infrastructure development, training needs, research,
          ethics, ICT support. These functions will apply to the various scope of health such
          as hospital care, disease control, family health, oral health, health promotion,
          pharmacy services, nutrition, engineering, and other areas of concern.

         Regulatory body – specialised function mainly to formulate and review all
          legislations related to health care providers, health care practice and premises,
          marketing and use of medical equipment, pharmaceuticals and other medical and
          health products. Public Health, Medical Practice, Oral Health, Drug and
          Pharmacy, Medical Devices, Health Facilities, Food Safety, Traditional and
          Complementary Medicine, and Research. Emphasis will be placed on the clear
          delineation of function and responsibility for legislation and regulation so that
          oversight and enforcement will be effective and impartial to avoid conflicts of
          interest. Where appropriate, different aspects of enforcement may remain within
          the MOH or devolved to independent bodies.

         Monitoring and Evaluation – to ensure restructuring of the health system will meet
          specific objectives. Performance of autonomous bodies will be monitored and
          evaluated. Quality and standards established by the Government will be
          implemented so that the people receive appropriate and satisfactory health
          services. Aspects such as health care provider assessment which encompass
          accreditation, credentialing and others will be given attention. Health quality
          control implementation will be carried out jointly with professional health bodies. In
          areas where there are legislation involving establishing of facilities and services,
          such as health care facilities and laboratories, assessment and monitoring in
          terms of „zoning‟ or issuance of „certificate of needs‟ will be required. There may
          be quota assessment before an approval is given.



35.       The Public Health Services function will focus on issues related to the
implementation of community based Public Health Services mainly focused on
Communicable Disease Control, community level disaster management and others.
Communicable Disease Control related services like Public Health Laboratory services

                                                19
will be retained within the MOH. These services will be provided throughout the country
within the existing public health network.

Malaysian Healthcare Delivery System (MHDS)

36.       The MHDS will be the implementing arm in the delivery of personal care. It
comprises of several Regional/State Authorities to address regional health needs. They
are responsible for the strategic supervision of the following functions:

         developing plans for improving health services in their local area,
         making sure local health services are of a high quality and are performing well,
         increasing the capacity of local health services so they can provide more services,
          and
         making sure national priorities for example, programmes for improving cancer
          services are integrated into local health service plans.

37.       The MHDS does not raise its own funds. Funding of MHDS activities related
directly to personal care will be obtained from the National Health Financing Agency
(NHFA) based on pre-determined criteria set by the NHFA in collaboration with the MOH.

Primary Health Care Trust (PHCT)

38.       Primary Health Care Trust (PHCT) is an autonomous agency accountable to the
MHDS. It administers personal care as the key agency to purchase primary health care
services and other levels of services for the region. They are responsible for providing
personal care and preventive services. They oversee and purchase health care services
from independent contractors (Primary Care Providers/Contractors), dentists and
pharmacies. They also commission services from secondary or tertiary care providers
such as hospital services, emergency services, etc.

Primary Health Care Providers (PHCP)


39.       Primary health care services will become the foundation of the health services
with strong focus on promotive-preventive care and early intervention. PHCP comprises
medical practitioners and dentists, assisted by nurses and appropriate paramedical
personnel, in public and private clinics operating individually or as registered groups to
provide services under the financing scheme. The primary health care providers who are

                                               20
independent contractors will function as family doctors and dentists, who are
gatekeepers to secondary and tertiary care. Every individual in the population is
registered with a PHCP. Financing of medical services is by capitation with case-mix
adjustments (based on the community‟s health profile). There are also additional
incentives for achieving performance targets and as inducement for working in less
desirable areas. The benefit package of services will be developed and other payment
mechanisms apply for dental treatment and pharmaceutical prescriptions where patients
will make some co-payments when receiving service. These co-payments are instituted
to encourage prudent use of these services. Certain identified groups, such as the poor,
will be exempted from these co-payments.

Hospital Services

40.       In the restructured system, patients will be referred by their PHCP to higher levels
of care, except in emergencies. There will be a regional network of autonomous public
hospitals, based on distribution of expertise and sub-expertise available in every
zone/state/district. The PHCT purchases hospital services from either the public network
or private hospitals. The services provided by public hospitals, will be funded through a
global budget based on case adjustments using Diagnostic Related Groups (DRG).
Financing of the private hospitals services is through case-based payment.

National Health Financing Authority (NHFA)

41.       NHFA will be an autonomous statutory body, accountable to MOH. It will not be
privatised to safeguard the integrity of the system, its effectiveness to ultimately control
the rate health care cost increases and ensure the equitable financing and delivery of
health services to the Nation. It shall manage both the social health insurance and
general taxation fund for personal health care as a single fund manager. Funds will be
disbursed to the regional/state health authority based on specific and transparent
formulas to cover the personal health care needs of that population. The NHFA will be
accountable for the management of the overall health financing system in close
collaboration with the MOH and MHDS. The main responsibilities of the NHFA include:
         Design Benefits Package together with MOH, MHDS and PHCT
         Negotiating with government for funding required to provide the agreed benefits
          package
         Monitor the fiscal performance of agencies within MHDS
                                               21
Independent and Professional Bodies

42.    Within the restructured health system, several existing independent and
professional bodies with specific technical functions will be strengthened while new ones
may be established. These autonomous agencies are set up to ensure that the system
will be more responsive to client needs. In some situations, they serve as regulatory
functions for licensing and enforcement.




FINANCING ARRANGEMENTS, COST & FINANCIAL
IMPLICATIONS

43.    In the proposed system, current financing arrangements will also be restructured
to ensure better financial risk management, equity in financing of health care, greater
efficiency of government subsidy for health care and accountability of work performance.
The proposed financing scheme moves the current Malaysian financing picture, as
described earlier (Figure 8), more into an upper middle to higher income country pattern.

44.    Health care will continue to be financed through a combination of mechanisms but
with greater public financing, thus reversing the trend of private individual financing seen
previously (Figure 6). Major components for health financing will now be publicly
administered social health insurance (SHI) and general taxation, with much smaller
components of private spending. Private spending may consist of out-of-pocket spending
(OOP) to pay the minimal co-payments at point of seeking care e.g. for dispensing of
drugs and dental treatment within the SHI benefits package, and for services not covered
by SHI. Private spending will also include voluntary top-up private health insurance (PHI)
and corporate spending for employees for coverage of high end care and other non-SHI
covered items.

45.    SHI contribution in the proposed system is mandatory with contributions for the
premiums raised from employer, employee and the government of Malaysia (GOM). The
whole population of Malaysia has to subscribe to SHI with no avenue to opt-out from the
system. This will ensure a high level of risk pooling and equity in financing for health
                                            22
whereby the healthy will cross-subsidise the ill, the rich cross-subsidise the poor, and the
economically productive cross-subsidise the dependant. SHI premiums are calculated as
a percentage of income and shared by employer, employee and government funding.
This model of nationally pooled financing will further enhance social unity and caring as
per the 1Malaysia concept. To ensure greater equity and lower average premiums, SHI
premiums are estimated through community risk-rating to cover all family members, and
not individual risk-rating as in PHI. The latter will result in unacceptably high premiums
for those with the greatest health care needs and yet have the lowest capacity to finance
this need, and these are mainly the young and elderly. The estimates for financing in the
restructured system are shown in Table 2 below.

Table 2: Estimates for financing for the restructured system


Estimated Annual Cost to Finance Malaysian Health System                           (RM)

 Expenditure for personal health care (PHC, specialist & inpatient care)          27.87b

                                                       As % of GDP                 3.9%

  Estimated Total Expenditure on Health with 5% administrative charge             44.23b
(Includes personal health care, public health, training, research, private
insurance etc.)

                                                       As % of GDP                 6.2%

 Per capita expenditure for personal health care                                  984.44

 Per capita expenditure for all health services                                  1,562.60

 SHI Premium for personal health care                                             972.44

 SHI Premium for average household (HH)                                          4,181.50

 SHI Premium as % of average household income                                      9.5%


46.    All estimates are made based on the assumption of population averages for
annual utilisation and cost. Primary health care visits are estimated for 6 annual visits per
person. Specialist clinic visits are estimated on 0.78 utilisation rate and inpatient care on
0.09 utilisation rate (NHMS II). The Malaysian population is estimated as 28,306,700
(Department of Statistics, 2009). Average household size is 4.3 persons per household
                                             23
(Department of Statistics, 2006). Unit cost estimates are RM40, RM317.39 and
RM5088.16 for a primary care visit, a specialist visit and an inpatient episode
respectively. A low 5% administration is estimated for the running of the system at
steady state capitalising on economies of scale and prudent government management.

47.    Funding contributions by employer and employee is a key feature of SHI as a
move towards greater social solidarity. There is no accepted gold standard on how to
apportion government, employer and employee contributions to SHI premiums (Annex
7). We propose 2 options in funding contribution of either 2/3 employer and 1/3
employee participation as the preferred Option 1, or 50:50 contribution as Option 2.
Option 1 is recommended given that majority of income tax collection for Malaysia is
raised through corporate tax rather than personal income tax and companies are already
spending substantial amounts privately to provide health care benefits to their
employees. The 2 options are presented schematically in Figure 9. Nevertheless, these
figures remain preliminary estimates and further analysis and estimates will be
recalculated when the decision is taken to proceed further with the planning for
restructuring.




Figure 9: Funding options for Employer-Employee contribution to SHI Premiums.




48.    With the proposed financial restructuring and the expansion of the social security
fund for health, beyond the current minimal health care spending through organisations
such as Employee Provident Fund (EPF) and Social Security Organisation (SOCSO),
public financing will increase from about 44% of total expenditures on health (TEH) to


                                           24
76% of TEH, if the whole Malaysian population participates in the SHI programme. This
is demonstrated in Figure 10.



Figure 10: Main Sources of Health Financing




49.    International experience has shown that countries with majority public funding for
health care is better able to control the rate of health care cost increases through greater
financial management, economies-of-scale and the bargaining power of a monopsony
not-for-profit organisation. Comparative analysis of the financing arrangements for both
the current and the restructured health system is made in Annex 8.

50.    The GOM remains committed to funding of health services in the restructured
system but with better targeting of beneficiary groups. This will reduce the use of
precious government funds by those of higher income who can afford to fund their own
health needs. Thus government subsidies for health care will be targeted to vulnerable
groups. Through general taxation, the GOM will subsidise funding of primary health care
services for the whole Malaysian population. At the same time, government will also
subsidise SHI contributions for identified vulnerable population groups such as the poor,

                                            25
disabled, and the elderly. As the largest employer in the country, the government will be
expected to contribute to the insurance premiums of government pensioners, civil
servants and five dependants. The GOM will also fund for various other components
particularly items which are public goods and merit goods such as community health
measures e.g. communicable disease control, health education, environmental health
issues and in-service training for public health care providers. Funding for other items
such as public infrastructure development and research will be through MOH budget.
Estimates for these commitments are shown in Table 3.



Table 3: Estimates for Government Spending on Health in the Restructured
         System




51.   Therefore, in line with proposal to inject sufficient funds into the health system,
government spending for health will increase from 2.11% of GDP in 2007 to an
estimated 2.85% of GDP (or from RM13.6billion to RM23.4billion in 2007 RM value).
However, government subsidy on health care will reduce from an estimated 17.9% of
TEH in 2007 to 15.6% in the proposed system through better targeting of vulnerable
population. In absolute quantum, the reduction in subsidies of about 2.3% of TEH is
almost RM1billion.

52.   The linchpin of the restructured health financing system is the contribution of
private spending by individuals and companies into a national fund that is publicly

                                           26
managed on a not-for-profit basis. This arrangement under the National Health Financing
Authority (NHFA) will not be privatised to safeguard the integrity of the system and its
effectiveness to ultimately control the rate of health care cost increases and ensure the
equitable financing and delivery of health services to the Nation.

53.    Funds to pay for SHI premiums may come directly from employer and employee
contributions as monthly salary deductions, and also through direct contribution by non-
formal sector workforce (possibly at a reduced rate to be estimated later). Other possible
sources of fund raising may include EPF dividends, EPF contributions and SOCSO
funds. In line with other government plans to look at contributory pension schemes
(pencen bercarum) for civil servants, it is conceivable that civil servants will also
contribute towards their own SHI premiums as per private employers. If the programme
is adopted, another possible source of funds may come from the Kumpulan Wang
Amanah Pencen (KWAP).

54.    PHI has been developing steadily in Malaysia providing some risk pooling for
health care amongst the higher income population. Current private spending for health
of 56% of TEH in 2006 (41% OOP, 8% PHI and 7% corporate and other spending
sources) will ultimately be reduced to 23% of TEH in the reformed system at steady
state. Private spending will not disappear completely as this component allows for the
continued development of PHI in specific niche areas as a voluntary top-up to the
mandatory SHI programme. Individuals and corporations may also choose to fund other
aspects of health services particularly the extra hotel-level comforts through some OOP
payments or company expenses.

55.    For catastrophic spending on conditions not covered in the SHI benefits package,
other existing sources of funding will be utilised. Such sources include the MOH Health
Welfare Fund and the government grants given to specific non-governmental agencies to
provide specific services such as the National Kidney Foundation, AIDS Foundation,
National Heart Foundation and the National Cancer Council (MAKNA).




                                            27
CAUTIONS AND CONCERNS

56.    This paper is presented to introduce the concept of a national health system
termed 1Care in line with the government‟s 1Malaysia policies towards greater unity. In
presenting this paper to the Economic Council (EC) it is expected that EC members will
provide valuable input and guidance to improve the skeletal plans towards restructuring
the Malaysian health system.

57.    With the consensus of the Economic Council and approval of the cabinet, the
MOH, with assistance from various partner agencies and stakeholders, will then
undertake further systematic planning towards the development of a full blueprint for the
1Care national health system within a 2-year time frame. Upon development, phased
implementation of the programme will be introduced with full evaluation and monitoring
to ensure that the objectives of the 1Care proposal are achieved.

58.    Given the scale of the restructuring, it is imperative that change is managed
effectively at all levels of stakeholders. With further development of the blueprint many
more deliberations with interested parties and stakeholders including the community will
be undertaken to ensure that a solid and widely accepted proposal emerges, taking into
consideration various aspects of concern. A realistic time frame for phased
implementation is required to ensure that the requisite manpower, infrastructure and ICT
needs and challenges are addressed. Appropriate training for health care personnel
such as training in management of public providers and managers in preparation for
greater autonomy has to be conducted. Effective change management will entail initial
injection of investments particularly for the restructured public system in order to
compete with the private sector on similar footing.

59.    In preparation for expanding the 1Care concept expounded in this paper, a
comprehensive review of existing statues and documents will be undertaken to identify
and streamline existing legislations and regulations on the government‟s role and
responsibility.

60.    It is understood that restructuring towards greater efficiency in health delivery may
require rationalisation of services in some regions and its development in others to also
address equity issues. Payment mechanisms, incentives and market signals will lead to
                                            28
change in the distribution of health facilities and the desired changes to ensure higher
quality health care practices.

61.       Planning and execution of the 1Care plan will occur over the longer term. Whilst
the current economic socio-political and global situation may be of concern to effect such
changes in the short term, nevertheless it is expected that the EC will recognise that now
is the ideal time (and indeed it is warranted) to prepare the necessary groundwork.




BENEFITS
Benefits to the Nation
62.       The development of a national health system will strengthen national unity
through a 2-prong process in which:-
         social solidarity is fostered through SHI contribution specifically addressing
          marginalised segments of the population in accordance with the 1Malaysia effort.
          There are cross subsidies by the rich to the poor, the healthy to the sick, and the
          economically productive to dependants and enhancement of corporate social
          responsibility through employer contribution; and

         the 1Care concept emphasises the ethical delivery of health care, employing
          welfare and extra-welfare economic principles to tackle the obvious market
          failures of the health system for better efficiency and at the same time, addressing
          equity issues that troubles the system.

63.       This programme will stimulate the health care market through increased health
care spending aligned with Malaysia‟s upper middle income status. With enhanced
public-private     integration   there   will   be   increasing   productivity   and   system
responsiveness.

64.       The policy will capitalise on the liberalisation and globalisation of the health
care market and ensure that Malaysia’s health care system remains competitive
with the ability to attract highly skilled medical personnel and support health care travel.
At the same time, public funds and subsidies will not benefit foreigners at the expense of
the Malaysian people.




                                                29
65.    The restructured system reduces unnecessary dependence on government
fund by decreasing the leakage of government spending to those who can afford. This
segment of society will contribute through SHI allowing better targeting of limited
government subsidy.       As mentioned previously, in 2007, government subsidy for
personal health care services was 17.9% of total expenditure on health (TEH). With the
proposed restructuring, this will be reduced to 15.6% through better targeting of
vulnerable groups, despite enhancement of services.

66.    The proposed system will improve financial safety nets for lower and middle
income groups through better risk management. There is reduction of direct out-of-
pocket spending (OOP) at point of seeking care by prepayment and coverage of the
poor, disabled and elderly through general taxation. Through SHI, the paying population
gains from the large pool of contributors. There will be lower insurance premium and
wider benefits. There is assurance that no one is denied coverage due to any existing
illnesses or has to pay substantial individually risk-rated premiums due to ill health.

67.    Public management of majority of the health expenditure will ultimately contain
the rapid growth in health care cost and inflation. 1Care promotes greater efficiency
through various means such as higher quality of care, more cost-effective measures,
reducing duplication and increasing competition by attending to the inherent failures of
health care market.



Benefits to the People
68.    This proposal was developed with the ethos of serving Malaysians better.
Through 1Care, people will get more access to both public and private providers in a
move to bring about personalised care nearer to home.

69.    At the point of physical and economic hardship during illness, individuals are not
faced with the concern of paying large sums or setting up deposits with the guarantee of
minimal co-payments at the point of seeking care. With prepayment into the SHI
scheme, there is assurance of access for vulnerable group, and addresses the demand
and expectations of the middle-income segment of the Malaysian population. The
restructured system has at its heart the pledge to improve quality of care delivered and
client satisfaction.
                                             30
70.    In the end the pursuit is for greater health outcomes for the community, thus
ensuring the means to higher work productivity and the ability to pursue individual life
choices.

Benefits to Health Care Providers
71.    The restructuring will bridge the gap between remuneration and workload among
health workers in the public and private sectors. Eventually, the problem of public sector
workers migrating to the private sector (brain drain) can be overcome. The restructuring
optimises the existing health practitioners in the public and private sectors. The lack of
health staff interested in serving less desirable areas can be addressed through the
provision of specific incentives.      Training and credentialing mechanisms will be
developed to ensure all health practitioners have the appropriate competency, in line
with the care standards to be determined.




CONCLUSION


72.    Malaysia‟s health system has been recognised internationally as an excellent
system. However, current and future challenges will affect the sustainability and
relevance of the system. Therefore, the restructuring of the country‟s health system is
critical. The proposed health system will have several clear advantages. Citizens, health
practitioners and the government will obtain multiple add-on benefits. The 1Care concept
is in tandem with the 1Malaysia philosophy to foster greater cohesiveness of the
Malaysian population through the national health system.

73.    The Economic Council is requested to consider and approve the proposed
concept of 1Care through Restructuring of the national health system to enable the
Ministry of Health to further its blueprint development.

Prepared by:

Ministry of Health


7 August 2009
                                             31
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       ulation&catid=38:kaystats&Itemid=11

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GOM (2002). „Federal Constitution (As At 10th April 2002)’. International Law Book Series,
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HIC (2009). „Health Facts, 2008’. Planning and Development Division, Ministry of Health,
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Institute for Public Health (1997). „The Second National Health Morbidity Survey (NHMS II)
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Institute for Public Health (2008). „The Third National Health Morbidity Survey (NHMS III) 2006’.
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Jeffers, J. (1985). „Health Services Financing Study’, 1984-85. Westinghouse Health System.
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       33&sec=atyourservice

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                                               33
ANNEXES
                                             ANNEX 1
      Current Malaysian Health System




                                        34
ANNEX 2

                            Access to Health Providers in Malaysia
                                        MOH                      Other agencies & Private sector
       SECONDARY/TERTIARY




                                                                                                                                           University Hospitals
             CARE




                                       Hospitals with




                                                                                                                      Private Hospitals
                                       Subspecialty



                                      Hospitals with
                                      Specialists




                                                                                                                                                                   Others
                                                                             Medical Corps
                                    Hospitals without




                                                                                                 Orang Asli
                                    Specialists




                                                                                                 Facilities
                                                                  GPs
       PRIMARY HEALTH




                                Health Clinics/Centres
                                1 : 20,000 population
            CARE




                                 Rural/Community Clinics
                                 1 : 4,000 population

                                                                                                                            Estate




                                                                        Hospitals without                                                                         ANNEX 3
                                                                        Specialists




                            Access to Health Providers in Malaysia
                                       MOH                      Other agencies & Private sector
                                                                By passing
SECONDARY/TERTIARY




                                                                                                                                          University Hospitals
      CARE




                                    Hospitals with
                                                                                                              Private Hospitals




                                    Subspecialty



                                    Hospitals with
                                    Specialists
                                                                                                                                                                       Others
                                                                                 Medical Corps




                                   Hospitals without
                                                                                                 Orang Asli
                                                                                                 Facilities




                                   Specialists


                                                                  GPs
PRIMARY HEALTH




                               Health Clinics/Centres
                               1 : 20,000 population
     CARE




                               Rural/Community Clinics
                               1 : 4,000 population

                                                                                                                     Estate



                                                           35
                                                                        Hospitals without
                                                                        Specialists
ANNEX 4
MEDICAL DEVICE AND EQUIPMENT IMPORTS IN MALAYSIA (2001-2007)




                               Source ??? Not Frost and Sullivan




                          36
ANNEX 5


        Number of Clinics and Hospitals by State, June 2009



                                           Clinic
             State                                          Hospital
                                     MOH*           Private MOH Private
Johore                                     352        805    11      28

Kedah                                      281        336     9      11

Kelantan                                   251        185     9       3

Malacca                                     86        278     3       4

Negeri Sembilan                            143        261     6       7

Pahang                                     306        222    10       8

Penang                                      88        483     6      20

Perak                                      288        619    14      13

Perlis                                      39         32     1       0

Selangor                                   189       1510    10      41

Terengganu                                 172        154     6       1

Sabah                                      270        301    22       3

Sarawak                                    203        303    20       9
WP Kuala Lumpur &
                                            14        960     2      30
Putrajaya
WP Labuan                                   11          9     1       0

Total                                     2729       6458   130     178

* MOH : Health Clinics and Community Clinics only




                                     37
Annex 6



Functional Relationship in the
 Restructured Health System




                                 35



              38
ANNEX 7

 Country      Year    %       SHI funds          %       Contribution Employer Employee
                     GDP      (multiple/      population (% income)
                               single)         covered

                                 HIGH INCOME COUNTRIES
                                 Single          All
Australia     2005    9.7      (Medicare)     Residents     1.5-2.5%         Nil      1.5-2.5%

Japan         2002     8        Multiple           99%          8            4           4
                              Single payer
Korea         2007    5.6        (NHIC)             97        4-5%           2           2
                              Single Payer
                              (Bureau for                  4.55 (10% by
Taiwan        2004    6.17        NHI)              99        govt.)      2.7 (60%)   1.4 (30%)
                      11.1
France        2008   (2008)   Multiple (17)         100        19.6         12.8         6.8
                                Multiple
Germany       2008   10.7     (319) - 2003         99.8         16           8           8
                                National
                               Insurance
United                           (Social
Kingdom       2008    9.4       Security)           100                    (NI)11     (NI)12.8

Netherlands   2008     9.2      Multiple           98.5        7.2           4.8         2.4
                       5.5
Hong Kong     2006   (2002)        Nil              Nil         Nil          Nil         Nil
                               MIDDLE INCOME COUNTRIES
                                  SOCSO
                              (Employment
                                 Injury &
Malaysia      2007    4.7       invalidity)        16.8        2.25         1.75         0.5

Indonesia     2002    2.8       Multiple            10     2.5 (ASKES)       2           0.5

Chile         2004    6.1        Single             86          7            Nil          7
Philippines   2005    3.3        Single             73         2.5          1.25        1.25

Costa Rica    2003    7.1     Single public         88          15          9.25         5.5
                                                               4.5
Thailand               4        Multiple           Mixed    (Govt. 1.5)      1.5         1.5
Mexico        2002    6.2       Multiple           51%         9.5          6.95        2.95
Nigeria       2005    3.9       Single              na          15           10          5
                               Multiple
                              (Main - NHI
Tanzania      2002    8.7       fund)               na          6            3           3
Mongolia      2002    4.3        Single            77.3     4% (max)         2           2
                                              39
Annex 8


       Comparative data of selected countries on
          Total Expenditure on Health (TEH)
 Source: WHO (2006)                                 TEH per                 Govt. HE     Public
•2008 Figure                  GDP per capita         capita      TEH as %
                                                                             (% of       HE (%
** Based on proposed system       US $                            of GDP
                                                     US $                    TEH)       of TEH)

Mid     Malaysia     (MNHA)          7,221*              245          4.3       44.2       44.6
Mid    Malaysia (New)**              7,221*              445         6.16       46.1       76.9
High          Japan                  38,443            2,936          7.6       14.6       81.3
High      Rep of Korea               19,115              973          5.9       11.4       53.0
Mid          Thailand                 3,869                 98        3.5       56.0       63.9
Mid         Colombia                  5,440              201          7.3       33.6       84.8
Low          Vietnam                  1,051                 37        6.0       17.0       25.7
Low         Indonesia                 2,254                 26        2.1       37.0       46.6
Low           Kenya                     895                 24        4.5       41.9       46.6
High        Singapore                37,600              944          3.5       26.5       31.9
High          Taiwan                 17,040            1561          6.17        9.0       66.5
Mid           Mexico                 10,211              474          6.4       17.3       45.5




                                               40

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1Care Concept Paper - 6 August 2009

  • 1. CONCEPT PAPER MINISTRY OF HEALTH 1Care for 1Malaysia: RESTRUCTURING THE MALAYSIAN HEALTH SYSTEM MINISTRY OF HEALTH MALAYSIA 11 AUGUST 2009
  • 2. EXECUTIVE SUMMARY CONCEPT PAPER FROM THE MINISTRY OF HEALTH 1Care for 1Malaysia: RESTRUCTURING THE MALAYSIAN HEALTH SYSTEM This paper is presented to introduce the concept of a national health system named 1Care, in line with the government‟s 1Malaysia model towards greater unity. Input and guidance of Economic Council members would help improve ideas in this concept paper. With the approval of the cabinet, MOH, with assistance from various partner agencies and stakeholders, will then undertake further systematic planning towards the development of a full blueprint for the 1Care national health system within a 2-year time frame. Phased implementation will be introduced with full evaluation and monitoring to ensure that objectives of the 1Care proposal are achieved. 2. Malaysia‟s health care system is acknowledged internationally as a successful, modern government-regulated health system that provides effective health services. Despite the accolades received, Malaysia, like many other countries, is apprehensive that the present system of health care delivery and financing may not be sustainable in the long term. 3. The country faces several issues and challenges in order to put the population at the forefront of health services and to increase the system performance and advance quality of care. These challenges include ensuring that services provided meet clients‟ need; enhancing performance to improve equity of service; providing higher quality care; and overcoming limited and mismatched health care resources such as human resource, financial and physical infrastructure. 1
  • 3. 4. Malaysia‟s health care financing pattern mimics more that of lower and lower- middle income countries while in reality we are an upper middle-income country striving for high wage earning status. It is now timely to restructure the system in order to align performance to the needs and expectation of the nation. 5. 1Care is the restructured national health system that is responsive and provides choice of quality health care, ensuring universal coverage for the health care needs of the population through the spirit of solidarity and equity. 6. The proposed restructured Malaysian Health System will retain the existing strengths of the current system. MOH will be streamlined to focus mainly on governance and stewardship, and specific community health services. The daily task of patient care will be devolved under an autonomous Malaysian Healthcare Delivery System with integration of public and private health care providers and services congruent with the 1Care concept. These changes will lead to more competition between the providers, higher quality and greater efficiency. The restructured system will be more responsive to population health needs and expectations through increased autonomy. Some functions will be placed under independent organisations owned by and accountable to the MOH. 7. The linchpin of the restructured health financing system is the contribution by individuals and companies into a social health insurance (SHI) fund publicly managed on a not-for-profit basis. SHI premiums are estimated at 9.5% of household income, with contributions from the government, employer and employee. Two options in the proportion of contributions are submitted for consideration. The National Health Financing Authority (NHFA) will safeguard the integrity of the system, its effectiveness to control the rate of health care cost increases and ensure the equitable financing and delivery of health services. 8. Overall spending for health will increase from 4.7% of GDP in 2007 to an estimated 6.2% of GDP. Nevertheless, government subsidy on health care will reduce from an estimated 17.9% of TEH in 2007 to 15.6% in the proposed system through improved targeting of vulnerable population. Prepared by: Ministry of Health 6 August 2009 2
  • 4. Contents EXECUTIVE SUMMARY ............................................................................................................................1 CONCEPT PAPER FROM THE MINISTRY OF HEALTH .....................................................................4 OBJECTIVE ..................................................................................................................................................4 BACKGROUND ............................................................................................................................................4 Current Health System ............................................................................................................................4 Achievements ...........................................................................................................................................6 Government‟s Commitment ....................................................................................................................7 Challenges in the Current Malaysian Health System .........................................................................8 FEATURES OF THE PROPOSED RESTRUCTURED MODEL ........................................................17 FINANCING ARRANGEMENTS, COST & FINANCIAL IMPLICATIONS..........................................22 CAUTIONS AND CONCERNS ................................................................................................................28 BENEFITS ...................................................................................................................................................29 Benefits to the Nation ............................................................................................................................29 Benefits to the People ...........................................................................................................................30 Benefits to Health Care Providers .......................................................................................................31 CONCLUSION ............................................................................................................................................31 REFERENCES ...........................................................................................................................................32 ANNEXES ...................................................................................................................................................34 3
  • 5. CONCEPT PAPER FROM THE MINISTRY OF HEALTH 1Care for 1Malaysia: RESTRUCTURING THE MALAYSIAN HEALTH SYSTEM OBJECTIVE 1. The objective of this concept paper is to propose a restructured national health system that will meet and sustain the future needs of the country. It introduces the concept of 1Care in line with YAB Prime Minister‟s vision of 1Malaysia. 1Care is the restructured national health system that is responsive and provides choice of quality health care, ensuring universal coverage for the health care needs of the population based on the spirit of solidarity and equity. 2. The purpose of tabling this concept paper is to seek input and comments from the Economic Council members. It is also to get approval to develop a detailed blueprint for the restructured national health system. BACKGROUND Current Health System 3. Malaysia has a dichotomous health care system where comprehensive health care is offered by a government-led public sector co-existing with a thriving private sector (Annex 1). The latter caters mainly for the personal care of individuals while the former provides for both personal care and public health services to ensure overall population health. There are many different financers and providers of health care serving various population sub-groups. Nevertheless, the Ministry of Health (MOH) remains the main provider and financer of health care in the country. 4
  • 6. 4. There are glaring imbalances and mismatches between the public and private sector in terms of resources and workloads. In 2008, although only 11% of primary care clinics are publicly owned, they handled 38% of total patient visits. While there are more hospitals in the private system, the reality is 78% of hospital beds remain within the public system, attending to 74% of admissions. Through concerted effort, 55% of doctors are now within the public system. Despite the greater workload for providers in the public system, more resources are spent through private financing (Figure 1). Figure 1: Public-Private Sector Resources and Workload (2008) Health clinics (with doctors) 802 6371 Outpatient visits (m) 38.4 62.65 No. of Hospitals 143 209 Hospital Beds 41249 11689 Admissions 2199310 754378 Doctors (excl. Houseman) 12081 10006 Health Expenditure (RM billion) (2007) 13.54 16.68 Public Private 0% 20% 40% 60% 80% 100% 10 Source: Health Informatics Centre (HIC) 5. A national referral system has been established within the MOH to provide a systematic assessment and treatment of patients, along the continuum of appropriate care. Patients access primary health care providers as the first point of contact and are referred up to higher levels as needed. Cases are returned to the primary care providers for follow-up, once close secondary or tertiary attention is no longer necessary. Despite some bypassing in the public sector, there is a pre-determined referral system to secondary or tertiary care, with primary care providers acting as gatekeepers (Annex 2). However, bypassing is rampant in the private sector where patients self-refer freely into 5
  • 7. any level of care (Annex 3). The practice of doctor-hopping among certain patients is a matter of concern, as it does not promote prudent and desired health care practices. Achievements 6. Malaysia‟s health care system is acknowledged internationally as a successful, modern government-regulated health system that provides effective health services (Bloom G & Standing H, 2008). Malaysia has achieved notable successes in health status and the health sector including:  reduction in morbidity and mortality and increasing lifespan of citizens;  an equitable public health sector;  universal access to a comprehensive government health sector;  an effective safety net for catastrophic expenditure for chronic illnesses;  minimal or no co-payment for services within the public system;  health service focused on health promotion and disease prevention; and  private sector responsive to market forces. 7. Since Independence, Malaysia has achieved great improvement in health as reflected by certain key health indicators. Life expectancy at birth for both genders has increased over the years, rising from 56 years for males and 58 for females in 1957 to 72 years for males and 76 years for females in 2006. (WHO, 2007). Infant mortality rate, which is a good indicator of overall health system performance, reduced drastically to levels comparable to developed countries. Nevertheless, Malaysia‟s health indicators have plateaued over recent years, compared to other countries, some of whom invest more into their health systems (Figure 2). 6
  • 8. Figure 2 : Selected Vital Statistics, Malaysia 1957-2006 Government’s Commitment 8. The Government of Malaysia (GOM) has been committed, both conceptually and operationally, to progressively improve the health and quality of life of Malaysians. The Ministry of Health (MOH) strives to provide accessible, equitable and high quality health care to the population. Various public documents state the Government‟s role and responsibility on health, notably the following:  Article 74(1) of the Federal Constitution stipulates that the Federal Government has the authority to legislate health matters. (GOM, 2002)  Vision 2020 states (among others) the aim to ensure the Nation provides adequate access to health facilities (Mahathir M, 1991).  Chapter F (Medical 1974) of the General Order for the Civil Services incorporates the proviso for free medical benefits for civil servants and dependants at public facilities only (GOM, 2006);  The EPF Act 1991 initiated the Employees Provident Fund (EPF) as a compulsory savings scheme for non-pensionable employees and includes provision allowing withdrawal of a portion for medical treatment (GOM, 1991). 7
  • 9. Malaysia is a signatory to the Universal Declaration of Human Rights (1948) (General Assembly, United Nations) wherein Article 25 states that “Everyone has the right to a standard of living adequate for the health and well-being of himself and of his family, including … medical care and necessary social services, and the right to security in the event of unemployment, sickness, disability, … in circumstances beyond his control. Motherhood and childhood are entitled to special care and assistance”.  Since the Fifth Malaysia Plan, Malaysia‟s 5-year Development Plans have included statements on cost sharing through health care financing mechanisms to provide wider choice and better quality of health services. Although efforts to study the sustainability and eventual introduction of a suitable financing scheme to replace the present one began in the 1980s, to date they have not lead to substantive action. Various reasons may have contributed to the inertia such as timing, political will, readiness of the government, people‟s acceptance and enabling infrastructure to accommodate the change. Challenges in the Current Malaysian Health System 9. Despite the accolades received, Malaysia, like many other countries, is apprehensive that the present system of financing may not be sustainable in the long term, given the rapid rise in health care spending and the high out-of-pocket proportion of this spending. Furthermore, the country faces several issues and challenges in order to put the population at the forefront of health services and to increase the system performance and advance quality of care. The main challenges are:  to ensure services provided meet clients‟ need;  to enhance greater performance;  to enhance equity of overall service delivery;  to ensure higher quality of care; and  to overcome limited and mismatched health care resources such as human resource, financial and physical infrastructure. 8
  • 10. Challenges in Serving the People Better 10. In striving to provide better services to the community, the public health care system faces the constraints of higher consumer expectations, epidemiological and socio-demographic shifts towards an aging population and the changing attitude towards lifestyle, as well as a fairly rigid central administrative structure. The most common complaint received by the MOH is the long waiting time for services and medical procedures at all levels of the system. Greater expectations and demands are the natural evolution of better education, higher income, and more access to information. Changing trends in socio-demography and disease patterns present a major challenge in the containment of health care cost (Figure 3 and 4). Figure 3: Changing Demographic Trends Source: Department of Statistics 9
  • 11. Figure 4: Changing Disease Trends in Peninsular Malaysia (1970 and 2008) 11. The elderly are living longer as evidenced by an increase in life expectancy. An increase in the aged population is associated with an increase in the prevalence of ill health mainly chronic problems which require long term and continuous care. Elderly patients are more likely to be admitted with serious and life threatening conditions entailing high cost. The cost of health care will increase as the elderly population increases in the future. Challenges in Achieving Greater Performance 12. While the population has benefited greatly from the publicly funded health system, there are growing issues of inefficiency in the targeting of limited health funds. Government spending on public health services benefit even those who can afford to pay for care leading to leakages of public subsidy. Data from the National Health Morbidity Survey II (NHMS II, 1996) showed that among the richest quintile of the population, more than half (54%) still admit into public hospitals. It is necessary to encourage the rich to utilise public facilities because they provide the much needed voice to counter-check the system and maintain the critical patient mix. Nevertheless, leakages of public subsidy can be circumvented if the affluent are required to pay amounts commensurate with services rendered. 10
  • 12. 13. The issue of limited appraisal and reward for performance in the public system still needs to be addressed. Poor working conditions, lower remuneration and rewards coupled with heavy workload contributes to the continuous brain drain of experts and experienced staff from the public to the private sector and overseas. A less recognised problem is the high payment charged in the private sector even when care delivered does not meet acceptable standards. When the MOH tries to tackle such matters through legislation and enforcement, it is accused of conflicts of interest as MOH itself is both the regulator and provider of services. Challenges in Improving Equity 14. In health care, both horizontal and vertical equity are relevant. Those with equal need should receive equal care, while payment should be according to capacity to pay. Moreover, such payment should not be required at the time of use but through a regular prepayment mechanism. Regardless of the wide network of public and private sector facilities in Malaysia, its distribution is unbalanced. Private facilities are concentrated mainly in urban areas. Specialist services are available predominantly in larger towns. Hence, rural communities do not receive comparable services. This has contributed to the discrepancy of health outcomes between urban and rural population as shown in Table 1. Table 1: Discrepancy in health outcomes by geographical location Source: National Health and Morbidity Survey (NHMS) III, 2006 15. Preferences for seeking care at various facilities are clearly income dependent (Figure 5). When people earn more, they preferentially switch to seeking private health 11
  • 13. care. As Malaysia strives towards becoming a high-wage earning country, the relevance of the public health system, as it exists now, is a major concern. Service charges at public health facilities (both primary and hospital care) are nominal and may even be waived on appeal. However, frequent media solicitations for financial assistance for health care indicate a weakness in the system. There is a need to increase the responsiveness of the health care system and health providers to meet the needs and expectation of the population. Figure 5: Health care Utilisation by Income government private Government Private 100.0 100.0 90.0 90.0 80.0 80.0 70.0 70.0 Prevalence 60.0 60.0 50.0 50.0 40.0 40.0 30.0 30.0 20.0 20.0 10.0 10.0 0.0 0.0 Less than RM400 - RM700 - RM1000 - RM2000 - RM3000 - RM4000 - RM5000 & Less than RM400 - RM700 - RM1000 - RM2000 - RM3000 - RM4000 - RM5000 & RM400 RM699 RM999 RM1999 RM2999 RM3999 RM4999 above RM400 RM699 RM999 RM1999 RM2999 RM3999 RM4999 above Ambulator y care Hospital care Income Range Source : NHMS III, 2006 16. Since 2004, private spending on health overtook public spending (Figure 6). The proportion of private sector expenditure has increased from 24% (Health Services Financing Study, 1985) to 55.2% (HIC, 2009). This pattern does not augur well for the health system because it has been shown that when majority of health care is privately funded, there is less control on health care inflation. Consequently, cost of health care in such situations will rise even faster (World Bank Institute,2007). 12
  • 14. Figure 6: Public-Private Expenditure on Health, 1997-2007. Real RM Value (2007) Source : MNHA (2007) &Public Private Figure 6: HIC (2009) Expenditure on Health, 1997-2007 2.6 18,000 Real RM Value (2007) 2.3 2.4 2.5 2.4 2.1 2.1 2.1 1.8 2.1 2.2 2.0 1.6 1.7 16,000 1.5 1.9 1.9 16,682 1.6 1.7 1.5 1.6 1.6 1.5 14,360 1.0 14,000 13,034 13,546 Percentage (%) 0.0 12,067 RM million 12,000 11,558 11,542 11,740 10,271 -1.0 10,000 9,083 10,079 8,727 -2.0 8,000 7,320 6,351 7,208 6,000 5,806 6,824 -3.0 5,616 6,571 5,658 5,970 5,538 4,000 -4.0 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Year PUBLIC (RM million) real RM2007 base PRIVATE Public as % GDP Private as % GDP 28 17. Of greater concern is the pattern of spending for health in Malaysia (Figure 7). Malaysia is noted to have very high out-of-pocket spending. At the time of illness and vulnerability, people have to ensure that they have enough funds to seek care not only in the private system, but also in the public system where purchases of certain prescribed drugs, prostheses and equipment are not subsidised by government funds. This does not provide adequate risk protection from possible impoverishment as a result of seeking care during episodes of catastrophic illness such as cancers, renal failure and major cardiovascular conditions. 13
  • 15. Figure 7: Ratio of Out-of-Pocket (OOP), Public & Private Expenditures PERCENTAGES Source : World Bank, 2005 COUNTRIES 18. There is some risk pooling mechanism available in the private sector in the form of voluntary private health insurance (PHI). These commercial for-profit organisations offer risk-rated insurance packages which are mainly affordable to healthy young financially independent people. Those who are in most need of financial security when seeking care such as the elderly who are not economically active and those with long- term chronic illnesses and pre-existing medical conditions, are unlikely to be accepted as insurers will deem them as very high risk. The PHI industry has grown tremendously in Malaysia in recent years. Unfortunately, to the health economist, this spells yet more bad news as PHI is another proven factor contributing to high health expenditure (World Bank Institute, 2007). 19. Malaysia‟s financing patterns mimics more that of a lower or lower-middle income country while in reality we are an upper middle-income country striving for high wage earning status. In these latter countries, social security infrastructure plays a significant role to garner private capacity into publicly managed fund-pooling mechanisms. In Malaysia, statutory bodies such as the Employee Provident Fund (EPF) and Social 14
  • 16. Security Organisation (SOCSO) have only a minimal role in providing this social protection in health financing. Challenges in Quality of Care 20. The dichotomy of public and private provision has had a major impact on the quality of care between the two sectors. Variations arise from the significant difference in infrastructure, such as facilities and equipment, as well as the clinical practice and competency of providers and ancillary staff. Such variations have significant impact, not just on perceived quality but more critically patient safety. 21. At the same time, the unregulated growth of medical technology as well as its ready assimilation into the private sector contributes not only to quality concerns but has also been proven to contribute to the rising cost of health care (Annex 4). The MOH Health Technology Assessment (HTA) section reports that of the 115 health technologies assessed from 2004 to mid 2009, only 33% were recommended for routine or selected use, 50% were not recommended while the balance should only be used in the research environment. Although the introduction of the Private Health care Facilities and Services Act (1998) has addressed some of these concerns, there is a need for a more concerted effort regarding the control and distribution of technology as an effective way to regulate the availability, use and equitable distribution of cost-effective technology to achieve higher quality of care. 22. A challenge to the harmonisation of quality standards and practices across the health system is the lack of information and data sharing. This is further compounded by low uptake of information communication technology (ICT) to assist clinical practice and evaluation as well management practises. Challenges in Limited Health Care Resources 23. In considering resources for any sector, the main components are generally human resource, physical infrastructure and financial resource. Despite efforts to increase the health care provider numbers in Malaysia, the country still lacks a significant volume. The current doctor-population ratio of 1:1,255 is higher than the WHO 15
  • 17. recommendation of 1:1000 (Oji, Utsumi & Uwaje, 2005). Moreover, skilled personnel are not necessarily distributed according to health needs of the nation (Annex 5). Private facilities in particular, responding to higher purchasing power, are concentrated in urban areas. 24. Given the volume of patients that utilise public hospitals, it is not surprising that overcrowding is an issue that frustrates the government‟s efforts to provide more creature comfort to patients and visitors. MOH primary health care providers treat more patients with chronic illnesses compared to private general practitioners (GPs) who treat more „healthy ill‟ (ACG Project Team, 2007). For public sector specialists, about 70% of their patient workload consists of complex cases, compared to 25% for private sector specialists (Abu Bakar S. et. al. 1993). In such a stressful environment, it is perhaps not surprising that there are substantial unhappiness from both clients and staff in the public sector. 25. Although Malaysia is an upper middle income country, its level of health expenditure mimics more that of a lower middle income country (Figure 8). The system is clearly under tremendous pressure. It is time to revamp the situation in order to align performance to the needs and expectation of the nation. It is time for “business unusual”. (Mohd. Ismail M., 2009) Figure 8: Total Expenditure on Health as percentage of GDP for Countries according to Income Level (2005) 16
  • 18. FEATURES OF THE PROPOSED RESTRUCTURED MODEL Main Objectives of Restructuring 26. Given the many challenges now facing the Malaysian health system, the objectives of the proposed restructuring are manifold. The newly restructured system will have to be BETTER than what Malaysians already enjoy today, with enhancement of universal coverage in line with the 1Malaysia philosophy. The concept of 1Care ensures horizontal integration between the public and private sectors and vertical integration between the various levels of care within the health care delivery system. Through this integration, the development of a national health system will promote greater technical and allocative efficiency. 27. Health services will become more affordable through a publicly-managed prepayment scheme, designed to ensure sustainability and appropriateness of the system to the needs of a progressive nation. The restructuring will undertake measures to improve equity in terms of access to better quality of care and financial risk protection. This includes effective safety nets for catastrophic spending due to illness in a responsive and caring health care system. 28. It is envisaged that increased personalised and community care will lead to greater client satisfaction and health outcomes. A more conducive work environment will eventually lead to the reduction of the brain drain of highly skilled health care personnel from the country and from the public to the private sector. Features of the proposed restructured model 29. The proposed restructured Malaysian Health System will retain the existing strengths of the current system. The role of the MOH will be more streamlined in 3 broad functions:  Governance and stewardship  Selected public health services  Personal health care services devolved to the Malaysian Healthcare Delivery System (MHDS) 30. Its main focus within the new public health functions would be the governance and stewardship of the national health system. The role of community health services and 17
  • 19. the function of communicable disease control are critically important as witnessed by the current pandemic of H1N1 Influenza 2009 ravaging our country and indeed the world. This public good will remain protected and guaranteed as it remains within the MOH, but with a more specialised role. The MOH of the future will be managed as a tight ship of highly skilled senior experts, functioning cohesively in a matrix organisation. 31. The daily routine of patient care will be devolved under an autonomous Malaysian Healthcare Delivery System (MHDS). The formation of MHDS will change the health care system in two major aspects:  the separation of purchaser-provider functions from MOH, allowing the role of MOH in governing and financing the health system to be more effective and with fewer issues pertaining to conflict of interest; and  the integration of public and private health care providers and services congruent with the 1Care concept. 32. In the restructured system, Primary Health Care (PHC) will be the thrust of health care delivery in Malaysia. This change will result in better collaboration between public and private providers who now perform on equal footing, utilising similar care pathways and performance tools; thus leading to higher quality and efficiency. The MHDS will be more responsive to individual health needs and expectations through increased autonomy. To this end, some functions will be placed under independent organisations owned by and accountable to the MOH. These autonomous bodies, which are run by their own management board, will have the flexibility to engage and remunerate staff based on capability and performance. Staff and facility performance will also be the main criteria for service payments. Functional Relationship of the proposed restructured model 33. The schematic in Annex 6 highlights the functions of the restructured health system. This paper is designed to introduce the broad skeletal concepts of 1Care and the restructured health system. The substance of the structure and detailed organisational arrangements will be developed in a blueprint for the restructured system when general approval to proceed is secured. New Public Health Functions 18
  • 20. 34. The New Public Health Functions denoted in the chart includes policy and regulations, public health services and any other services deemed necessary. The Policy & Regulation function includes those related to the following:  Policy and Development - responsible to formulate and review all national level policies related to the health system planning including (but not confined to) standard setting, quality assurance, guidelines for good practice and adoption of cost-effective measures, infrastructure development, training needs, research, ethics, ICT support. These functions will apply to the various scope of health such as hospital care, disease control, family health, oral health, health promotion, pharmacy services, nutrition, engineering, and other areas of concern.  Regulatory body – specialised function mainly to formulate and review all legislations related to health care providers, health care practice and premises, marketing and use of medical equipment, pharmaceuticals and other medical and health products. Public Health, Medical Practice, Oral Health, Drug and Pharmacy, Medical Devices, Health Facilities, Food Safety, Traditional and Complementary Medicine, and Research. Emphasis will be placed on the clear delineation of function and responsibility for legislation and regulation so that oversight and enforcement will be effective and impartial to avoid conflicts of interest. Where appropriate, different aspects of enforcement may remain within the MOH or devolved to independent bodies.  Monitoring and Evaluation – to ensure restructuring of the health system will meet specific objectives. Performance of autonomous bodies will be monitored and evaluated. Quality and standards established by the Government will be implemented so that the people receive appropriate and satisfactory health services. Aspects such as health care provider assessment which encompass accreditation, credentialing and others will be given attention. Health quality control implementation will be carried out jointly with professional health bodies. In areas where there are legislation involving establishing of facilities and services, such as health care facilities and laboratories, assessment and monitoring in terms of „zoning‟ or issuance of „certificate of needs‟ will be required. There may be quota assessment before an approval is given. 35. The Public Health Services function will focus on issues related to the implementation of community based Public Health Services mainly focused on Communicable Disease Control, community level disaster management and others. Communicable Disease Control related services like Public Health Laboratory services 19
  • 21. will be retained within the MOH. These services will be provided throughout the country within the existing public health network. Malaysian Healthcare Delivery System (MHDS) 36. The MHDS will be the implementing arm in the delivery of personal care. It comprises of several Regional/State Authorities to address regional health needs. They are responsible for the strategic supervision of the following functions:  developing plans for improving health services in their local area,  making sure local health services are of a high quality and are performing well,  increasing the capacity of local health services so they can provide more services, and  making sure national priorities for example, programmes for improving cancer services are integrated into local health service plans. 37. The MHDS does not raise its own funds. Funding of MHDS activities related directly to personal care will be obtained from the National Health Financing Agency (NHFA) based on pre-determined criteria set by the NHFA in collaboration with the MOH. Primary Health Care Trust (PHCT) 38. Primary Health Care Trust (PHCT) is an autonomous agency accountable to the MHDS. It administers personal care as the key agency to purchase primary health care services and other levels of services for the region. They are responsible for providing personal care and preventive services. They oversee and purchase health care services from independent contractors (Primary Care Providers/Contractors), dentists and pharmacies. They also commission services from secondary or tertiary care providers such as hospital services, emergency services, etc. Primary Health Care Providers (PHCP) 39. Primary health care services will become the foundation of the health services with strong focus on promotive-preventive care and early intervention. PHCP comprises medical practitioners and dentists, assisted by nurses and appropriate paramedical personnel, in public and private clinics operating individually or as registered groups to provide services under the financing scheme. The primary health care providers who are 20
  • 22. independent contractors will function as family doctors and dentists, who are gatekeepers to secondary and tertiary care. Every individual in the population is registered with a PHCP. Financing of medical services is by capitation with case-mix adjustments (based on the community‟s health profile). There are also additional incentives for achieving performance targets and as inducement for working in less desirable areas. The benefit package of services will be developed and other payment mechanisms apply for dental treatment and pharmaceutical prescriptions where patients will make some co-payments when receiving service. These co-payments are instituted to encourage prudent use of these services. Certain identified groups, such as the poor, will be exempted from these co-payments. Hospital Services 40. In the restructured system, patients will be referred by their PHCP to higher levels of care, except in emergencies. There will be a regional network of autonomous public hospitals, based on distribution of expertise and sub-expertise available in every zone/state/district. The PHCT purchases hospital services from either the public network or private hospitals. The services provided by public hospitals, will be funded through a global budget based on case adjustments using Diagnostic Related Groups (DRG). Financing of the private hospitals services is through case-based payment. National Health Financing Authority (NHFA) 41. NHFA will be an autonomous statutory body, accountable to MOH. It will not be privatised to safeguard the integrity of the system, its effectiveness to ultimately control the rate health care cost increases and ensure the equitable financing and delivery of health services to the Nation. It shall manage both the social health insurance and general taxation fund for personal health care as a single fund manager. Funds will be disbursed to the regional/state health authority based on specific and transparent formulas to cover the personal health care needs of that population. The NHFA will be accountable for the management of the overall health financing system in close collaboration with the MOH and MHDS. The main responsibilities of the NHFA include:  Design Benefits Package together with MOH, MHDS and PHCT  Negotiating with government for funding required to provide the agreed benefits package  Monitor the fiscal performance of agencies within MHDS 21
  • 23. Independent and Professional Bodies 42. Within the restructured health system, several existing independent and professional bodies with specific technical functions will be strengthened while new ones may be established. These autonomous agencies are set up to ensure that the system will be more responsive to client needs. In some situations, they serve as regulatory functions for licensing and enforcement. FINANCING ARRANGEMENTS, COST & FINANCIAL IMPLICATIONS 43. In the proposed system, current financing arrangements will also be restructured to ensure better financial risk management, equity in financing of health care, greater efficiency of government subsidy for health care and accountability of work performance. The proposed financing scheme moves the current Malaysian financing picture, as described earlier (Figure 8), more into an upper middle to higher income country pattern. 44. Health care will continue to be financed through a combination of mechanisms but with greater public financing, thus reversing the trend of private individual financing seen previously (Figure 6). Major components for health financing will now be publicly administered social health insurance (SHI) and general taxation, with much smaller components of private spending. Private spending may consist of out-of-pocket spending (OOP) to pay the minimal co-payments at point of seeking care e.g. for dispensing of drugs and dental treatment within the SHI benefits package, and for services not covered by SHI. Private spending will also include voluntary top-up private health insurance (PHI) and corporate spending for employees for coverage of high end care and other non-SHI covered items. 45. SHI contribution in the proposed system is mandatory with contributions for the premiums raised from employer, employee and the government of Malaysia (GOM). The whole population of Malaysia has to subscribe to SHI with no avenue to opt-out from the system. This will ensure a high level of risk pooling and equity in financing for health 22
  • 24. whereby the healthy will cross-subsidise the ill, the rich cross-subsidise the poor, and the economically productive cross-subsidise the dependant. SHI premiums are calculated as a percentage of income and shared by employer, employee and government funding. This model of nationally pooled financing will further enhance social unity and caring as per the 1Malaysia concept. To ensure greater equity and lower average premiums, SHI premiums are estimated through community risk-rating to cover all family members, and not individual risk-rating as in PHI. The latter will result in unacceptably high premiums for those with the greatest health care needs and yet have the lowest capacity to finance this need, and these are mainly the young and elderly. The estimates for financing in the restructured system are shown in Table 2 below. Table 2: Estimates for financing for the restructured system Estimated Annual Cost to Finance Malaysian Health System (RM) Expenditure for personal health care (PHC, specialist & inpatient care) 27.87b As % of GDP 3.9% Estimated Total Expenditure on Health with 5% administrative charge 44.23b (Includes personal health care, public health, training, research, private insurance etc.) As % of GDP 6.2% Per capita expenditure for personal health care 984.44 Per capita expenditure for all health services 1,562.60 SHI Premium for personal health care 972.44 SHI Premium for average household (HH) 4,181.50 SHI Premium as % of average household income 9.5% 46. All estimates are made based on the assumption of population averages for annual utilisation and cost. Primary health care visits are estimated for 6 annual visits per person. Specialist clinic visits are estimated on 0.78 utilisation rate and inpatient care on 0.09 utilisation rate (NHMS II). The Malaysian population is estimated as 28,306,700 (Department of Statistics, 2009). Average household size is 4.3 persons per household 23
  • 25. (Department of Statistics, 2006). Unit cost estimates are RM40, RM317.39 and RM5088.16 for a primary care visit, a specialist visit and an inpatient episode respectively. A low 5% administration is estimated for the running of the system at steady state capitalising on economies of scale and prudent government management. 47. Funding contributions by employer and employee is a key feature of SHI as a move towards greater social solidarity. There is no accepted gold standard on how to apportion government, employer and employee contributions to SHI premiums (Annex 7). We propose 2 options in funding contribution of either 2/3 employer and 1/3 employee participation as the preferred Option 1, or 50:50 contribution as Option 2. Option 1 is recommended given that majority of income tax collection for Malaysia is raised through corporate tax rather than personal income tax and companies are already spending substantial amounts privately to provide health care benefits to their employees. The 2 options are presented schematically in Figure 9. Nevertheless, these figures remain preliminary estimates and further analysis and estimates will be recalculated when the decision is taken to proceed further with the planning for restructuring. Figure 9: Funding options for Employer-Employee contribution to SHI Premiums. 48. With the proposed financial restructuring and the expansion of the social security fund for health, beyond the current minimal health care spending through organisations such as Employee Provident Fund (EPF) and Social Security Organisation (SOCSO), public financing will increase from about 44% of total expenditures on health (TEH) to 24
  • 26. 76% of TEH, if the whole Malaysian population participates in the SHI programme. This is demonstrated in Figure 10. Figure 10: Main Sources of Health Financing 49. International experience has shown that countries with majority public funding for health care is better able to control the rate of health care cost increases through greater financial management, economies-of-scale and the bargaining power of a monopsony not-for-profit organisation. Comparative analysis of the financing arrangements for both the current and the restructured health system is made in Annex 8. 50. The GOM remains committed to funding of health services in the restructured system but with better targeting of beneficiary groups. This will reduce the use of precious government funds by those of higher income who can afford to fund their own health needs. Thus government subsidies for health care will be targeted to vulnerable groups. Through general taxation, the GOM will subsidise funding of primary health care services for the whole Malaysian population. At the same time, government will also subsidise SHI contributions for identified vulnerable population groups such as the poor, 25
  • 27. disabled, and the elderly. As the largest employer in the country, the government will be expected to contribute to the insurance premiums of government pensioners, civil servants and five dependants. The GOM will also fund for various other components particularly items which are public goods and merit goods such as community health measures e.g. communicable disease control, health education, environmental health issues and in-service training for public health care providers. Funding for other items such as public infrastructure development and research will be through MOH budget. Estimates for these commitments are shown in Table 3. Table 3: Estimates for Government Spending on Health in the Restructured System 51. Therefore, in line with proposal to inject sufficient funds into the health system, government spending for health will increase from 2.11% of GDP in 2007 to an estimated 2.85% of GDP (or from RM13.6billion to RM23.4billion in 2007 RM value). However, government subsidy on health care will reduce from an estimated 17.9% of TEH in 2007 to 15.6% in the proposed system through better targeting of vulnerable population. In absolute quantum, the reduction in subsidies of about 2.3% of TEH is almost RM1billion. 52. The linchpin of the restructured health financing system is the contribution of private spending by individuals and companies into a national fund that is publicly 26
  • 28. managed on a not-for-profit basis. This arrangement under the National Health Financing Authority (NHFA) will not be privatised to safeguard the integrity of the system and its effectiveness to ultimately control the rate of health care cost increases and ensure the equitable financing and delivery of health services to the Nation. 53. Funds to pay for SHI premiums may come directly from employer and employee contributions as monthly salary deductions, and also through direct contribution by non- formal sector workforce (possibly at a reduced rate to be estimated later). Other possible sources of fund raising may include EPF dividends, EPF contributions and SOCSO funds. In line with other government plans to look at contributory pension schemes (pencen bercarum) for civil servants, it is conceivable that civil servants will also contribute towards their own SHI premiums as per private employers. If the programme is adopted, another possible source of funds may come from the Kumpulan Wang Amanah Pencen (KWAP). 54. PHI has been developing steadily in Malaysia providing some risk pooling for health care amongst the higher income population. Current private spending for health of 56% of TEH in 2006 (41% OOP, 8% PHI and 7% corporate and other spending sources) will ultimately be reduced to 23% of TEH in the reformed system at steady state. Private spending will not disappear completely as this component allows for the continued development of PHI in specific niche areas as a voluntary top-up to the mandatory SHI programme. Individuals and corporations may also choose to fund other aspects of health services particularly the extra hotel-level comforts through some OOP payments or company expenses. 55. For catastrophic spending on conditions not covered in the SHI benefits package, other existing sources of funding will be utilised. Such sources include the MOH Health Welfare Fund and the government grants given to specific non-governmental agencies to provide specific services such as the National Kidney Foundation, AIDS Foundation, National Heart Foundation and the National Cancer Council (MAKNA). 27
  • 29. CAUTIONS AND CONCERNS 56. This paper is presented to introduce the concept of a national health system termed 1Care in line with the government‟s 1Malaysia policies towards greater unity. In presenting this paper to the Economic Council (EC) it is expected that EC members will provide valuable input and guidance to improve the skeletal plans towards restructuring the Malaysian health system. 57. With the consensus of the Economic Council and approval of the cabinet, the MOH, with assistance from various partner agencies and stakeholders, will then undertake further systematic planning towards the development of a full blueprint for the 1Care national health system within a 2-year time frame. Upon development, phased implementation of the programme will be introduced with full evaluation and monitoring to ensure that the objectives of the 1Care proposal are achieved. 58. Given the scale of the restructuring, it is imperative that change is managed effectively at all levels of stakeholders. With further development of the blueprint many more deliberations with interested parties and stakeholders including the community will be undertaken to ensure that a solid and widely accepted proposal emerges, taking into consideration various aspects of concern. A realistic time frame for phased implementation is required to ensure that the requisite manpower, infrastructure and ICT needs and challenges are addressed. Appropriate training for health care personnel such as training in management of public providers and managers in preparation for greater autonomy has to be conducted. Effective change management will entail initial injection of investments particularly for the restructured public system in order to compete with the private sector on similar footing. 59. In preparation for expanding the 1Care concept expounded in this paper, a comprehensive review of existing statues and documents will be undertaken to identify and streamline existing legislations and regulations on the government‟s role and responsibility. 60. It is understood that restructuring towards greater efficiency in health delivery may require rationalisation of services in some regions and its development in others to also address equity issues. Payment mechanisms, incentives and market signals will lead to 28
  • 30. change in the distribution of health facilities and the desired changes to ensure higher quality health care practices. 61. Planning and execution of the 1Care plan will occur over the longer term. Whilst the current economic socio-political and global situation may be of concern to effect such changes in the short term, nevertheless it is expected that the EC will recognise that now is the ideal time (and indeed it is warranted) to prepare the necessary groundwork. BENEFITS Benefits to the Nation 62. The development of a national health system will strengthen national unity through a 2-prong process in which:-  social solidarity is fostered through SHI contribution specifically addressing marginalised segments of the population in accordance with the 1Malaysia effort. There are cross subsidies by the rich to the poor, the healthy to the sick, and the economically productive to dependants and enhancement of corporate social responsibility through employer contribution; and  the 1Care concept emphasises the ethical delivery of health care, employing welfare and extra-welfare economic principles to tackle the obvious market failures of the health system for better efficiency and at the same time, addressing equity issues that troubles the system. 63. This programme will stimulate the health care market through increased health care spending aligned with Malaysia‟s upper middle income status. With enhanced public-private integration there will be increasing productivity and system responsiveness. 64. The policy will capitalise on the liberalisation and globalisation of the health care market and ensure that Malaysia’s health care system remains competitive with the ability to attract highly skilled medical personnel and support health care travel. At the same time, public funds and subsidies will not benefit foreigners at the expense of the Malaysian people. 29
  • 31. 65. The restructured system reduces unnecessary dependence on government fund by decreasing the leakage of government spending to those who can afford. This segment of society will contribute through SHI allowing better targeting of limited government subsidy. As mentioned previously, in 2007, government subsidy for personal health care services was 17.9% of total expenditure on health (TEH). With the proposed restructuring, this will be reduced to 15.6% through better targeting of vulnerable groups, despite enhancement of services. 66. The proposed system will improve financial safety nets for lower and middle income groups through better risk management. There is reduction of direct out-of- pocket spending (OOP) at point of seeking care by prepayment and coverage of the poor, disabled and elderly through general taxation. Through SHI, the paying population gains from the large pool of contributors. There will be lower insurance premium and wider benefits. There is assurance that no one is denied coverage due to any existing illnesses or has to pay substantial individually risk-rated premiums due to ill health. 67. Public management of majority of the health expenditure will ultimately contain the rapid growth in health care cost and inflation. 1Care promotes greater efficiency through various means such as higher quality of care, more cost-effective measures, reducing duplication and increasing competition by attending to the inherent failures of health care market. Benefits to the People 68. This proposal was developed with the ethos of serving Malaysians better. Through 1Care, people will get more access to both public and private providers in a move to bring about personalised care nearer to home. 69. At the point of physical and economic hardship during illness, individuals are not faced with the concern of paying large sums or setting up deposits with the guarantee of minimal co-payments at the point of seeking care. With prepayment into the SHI scheme, there is assurance of access for vulnerable group, and addresses the demand and expectations of the middle-income segment of the Malaysian population. The restructured system has at its heart the pledge to improve quality of care delivered and client satisfaction. 30
  • 32. 70. In the end the pursuit is for greater health outcomes for the community, thus ensuring the means to higher work productivity and the ability to pursue individual life choices. Benefits to Health Care Providers 71. The restructuring will bridge the gap between remuneration and workload among health workers in the public and private sectors. Eventually, the problem of public sector workers migrating to the private sector (brain drain) can be overcome. The restructuring optimises the existing health practitioners in the public and private sectors. The lack of health staff interested in serving less desirable areas can be addressed through the provision of specific incentives. Training and credentialing mechanisms will be developed to ensure all health practitioners have the appropriate competency, in line with the care standards to be determined. CONCLUSION 72. Malaysia‟s health system has been recognised internationally as an excellent system. However, current and future challenges will affect the sustainability and relevance of the system. Therefore, the restructuring of the country‟s health system is critical. The proposed health system will have several clear advantages. Citizens, health practitioners and the government will obtain multiple add-on benefits. The 1Care concept is in tandem with the 1Malaysia philosophy to foster greater cohesiveness of the Malaysian population through the national health system. 73. The Economic Council is requested to consider and approve the proposed concept of 1Care through Restructuring of the national health system to enable the Ministry of Health to further its blueprint development. Prepared by: Ministry of Health 7 August 2009 31
  • 33. REFERENCES Abu Bakar S, Wong SL, Jai-Mohan A. et. al., (1993) „Utilisation of specialist medical manpower study 1992/93‟. Ministry of Health and Academy of Medicine, Malaysia. ACG Project Team (2007). Development of Teleprimary Care (TPC) Dataset Through Use of Johns Hopkins ACG (Adjusted Clinical Groups) in Malaysia (Draft). Family Health Development Division, Ministry of Health, Putrajaya. September 2007. Bloom G & Standing H (2008). „Future Health Systems: Why Future? Why Now?‟ Social Science & Medicine 66 (2008), 2067-2075. Retrieved on 31 July 2009 from the World Wide Web: http://www.futurehealthsystems.org/news/GHF/FHSflyer.pdf Department of Statistics, Malaysia (2006). „Yearbook on Statistics, 2006’. Percetakan Nasional Malaysia Berhad, 2006. Department of Statistics, Malaysia (2009). „Population Statistics‟. Retrieved on 20 Julai 2009 from the World Wide Web: http://www.statistics.gov.my/eng/index.php?option=com_content&view=article&id=50:pop ulation&catid=38:kaystats&Itemid=11 EPF (2009). „Employees Provident Fund- Treating Illnesses’. Retrieved on 20 Julai 2009 from the World Wide Web: http://www.kwsp.gov.my/index.php?ch=p2life&pg=en_p2life_medical GOM (2002). „Federal Constitution (As At 10th April 2002)’. International Law Book Series, Petaling Jaya. Article 74(1). GOM (2006). „Perintah-Perintah Am dan Arahan Pentadbiran‟. International Law Book Series, Petaling Jaya. Bab F (Perubatan 1974) HIC (2009). „Health Facts, 2008’. Planning and Development Division, Ministry of Health, Putrajaya. May 2009. Institute for Public Health (1997). „The Second National Health Morbidity Survey (NHMS II) 1996’. Ministry of Health, Kuala Lumpur, 1997. Institute for Public Health (2008). „The Third National Health Morbidity Survey (NHMS III) 2006’. Ministry of Health, Kuala Lumpur, 2008. 32
  • 34. Jeffers, J. (1985). „Health Services Financing Study’, 1984-85. Westinghouse Health System. Asian Development Bank. Mahathir Mohamad (2001). „The Way Forward: Vision 2020‟ Working paper presented at the Malaysian Business Council, Kuala Lumpur on 28 February 1991. Retrieved on 20 Julai 2009 from World Wide Web: http://www.wawasan2020.com/vision/ MNHA (2008), Malaysia National Health Accounts: Health Expenditure Report (1997-2006). Planning and Development Division, Putrajaya, 2008. Mohd. Ismail M., (2009). „Healthcare business on the rise‟. Published in The Star on 4 July 2009. Retrieved on 28 July 2009 from the World Wide Web: http://thestar.com.my/columnists/story.asp?file=/2009/7/4/columnists/atyourservice/41324 33&sec=atyourservice NHI Bureau Taiwan (2004). „National Health Insurance in Taiwan’. Retrieved on 16 July 2009 from the World Wide Web: http://www.unicatt.it/CentriRicerca/Cerismas/Formazione/SGiminiano/2g_Taiwan.pdf Oji DE, Utsumi T & Uwaje C, (2005). „International Centres of Excellence for e-Health in Africa with Global University System in Nigeria’. E-Health International. Retrieved on 3 August 2009 from the World Wide Web: http://www.ehealthinternational.org/vol2num1/Vol2Num1 p23.pdf Rozita Halina H., (2008). „Asia Pacific Region Country Health Financing’. Institute for Health Systems Research, Malaysia. United Nations (1948). Universal Declaration of Human Rights. Article 25. Retrieved on 20 Julai 2009 from the World Wide Web: http://www.un.org/en/documents/udhr/index.shtml WHO (2007). „Malaysia Country Health Information Profile’. Retrieved on 4 August 2009 from World Wide Web: http://www.wpro.who.int/NR/rdonlyres/DB90A4E5-0963-4E00-B56C- E09C2AE01ECC/0/19Malaysia07.pdf World Bank (2005). „Health Expenditure Data’. Retrieved on 15 May 2009 from the World Wide Web: http://www.who.int/entity/nha/country/Regional_ Averages_by_ WB_Income_group- 2005_En.xls World Bank Institute (2007). „Basics of Health Economics’. World Bank, Washington, 2007. 33
  • 35. ANNEXES ANNEX 1 Current Malaysian Health System 34
  • 36. ANNEX 2 Access to Health Providers in Malaysia MOH Other agencies & Private sector SECONDARY/TERTIARY University Hospitals CARE Hospitals with Private Hospitals Subspecialty Hospitals with Specialists Others Medical Corps Hospitals without Orang Asli Specialists Facilities GPs PRIMARY HEALTH Health Clinics/Centres 1 : 20,000 population CARE Rural/Community Clinics 1 : 4,000 population Estate Hospitals without ANNEX 3 Specialists Access to Health Providers in Malaysia MOH Other agencies & Private sector By passing SECONDARY/TERTIARY University Hospitals CARE Hospitals with Private Hospitals Subspecialty Hospitals with Specialists Others Medical Corps Hospitals without Orang Asli Facilities Specialists GPs PRIMARY HEALTH Health Clinics/Centres 1 : 20,000 population CARE Rural/Community Clinics 1 : 4,000 population Estate 35 Hospitals without Specialists
  • 37. ANNEX 4 MEDICAL DEVICE AND EQUIPMENT IMPORTS IN MALAYSIA (2001-2007) Source ??? Not Frost and Sullivan 36
  • 38. ANNEX 5 Number of Clinics and Hospitals by State, June 2009 Clinic State Hospital MOH* Private MOH Private Johore 352 805 11 28 Kedah 281 336 9 11 Kelantan 251 185 9 3 Malacca 86 278 3 4 Negeri Sembilan 143 261 6 7 Pahang 306 222 10 8 Penang 88 483 6 20 Perak 288 619 14 13 Perlis 39 32 1 0 Selangor 189 1510 10 41 Terengganu 172 154 6 1 Sabah 270 301 22 3 Sarawak 203 303 20 9 WP Kuala Lumpur & 14 960 2 30 Putrajaya WP Labuan 11 9 1 0 Total 2729 6458 130 178 * MOH : Health Clinics and Community Clinics only 37
  • 39. Annex 6 Functional Relationship in the Restructured Health System 35 38
  • 40. ANNEX 7 Country Year % SHI funds % Contribution Employer Employee GDP (multiple/ population (% income) single) covered HIGH INCOME COUNTRIES Single All Australia 2005 9.7 (Medicare) Residents 1.5-2.5% Nil 1.5-2.5% Japan 2002 8 Multiple 99% 8 4 4 Single payer Korea 2007 5.6 (NHIC) 97 4-5% 2 2 Single Payer (Bureau for 4.55 (10% by Taiwan 2004 6.17 NHI) 99 govt.) 2.7 (60%) 1.4 (30%) 11.1 France 2008 (2008) Multiple (17) 100 19.6 12.8 6.8 Multiple Germany 2008 10.7 (319) - 2003 99.8 16 8 8 National Insurance United (Social Kingdom 2008 9.4 Security) 100 (NI)11 (NI)12.8 Netherlands 2008 9.2 Multiple 98.5 7.2 4.8 2.4 5.5 Hong Kong 2006 (2002) Nil Nil Nil Nil Nil MIDDLE INCOME COUNTRIES SOCSO (Employment Injury & Malaysia 2007 4.7 invalidity) 16.8 2.25 1.75 0.5 Indonesia 2002 2.8 Multiple 10 2.5 (ASKES) 2 0.5 Chile 2004 6.1 Single 86 7 Nil 7 Philippines 2005 3.3 Single 73 2.5 1.25 1.25 Costa Rica 2003 7.1 Single public 88 15 9.25 5.5 4.5 Thailand 4 Multiple Mixed (Govt. 1.5) 1.5 1.5 Mexico 2002 6.2 Multiple 51% 9.5 6.95 2.95 Nigeria 2005 3.9 Single na 15 10 5 Multiple (Main - NHI Tanzania 2002 8.7 fund) na 6 3 3 Mongolia 2002 4.3 Single 77.3 4% (max) 2 2 39
  • 41. Annex 8 Comparative data of selected countries on Total Expenditure on Health (TEH) Source: WHO (2006) TEH per Govt. HE Public •2008 Figure GDP per capita capita TEH as % (% of HE (% ** Based on proposed system US $ of GDP US $ TEH) of TEH) Mid Malaysia (MNHA) 7,221* 245 4.3 44.2 44.6 Mid Malaysia (New)** 7,221* 445 6.16 46.1 76.9 High Japan 38,443 2,936 7.6 14.6 81.3 High Rep of Korea 19,115 973 5.9 11.4 53.0 Mid Thailand 3,869 98 3.5 56.0 63.9 Mid Colombia 5,440 201 7.3 33.6 84.8 Low Vietnam 1,051 37 6.0 17.0 25.7 Low Indonesia 2,254 26 2.1 37.0 46.6 Low Kenya 895 24 4.5 41.9 46.6 High Singapore 37,600 944 3.5 26.5 31.9 High Taiwan 17,040 1561 6.17 9.0 66.5 Mid Mexico 10,211 474 6.4 17.3 45.5 40