Healthcare costs rise and rise

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THREE years ago, an appendectomy (appendix removal surgery) cost RM1,800. Today, it will set you back RM3,000. Potentially, this relatively simple procedure can cost up to RM20,000 in 20 years’ time. The fact is that the cost of medical healthcare goes up every year, and it usually outpaces the general inflation rate.

Dr Pawel Suwinski, Frost & Sullivan Malaysia Sdn Bhd’s senior consultant of healthcare practice for Asia-Pacific, believes that healthcare costs in Malaysia increases about 10% every year – approximately double the inflation rate.

“It is something to worry about, as we can expect healthcare to become more expensive with every year. We are already at the point that only few can afford to pay for more complex and sophisticated procedures directly from their pockets,” he says, adding that the majority rely on other sources such as insurance, health saving accounts, or public care.

According to a former cancer patient, a standard radiotherapy regiment of 35 sessions cost RM2,000 in 1999. Ten years later in 2009, it costs a whopping RM35,000 – although it should be noted that today’s treatment is better targeted and more localised than it was before.

Dr Suwinski says there are four levels of therapy classification. In 2008, standard, basic-level breast cancer treatment in private hospitals costs RM20,000 to RM30,000, but this can go well beyond RM100,000 for the maximum level, which uses the latest-available therapeutics.

Affecting confidence

The AXA Life Outlook Survey 2009 (covering 2,707 Asians across key markets in Malaysia, China, Hong Kong, India, Indonesia, the Philippines, Singapore and Thailand) shows that the increase in healthcare costs is affecting Malaysians’ confidence in their health levels in their retirement years. It shows that only 29% are confident of maintaining it, down 11% from 40% at the last survey in 2007.

The survey also shows there is a dip in respondents’ confidence levels in maintaining their health over the next five years. Only 40% of respondents are confident of maintaining it, down from 49% two years ago.

According to Nicholas Kua, chief marketing officer of AXA AFFIN Life Insurance Berhad, fewer Malaysians believe they have sufficient savings for medical care, due to the escalating cost of hospitalisation and medical treatment.

“In 2007, 71% of Malaysians were satisfied with their medical conditions and savings but in 2009, this figure has dropped to 48%. Consumers are also worried about using up the lifetime limit of their medical coverage while they are still early in their retirement years,” he says.

However, the fact remains that medical costs will continue to rise, and the so-called “medical inflation” rate outpaces even the general inflation rate every year. This can be put down to the continuous and sizeable investments poured into research and development for the continuing advancement of medical technology. This is not only necessary but also essential – without it, there would be no new drugs, treatments or tools, and the standard of healthcare will not improve.

In light of the increasing healthcare costs, we can count ourselves fortunate for the system put in place by the Government for the benefit of all Malaysians.

Association of Private Hospitals of Malaysia (APHM) president Datuk Dr Jacob Thomas was quoted in StarBizweek as saying there is only so much that the public hospitals can cope with as these hospitals are already overloaded with patients. Currently, there is a ratio of one doctor for every 1.3 beds for private healthcare, as compared to a one doctor for every three beds ratio in public healthcare.

Malaysians in general prefer private healthcare – but its escalating costs, combined with effects of the global recession, may drive patients to the public healthcare system.

Dr Suwinski says that where middle-class wage earners are concerned, savings alone may not be sufficient to pay lifelong medical bills.

“The funds for essential medical care need to come from other sources,” he says, citing national and commercial insurance, and health saving accounts as examples.

“Relying only on savings will mean rationing the care,” he says, explaining that this may preclude the use of latest advances in treatment as these tend to be more expensive.

Increasingly unaffordable

Dr Suwinski says the present economic situation affects consumers’ income, and make private healthcare increasingly unaffordable. He believes third-party payers (like insurance) will play a more prominent role in the future.

He also sees the possibility that people may spend less on healthcare. “The so-called discretionary care, which is non-essential, will suffer most as people will be less willing to dispose of their savings in bad economic times.

“However, essential care, mostly related to curative and life-saving, will be affected to a lesser degree. People will need to consume these services to become healthy. Also, this type of healthcare is paid mostly by third-party payors and does not affect savings,” he says.


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While health insurance premiums may not be large, it's never prudent to spend more money than you need to. So don't just opt for the most expensive health insurance. Be discriminate.

"Choose a level of protection that meets your expectations of service," advises Sonny S.H. Tan, acting chief executive officer of The Pacific Insurance Bhd. "Do you want privacy? Do you have any preference of hospital?" he elaborates.

"The most expensive product does not necessarily provide the best coverage," agrees Alexander Ankel, chief executive officer of Allianz General Insurance Malaysia Bhd.

Insurers will be able to provide you with some indication of the costs of hospital room and board and the costs of surgical procedures.

"We do our own research, but sometimes hospitals move too quickly in their own reviews," say Bernard Ong, head of business development at Aviva Insurance Bhd.

Insurers therefore say it is wise to do some of your own research.

"Determine your preferred hospitals and find out the costs of the services and facilities befitting your expectations. Only then should you decide the level of coverage," says Tan.

Choosing a hospital is not just about the cost of the facilities on offer.

"Sometimes the name precedes the person. Sometimes it depends on your own experience and also on information from your peers," suggests Ong. "But hospitals are usually quite transparent and will give information on room and board cover," he says.

"But be mindful that hospitals can increase their fees at any time," notes Tan.

Room and board rates are roughly consistent among private hospitals. A four-bed hospital room will cost between RM80 and RM100 per night. A two-bed room will cost between RM120 and RM140 per night and the cost of a private room is between RM195 and RM220. These prices include meals. If you are looking for deluxe accomodation, expect to pay much more.

"The cost of treatment varies from each hospital. It all boils down to the doctors and the treatment provided," says Ankel.

Tan says it is unlikely that the hospital administration would be able to help you forecast these costs in advance. "Your preferred doctor may provide better advice," he suggests.

"The insurer would also be able to assist the policyholder as the company can obtain discounted rates from the hospitals," says Ankel.

Hospitals are only likely to be able to provide you with a rough figure for the cost of surgery. The cost really does depend on the individual doctors and of course you can't know in advance whether surgery is likely to meet with complications and involve further expertise and a prolonged stay in hospital.

As an indication only, hospitals will say that charges for major operations such as heart surgery start between RM22,000 and RM25,000. An intermediate operation such as appendicitis will cost in the region of RM4,000 to RM6,000. Smaller operations such as the removal of a cataract or a lump would be between RM2,000 and RM5,000.


In order to control premium levels, insurers apply limits to various types of costs. You need to understand how and where the limits apply in order to be able to decide which is best for you.

Ankel explains that a plan with inner limits means that the cost is limited per item. So if your surgery coverage is RM5,000 and the actual costs are RM11,000, you will pay the outstanding RM6,000.

Plans on an as-charged basis with an annual limit means that you have a certain limit each year, and each time you are admitted the cost will be deducted from you total amount. If your annual coverage is RM30,000 and your first visit costs RM10,000, you have a balance of RM20,000 left for the year.

An as-charged plan with a fixed limit on a per disability basis means that if you are covered for RM30,000 per admission each time you are admitted you will have a coverage of RM30,000, regardless of how much is left from your previous admission.

Medical cost inflation is always at the forefront of any discussion of health care. Insurers say in Malaysia it is currently running at about 20 per cent a year. So when you take out a policy you should bear in mind that if you end up having to have an operation towards the end of your policy period, chances are the costs will be higher than they were at the start of the policy period.

"Policies are renewable annually. Companies cannot guarantee the costs down the line in five years' time," says Ong.

"But if you are purchasing a guanranteed renewable policy, you may wish to choose a policy with coverage higher than your present expected costs because you may not be able to increase your coverage limits in later years when inflation sets in," explains Tan.

"For yearly renewable policies, you should determine the level of protection based on the current cost of treatment," says Tan. "To ensure adequate protection, always choose a policy with a coverage level 15 to 20 per cent higher than your current expectations," he concludes.