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.