People's proposal for health care financing

Draft for Discussion on 11 December 05

prepared by the Coalition

The government seems serious about making massive changes to the Malaysian Health Care System. Several MOH and government leaders like Datuk Chua Soi Lek and Dato Seri Najib Razak have stated this.

Most of their pronouncements, however, only state the government’s intention to make the rakyat pay more towards health costs. At the same time they assure us that it will be remain fair and equitable and result in better care for everyone, including the poor. They remain silent on the operational details of the new scheme, and at our discussion with the Planning and Development Section of the MOH we found out why – they haven’t yet decided the crucial details. See the Minutes of our 27 September 2005 meeting with the Ministry of Health (MOH). The Gabungan would like to take this opportunity to thank the MOH for inviting us to that dialogue. They state that they are now looking for a consultant to help them with the operational details and expect that this consultant will start work in early 2006.

Main Outline of the MOH Proposal for a new system.

According to the MOH, the new scheme has seven main components. These are

1. The National Health Fund

• this they keep saying, will not be privatised but run by the government. It will pay for the treatment of all the conditions/illnesses that are specified in the “Essential Health Benefit Package”.

• Payments will be made to both the MOH hospitals and clinics as well as to the private hospitals and GP clinics.

2. Mandatory Monthly Contributions.

• every wage earner will be required to pay towards this fund. Quantum not specified as yet. The government will make payments for government staff, pensioners, the poor as well as the handicapped.

3. Essential Health Benefit Packages

• the package(s) is(are) not yet defined; for example, MOH officials were not able to answer definitively when we asked them whether the treatment of a heart attack would be part of the essential package!

• apparently the consultant will help the government decide on this!

4. Restructured MOH Hospitals and Clinics

• we were not told how they would be restructured. However, one idea that has been floating in the Ministry of Health for more than a decade now is that these institutions should be corporatised to improve efficiency and to allow them to implement better pay schemes for their staff (and thus halt the brain drain.)

5. The Private Sector

• the National Health Fund will also make payments for visits to General Practitioners. There are two models of making payments: on a fee-for-service basis or on a capitation basis. The former system leads to over-treatment, neglect of preventive aspects and to sky-rocketing costs. The latter may lead to under-treatment. The National Health Fund will also cover a portion of the costs for the treatment of conditions listed under the “Essential Packages” even in private hospitals.

6. Private Insurance for Extra Coverage

• Richer families have the option of purchasing additional private insurance packages to top up for the payment of conditions for which the National Health Fund will pay only a portion of the costs that private hospitals charge. The private insurance packages will also cover conditions not specified in the Essential package underwritten by the National Health Scheme.

7. The National Health Financing Authority

• This is envisaged as a new body set up to oversee the overall administration and evaluation of the new health care system. MOH officials, however, were not able to say how this would be constituted, apart from stating that they would comprise representatives from both the public and private sectors.

Background to the People’s Proposal

In reviewing the above MOH proposal and coming out with our own counter proposal, it is important for all of us to bear in mind the following:

• The provision of health care in any country is very much conditioned by the dominant economic, political and social environment. Even in our own country, in the 1960s and 1970s, the prevalent view was that the government should play a key role in the provision of health care. The role of the private sector was largely limited to GP services in the main urban areas. From the 1980s, the government has been shifting the burden of financing many essential social services directly to the rakyat due to the neo-liberal ideas that were and are still being advocated by international financial institutions like the IMF and the World Bank. This also coincided with the ideology of the Mahathir government. Thus we have ended up with our current dysfunctional dual system.

• We must also recognise that a health care system cannot be effective and financially viable if citizens at large do not accept personal responsibility for maintaining healthy lifestyles in terms of nutrition and physical activities. We must also have some safeguards built in to the system so that both patients and providers of health care will find it difficult to abuse the system.

• As mentioned above, the MOH is now looking for a consultant to help them with the operational details and expect that this consultant will start work in early 2006. It is very worrying that the Government has chosen to accept UNDP money for this as this means it is the UNDP and not the Government which is responsible for the appointment of the consultant. This implies that the consultant will be a foreign consultant who may reflect the current donor agency's bias in favour of privatisation. Also worrying is the lack of details about how the consultant will actually consult Malaysians. This needs to be very clear from the beginning, and full opportunity for consultation with any interested party must be mapped out both before the Consultant writes the report as well as after. The new health scheme is far too big a change in the lives of all Malaysians for it to be introduced without open, extensive and accountable consultation processes.

• At present about 75 per cent of all admissions in Malaysia are to government hospitals, but only 25–30 per cent of Malaysian medical specialists work in Government Hospitals. This mismatch of resources to need leads to poorer quality of care in the public sector for certain conditions such as ischaemic heart disease, renal failure and cancer.

• Experienced government doctors and other para-medical professionals are still leaving for the private sector.

• Patients in government hospitals already have to pay exorbitantly high collateral payments for the treatment of several conditions such as orthopaedic procedures which require plates and nails, lens for cataracts, clips for surgical procedures, certain anti-cancer drugs, etc

• The Health Ministry is already implementing neo-liberal policies albeit in a piece-meal fashion and these are eroding the resilience of the Public Sector. Examples are:

- private dispensaries in certain government hospitals.

- private wings in government hospitals

- promotion of health tourism in several private hospitals

- raising the fees for foreign workers.

Main Components of the People’s Proposal.

1. Need for consultation: A comprehensive overhaul of the health care system such as that being proposed by the MOH must be undertaken with great care. Nothing should be rushed. Full and prior consultation with the rakyat, unions, consumer groups and health personnel as mentioned above is absolutely fundamental; nothing should be done without that being carried out. This consultation will also mean paying close attention to the our proposals and if these are rejected, the MOH needs to explain to the people of Malaysia on what basis it is rejected. Piece-meal, poorly thought-out schemes that are being announced by the Health Minister from time to time must stop. The plan must be comprehensive and deliberate.

2. Need for equitable change: We agree that changes are needed in the financing and running of our health care system. Because of past government policies, a two-tier system has been allowed to develop which works in favour of those with money and against those who do not - which has seen the growth of the private sector at the expense of the (far more used) public sector; and which has seen the introduction of privatisation into certain health care services. There are issues of inequities, inefficiencies and unaccountability. These need to be tackled.

3. National Health Fund: We therefore propose a new funding formula to safeguard the health of all Malaysians. It could be called the National Health Fund, but it should not be financed from the pockets of individual Malaysians. There are plenty of viable and present alternatives, as follows:

Source	Description	Amount per year
The Federal Budget	At present the Federal Govt is only spending 1.8% of the GDP on Health. The WHO has advised that developing countries should spend 5 per cent of their GDP on health. We propose that the Malaysian Government increases allocation to health to 3 per cent of GDP effective next year. GDP = RM530 bil ; 3 per cent = RM15.9 bil	RM15.9 bil
Taxes on Alcohol and Cigarettes	These lead to ill-health and require funds to treat. So the entire collection of taxes on these two items should come to health.
Petroleum Profits.	Petronas made a profit of more than RM30 bil in 2004. We propose RM5 billion of Petronas profits be ploughed into health care to benefit the entire population.	RM5 bil
Levy on Foreign Workers	As foreign workers are also using the public health care system, it is only appropriate that a portion of the annual levy should be channelled to the NHF.	RM1- 2 bil

These resources are not just readily available but will be ample to undertake necessary changes. We should reject any proposal to make Malaysians pay more. This should be rejected because:

• it is unnecessary and will be an extra ‘tax’ which will penalise those least able to afford it. The Malaysian public is at present reeling from the effects of rising oil and other prices. People are already under considerable financial stress;

• collecting premiums from the public will involve a lot of effort, and distract us from the main aim of the exercise which is to improve the Public Health Sector. The administrative cost of collection of premiums can be substantial in countries like Malaysia where a large segment of the population is made up of self-employed and not salaried workers.

4. The National Health Authority (NHA)

• A fund totalling more than RM20 billion per year can easily be plundered to enrich corporate cronies given the current culture in government. We must have an effective mechanism to prevent this from happening. Given that we all know the extent and pervasiveness of corruption, and given that it has taken away so much money from the services which could have benefited millions of ordinary Malaysians, any scheme which continues traditions of unaccountable bodies in charge of massively large funds must be resisted. Accountability and proper representation is an essential element of any proposal, and here it is not good enough for the Government to offer bland reassurances. Health is the last big cake that has escaped the grasp of the cronies.

• The NHA must be seen as fulfilling a constitutional requirement of a basic right of citizens. It should be established by an Act of Parliament as the single-payer initially for public sector health care (and eventually for all health care) with the responsibility to ensure effective and efficient care. There must be no intermediary to administer payment for care.

• The NHA should comprise representatives from a wide cross-section of Malaysians and needs to be fully accountable to all Malaysians. It cannot be selected by just the Prime Minister or by the Health Ministry. An effective mechanism must be decided upon.
  

One possible mechanism is to distribute the representation as follows:
- 50 per cent from political parties based on their share of the total votes in the latest general election;
- 20 per cent nominated by the government;
- 10 per cent from unions
- 10 per cent from consumer groups and health NGOs.
- 10 per cent from health provider associations.

• The NHA must have bite. It should have the power to review contracts before they are passed. It must have access to information. It should have a budget to employ sufficient staff to monitor the use of the National Health Fund throughout the country.

• Perhaps the management of government health facilities could be devolved to a Primary Care Authority and a Hospitals Authority. This will create a new public sector that will drive training and research, be the benchmark for quality care, and keep the private sector honest. Only then can we dismantle the ‘iron curtain’ between public and private sectors and integrate care to the benefit and convenience of patients and their families. These new agencies must not be 'corporatised', which has always been preparation to privatisation, but must be established as Trusts by Act of Parliament so that they remain under the scrutiny of Parliament with specified responsibilities and duties.

• Such a move also has an added advantage of freeing the entire public sector health care system from the control of the Public Services Department (JPA). JPA control of health professionals has often been cited as one of the leading causes of dissatisfaction among health professionals. Their inability to understand the special features of managing health facilities and providing professional services has often been a major stumbling block in improving the terms and conditions of service in the health sector.

• We may also need to consider setting up state-level Community Health Bodies, which would help promote and support actions that will help ensure people’s control over decision-making about their health and health care.

5. Focus on public sector health system first: We propose that the purpose of this fund should be to improve health care for the Malaysian rakyat – initially, by rehabilitating and strengthening the government health sector. In other words, the first task of this Fund is to upgrade the facilities, terms and conditions in government hospitals and clinics because:

• The majority (at least 75 per cent) of our population still rely on government clinics and hospitals for treatment;

• Government health facilities are much more equitably distributed throughout the country compared to the private sector facilities which are largely concentrated in the major urban centres.

• The doctors and other health personnel in the government sector are salaried and not paid on a fee-for-service basis. This will ensure that costs are curtailed. The private sector has the potential to quickly suck the NHF dry unless there is a strong and competent government sector to act as a counter-weight.

Among other things the fund should work towards:

• The retention of experienced health care personnel in the public sector.

- This should be a crucial aspect of the new scheme. Pay and working conditions for all health personnel including nurses, para-medical staff, doctors, specialists etc. must be improved.

- Other perks such as funding for undertaking research and attending courses, seminars etc to upgrade skills should be made available to professional staff.

- If the provision of pension is a major pull factor, perhaps this should remain a feature of the terms of service for government health personnel.

6. A Comprehensive Essential Package: We agree with the government that there needs to be a basic health package available to all Malaysians. The government, however, seems a little unclear on what this package will cover. To safeguard the health care of all Malaysians, this package needs to have the following:

• it must consist of all the treatment options available in our government clinics and hospitals at present; it must include all the primary health care components such as immunisation and vector control, as well as all the currently offered tertiary care components such as ICU care, by-pass surgery and dialysis.

• It must be available to all Malaysian residents including foreign workers for a small co-payment like what we pay for out-patient treatment now; the actual quantum of payment can be determined after discussion and consultation with all concerned groups.

• The treatment modalities in the essential package must be accessible to all Malaysians irrespective of location of residence.

We are unequivocally against any two-tier system based on the ability to pay. It is immoral to speak of two standards of care based on ability to pay. The professions of Medicine are ethically committed to care equally for all. Evidence-based quality and patient involvement should be the same for all citizens. Private insurance may cover 'hotel' and fringe benefits as well as cosmetic and other privileges. Doctors must be paid the same whoever they treat, rich or poor.

Conclusion

Implementing the National Health Fund and the National Health Authority in the manner and with the task as outlined above will be a major step forward in protecting the health care of all Malaysians. We reiterate that Malaysians should be very worried about any proposals that:

• talk about Malaysians paying extra money into an unaccountable fund;

• talk about a new Body that is similarly unaccountable, full of government-appointees and a recipe for cronyism and corruption;

• talk about efficiency, if it is equated with privatisation; rather, it is a fact that the scandal of privatisation has led to extra costs for our public sector health care system – and this has been exposed; we should take steps to rectify this;

• talk about a basic package without clarification of what is covered

• lack any proactive plan to ensure that much needed investment into our public system actually happens; the huge worry is that the public sector will be allowed to deteriorate further and the private sector flourish - at the expense of ordinary Malaysians and their health.

If we can actually implement the six aspects of the People’s Proposal as sketched above properly, we would be in a much better position to plan for the ensuing phases which will involve integrating the private sector health care system into the NHF and the NHA. It would be extremely premature for us to talk about these in any detail at present.