KUALA LUMPUR (June 18): The government has kicked off the formal rollout of its Reset programme, a coordinated reform framework to overhaul the country’s healthcare financing system and curb escalating costs.
The initiative comes as policymakers seek to mitigate rising healthcare expenditure and medical inflation — a trend that has triggered growing concern, despite the industry being on an upward trajectory, driven by demographic shifts, the growing burden of non-communicable diseases (NCDs), and increasing demand for quality services.
“The health system that served us well in the last century is no longer fit for purpose,” said Health Minister Datuk Seri Dr Dzulkefly Ahmad.
“We are at an inflection point, and this time, it’s about execution, not just another blueprint,” Dzulkefly said at Bank Negara Malaysia's (BNM) Sasana Symposium 2025 on Wednesday.
Anchored by BNM and the health and finance ministries — with support from the World Bank — Reset aims to address long-standing structural inefficiencies through targeted interventions in service delivery, insurance reform, and digital health infrastructure.
Healthcare expenditure in Malaysia has nearly doubled — from 2.5% to close to 5% of gross domestic product — between 2000 and 2022. Yet, according to the World Bank, Malaysians are living longer but not necessarily healthier, with many spending the final decade of life in poor health due to NCDs such as diabetes, hypertension, and cardiovascular disease.
Compounding the issue, Malaysia’s healthcare financing system remains heavily reliant on out-of-pocket payments, which accounted for about 32% of current health expenditures in 2021, according to World Health Organization data — an inequitable and inefficient model that risks excluding vulnerable populations from essential care.
“Medical inflation is not new. But without intervention, it will continue to erode access and affordability,” said BNM governor Datuk Seri Abdul Rasheed Ghaffour, noting that interim insurance premium controls are only in place until 2026.
“Hopefully we can finalise the pilot before the end of 2026, that's before the end expiry of the interim period,” Abdul Rasheed said at the BNM symposium.
Reset — short for Revamp, Enhance, Strengthen, Expand and Transform — comprises five strategic thrusts and 11 initiatives, aimed at restoring balance to the healthcare cost ecosystem.
Key components of the programme will include the rollout of a medical and health insurance and takaful base product to provide affordable, essential coverage; wider price transparency for drugs, procedures and hospital services; a revamped provider payment mechanism anchored on diagnosis-related group models to promote value-based care; greater use of digital health systems, including a nationwide electronic medical records platform; and expansion of cost-effective models like Rakan KKM, a public-private hybrid programme offering tiered, premium care in public facilities.
A joint ministerial committee — comprising the health and finance ministries and BNM and chaired by Prime Minister Datuk Seri Anwar Ibrahim — has been tasked with driving the Reset agenda. This is complemented by a consultative council involving insurers, hospital operators, medical practitioners, consumer groups, and academia.