This article first appeared in Forum, The Edge Malaysia Weekly on November 3, 2025 - November 9, 2025

These are not ordinary times for Malaysia’s health system. In 2025, there are five highly significant policy decisions that may determine the path for the nation’s health system in the coming decades. This article will examine these five policies individually and collectively, assess their pros and cons, and recommend five systemic solutions to implement before the 16th general election (to be held by November 2027), including implementing the Health White Paper.

Our context begins in October-December 2024, with warnings that medical and health insurance/takaful (MHIT) premiums or contributions may increase by 40%-70% in 2025. In response, on Dec 20, 2024, Bank Negara Malaysia announced a package of interim measures, such as spreading the premium increases over a minimum of three years, implementing diagnosis-related group (DRG) payment models and creating a base MHIT product. The context in 2024 sets the stage for the five government policies in 2025.

At the Sasana Symposium on June 17, 2025, Bank Negara announced the RESET Framework. It has five thrusts and 11 initiatives. The framework aims to “reduce healthcare costs” but not “reduce wastage” or “increase healthcare funding”. All three aims are equally important. For example, the Malaysian healthcare system can save RM20 billion a year by eliminating waste (assuming a 25% waste rate like in the US). The framework has many noble intentions and powerful ideas that have been successfully implemented in peer countries, but focusing on reducing costs without reducing waste and increasing funding by themselves is incomplete.

On June 25, 2025, the finance and health ministries announced a joint ministerial committee (JMC) on private healthcare costs, to be co-chaired by the finance and health ministers, with members from the Ministry of Finance (MoF), Ministry of Health (MoH), Bank Negara, private operators such as hospitals and insurance and takaful operators (ITOs), universities and civil society organisations. The JMC is an excellent idea because financing health to achieve universal health coverage requires strong inter-agency and whole-of-society collaboration.

The JMC will be the “primary platform to … implement RESET”, but it is still unclear which department or unit in which ministry or agency will lead what initiative. As an example, will DRG be led by the digital health division, health technology assessment section, health transformation office or consultants reporting to MoH senior leadership (these are four separate units under the MoH), ProtectHealth Corp, Bank Negara or Laksana (the MoF agency that monitors the implementation of strategic national initiatives)?

Rakan KKM was first announced in parliament in October 2024, during the Budget 2025 debate. More details were announced in July 2025: Rakan KKM Sdn Bhd is fully owned by Minister of Finance Inc, receiving RM25 million in seed funding from the government and potential scale-up funding from government-linked investment corporations (notably the Employees Provident Fund). But if EPF is an investor in Rakan KKM, is the purpose of Rakan KKM to generate returns for the provident fund or to increase access to equitable healthcare? Both purposes are not mutually exclusive in theory, but are nearly impossible to reconcile in practice.

The Rakan KKM website (accessed on Sept 28, 2025) stated that Rakan KKM offers “premium economy” services at selected MoH hospitals. Rakan KKM is likely to start with only five MoH hospitals (out of 149 nationwide). The website’s stated objectives are noble, but are so lofty that it is difficult to imagine a straight-line causality — how exactly does a limited premium economy service at a few MoH hospitals help to “increase the retention of healthcare workers to benefit all patients” or “raise the floor for the B40 by increasing investment in the public healthcare system”? Inevitably, public uncertainty and criticism led to the (equally inevitable) explanation by the health minister that “Rakan KKM is not privatisation”.

There are already many healthcare-specific laws in Malaysia, such as the Medical Act 1971, the Private Healthcare Facilities & Services Act 1998 and the Medicines (Advertisement and Sale) Act 1956. In 2025, we see non-healthcare-specific laws being imposed on healthcare operators, notably the Price Control and Anti-Profiteering Act 2011 (a law of the Ministry of Domestic Trade and Cost of Living [KPDN]), effective May 1, 2025, requiring all private hospitals and clinics to display medicine prices. This “scope creep” by non-MoH agencies regulating healthcare must be carefully managed.

(To be clear, this author supports transparency and competition as two important measures to reduce healthcare prices. Both features are necessary but insufficient to build a “perfect market”. Government interventions in healthcare remain necessary because the healthcare sector has more risk of market failure than say the telecommunications, retail or consumer electronics sectors.)

KPDN is not the only non-health agency beginning to regulate the practice of healthcare in Malaysia. In a sense, MoF and Bank Negara are regulating healthcare through RESET. As healthcare uses more artificial intelligence (AI) and digital tools, the Malaysian Communications and Multimedia Commission, Ministry of Digital and the National AI Office (as NAIO grows) may begin regulating healthcare too. Other bodies such as the Ministry of Agriculture and Food Security, Ministry of Economy and Ministry of Women, Family and Community Development would also be natural partners (if not regulators) in healthcare.

To be clear again, transparency of medicine prices is important and helpful. And non-health agencies being involved in healthcare can be a net positive too, supporting the concept of health in all policies promoted by the World Health Organization. But the important question is: Where does MoH enforcement end and non-MoH enforcement begin, and which law should clinics and hospitals follow? Sub-questions include: Does MoH jointly enforce with KPDN? Do KPDN enforcement officers understand the nuances of clinics, which are very different from grocery stores? When there are disputes, who arbitrates and using what criteria?

From publicly available information, it is unclear exactly how many doctors (medical officers and specialists), nurses, pharmacists and dentists leave the MoH for the private sector or leave Malaysia for another country. But we can estimate that the exact numbers are high and only getting higher.

This article shall avoid empty lamentations and instead describe two under-discussed systemic effects of this brain drain. One, the brain drain can cause an accelerating chain reaction — the more doctors leave, the fewer doctors remain with increasing per-capita workload, causing more departures, causing more workload, causing more departures, ad infinitum. Two, senior doctors leave, depriving mid-senior and junior doctors of the training and skills, which may lead to worse health outcomes after five to 10 years.

Both systemic effects are urgent and life-threatening reasons to stop the brain drain now, using a basket of policies and strong political will.

The next general election must be held before November 2027, which means the current administration must begin implementing five additional systemic solutions in the next 24 months.

First, the current administration must expand the scope of the JMC to include “increase sustainable healthcare funding”, not just reduce private healthcare costs. As stated, reducing cost alone is not enough and must be paired with increasing funding. As part of the discussions on increasing funding, the JMC must begin public advocacy and debates on a social health insurance model as one additional way to fund healthcare. Simultaneously, it must also clarify the responsible units for DRG implementation and address the philosophical and operational model for Rakan KKM. Finally, the JMC should be systematic, and not reactive to waves of public pressure or media cycles.

Second, the Health White Paper was passed by parliament in 2023 and is awaiting an implementation agency. The white paper envisions a health reforms commission or health services commission for implementation, but if the commission is not possible for any reason, then the JMC can include the Health White Paper in its mandate. The main aim is to implement the white paper. Given that the JMC has already obtained political capital and momentum, it may be easier for it to be the implementation agency, especially because several important features of the Health White Paper require the finance agencies (MoF, Bank Negara, EPF and Social Security Organisation) to be closely involved. (Disclosure: this author was on the Health White Paper advisory committee.)

Third, the current administration must clarify the relationships between MoH and non-MoH agencies in regulating healthcare. Very few high-income countries have non-MoH agencies regulating healthcare, but that is because their health systems already have effective governance based on single-payer models (for example, the South Korean National Health Insurance Service, the Taiwanese National Health Insurance scheme or the UK’s National Health Service) or competitive social health insurance providers (for example, there are more than 3,000 health insurance funds in Japan and more than 100 public health insurance providers in Germany). In these countries, non-MoH regulation of healthcare is not needed because the prices are regulated by competition, transparency and the intrinsic design of the health system.

Fourth, the current administration can begin a review of all private healthcare laws in Malaysia. In August 2023, the Indonesian parliament repealed 11 previous laws and merged the laws into one Health Omnibus Law. Malaysia can do the same. The Malaysia Productivity Corporation (MPC) can lead this initiative, specifically by its Private Healthcare Productivity Nexus coordinating responses from private healthcare operators. Other entities in this process should include the Malaysian Society for Quality in Health, professional societies (such as the Academy of Medicine Malaysia) and ProtectHealth Corp. The Malaysian Omnibus Health Act must also govern third-party administrators and aim to reduce the adversarial relationships between different healthcare stakeholders.

And finally, Malaysia must aggressively implement a set of policies to stop the brain drain from MoH to the private sector and from Malaysia to other countries. The policies can be simple, significant and symbolic, to show that a Madani government truly appreciates its health workers. Stop the slogans, committees and studies.

(i)     Increase the on-call allowance for doctors and dentists by 50% before Dec 31, 2025. This should cost only RM144 million annually (as stated by the health minister).

(ii)    Provide even more permanent posts (not contract posts) and publicise the criteria to decide on permanent posts (currently not very transparent to rank-and-file doctors).

(iii)   Increase the allowance to specialist doctors based on years of experience (currently based on Sistem Saraan Perkhidmatan Awam grades). Buy-out clauses can help, but do not prevent departures. More policies can be implemented and are the subject of a future article.

Health systems need nurturing, strong political capital and a national-level commitment to continuous improvement and system redesign. So far, Malaysia’s public healthcare system has survived by the sheer discipline, sense of duty and sacrifice of rank-and-file nurses, doctors, specialists, dentists, pharmacists and paramedics, including the 11,000 general practice clinics in the private sector.

They are getting tired, in a way that sleep cannot cure. They need political action to help them continue serving the rakyat, not empty slogans, rhetoric or one more jawatankuasa.

Dr Khor Swee Kheng is CEO of Angsana Health and specialises in health systems

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