KUALA LUMPUR (Jan 23): Malaysia’s proposed base medical and health insurance/takaful (MHIT) plan may be worse than existing health insurance products on the market, a think tank has warned.

Galen Centre for Health and Social Policy chief executive Azrul Mohd Khalib said the plan, designed to raise the "floor" for coverage, compares poorly against existing policies that already offer similar or better protection at lower costs. 

“Imposing deductibles between RM10,000 and RM15,000 for the Standard-plus plan while providing an annual policy limit of RM300,000 is not competitive,” he said.

Azrul added that with no yearly cap on deductibles and co-payments, repeated health episodes could become financially catastrophic. He notes that the initial premiums in the white paper are subject to review and repricing. 

The white paper precedes a trial rollout in the second half of 2026 before full rollout in 2027, in line with the expiry of Bank Negara Malaysia’s interim measures by the end of this year.

The Standard-plus base MHIT plan offers higher coverage with an annual limit of RM300,000 at lower premiums. Individuals pay hospital bills up to a deductible of RM10,000–15,000, with the plan covering costs above that. This plan is aimed at those who already have employer medical benefits or can afford to pay more upfront, protecting mainly against catastrophic medical costs. Premiums are 15–70% lower than the Standard plan because the insurance pool will bear fewer overall claims.

The Standard plan provides annual limits of RM100,000 for those aged 30–35, and RM150,000 for those over 60.

The enrolment age for the plan is capped at 70, with coverage extending up to age 85.

Azrul highlighted that the proposed premiums may be unaffordable for those aged over 60, a group particularly vulnerable due to higher health risks and rising insurance costs. 

“This group is particularly vulnerable. The proposed premiums under the base MHIT plan are not within their affordability,” he said. 

Azrul called on the government to provide cash subsidies for those over 60 and unemployed individuals receiving assistance under the Social Security Organisation (Socso) employment insurance system to help co-pay premiums.

He also warned the plan risks creating a false sense of security, widening inequities in access to care, and shifting costs back onto patients, especially households already strained by rising living costs.

Azrul said the base MHIT plan may appeal more to existing policyholders struggling with rising premiums, but may fail to attract those who are currently uninsured.

“As previously predicted, the repricing exercise caused more than 340,000 policies to be surrendered or terminated in 2024 and 2025. Getting those previous policyholders to sign on to the base MHIT and regain their coverage would be a major achievement,” said Azrul. 

He also warned that smaller insurers and takaful operators may opt out of the scheme due to weaker risk pooling, leaving participation concentrated among larger multinational players unless incentives are provided.

Azrul further called for the establishment of a dedicated Private Healthcare Commission to strengthen consumer safeguards on exclusions, claims adjudication, premium repricing practices, portability rights and hospital charges.

"The base MHIT plan can potentially introduce positive disruption into the private healthcare space. However, it  must not become a low-cost instrument that transfers financial risk away from the system and onto families. Malaysia needs meaningful reforms that expand real protection, improve access, and enforce fair pricing, not products that provide affordability only by limiting what Malaysians can actually claim," Azrul added.

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