- 19 minutes ago
Medical claims in Malaysia rose to RM9.4 billion in 2025, now making up the largest share of total insurance payouts. The discussion focuses on what is driving this increase, whether healthcare costs are becoming structurally more expensive, and what it means for affordability, access and the sustainability of medical coverage for Malaysians.
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00:06Good morning, you're watching Pantau Belanjawan with me Nina Rosman and today we're focusing on medical claims in Malaysia have
00:13now hit RM9.4 billion in 2025 last year, making up more than half of total insurance payouts.
00:20This matters because it goes beyond the insurance industry, it directly affects how much Malaysians pay for protections, how affordable
00:29healthcare remains and ultimately how prepared we are for rising medical costs.
00:33At the same time, the number of active policies is declining, while disability claims have surged, sharply raising deeper questions
00:42about access, affordability and long-term sustainability.
00:45So what is really driving these trends and what does it mean for the average Malaysian going forward?
00:51Let's welcome our guests to help us unpack this further, it's Azrul Mohamed Khalid, CEO of Gallant Centre for Health
00:58and Social Policy.
00:59I will say thank you very much, Azrul.
01:01Let's take a look at the medical claims have risen to RM9.4 billion in 2025, which can go to
01:10RM10 billion, making up nearly 54% of total payouts in this.
01:14Is this a clear signal that healthcare costs in Malaysia are actually becoming structurally more expensive?
01:22Well, you know, I think the data is more symptomatic of the fact that there's more volume, which is that
01:32there are more Malaysians who are actually unwell
01:37and are forced to make use of their insurance coverage and protection in order for them to be able to
01:44afford the kind of healthcare that they need to be able to then treat themselves.
01:49So if you look at the data, it's very important for us to make our assessments based on what has
01:56been published and what we know of.
01:58A third of Malaysians are actually with hypertension.
02:02We see that one in five now are living maybe undiagnosed or diagnosed with diabetes.
02:13Cardiovascular disease is still the number one killer for Malaysians here in this country.
02:18And if you look at chronic kidney disease, for example, which at the end stage will result in someone going
02:25for dialysis,
02:26you find that 16% of the population are living with some form of chronic kidney disease at the end
02:33of the day.
02:33Okay, so all of this combined results in basically there being immense pressure for those who are with insurance
02:43because you have to also consider the fact that people have health insurance to ensure that they are able to
02:52afford and access private healthcare.
02:54People who cannot afford to have health insurance and cannot afford to have private healthcare,
03:02they access the public healthcare system.
03:05So public healthcare is accessed by around 75% of the population,
03:11while the 25-30% of the population uses private healthcare.
03:15And a certain number of people in this segment have insurance.
03:19So what this shows is, and you mentioned just now that we're almost, you know, reaching 54% of total
03:26payouts,
03:27it's almost 10 billion in 2025, shows that not only are there more people falling ill,
03:35but a lot of people who have insurance are now having to tap into their insurance more frequently,
03:44perhaps much more earlier, and most importantly, perhaps to treat many of these chronic, non-communicable diseases,
03:51which I mentioned just now, diabetes, hypertension, cardiovascular disease, chronic kidney disease, and cancer, of course.
03:59Basically, taking a look at this, more half of Malaysians that are also got inflicted with disease,
04:09chronic disease, as you mentioned, and it's also not only showing the high number in pricing of medical expenses.
04:17But, Azrul, what is really driving this 5.3% increase in medical claims?
04:22Is it hospital pricing, treatment costs, or a shift in disease pattern and utilization?
04:30Well, you know, this is, it's very important for me to emphasize also this increase that occurred in 2025 is
04:37actually not temporary.
04:38It's going to be something that we're going to see increase over the next several years,
04:44because it's forced to deal with the fact that there are more people living with chronic disease.
04:50And it shows a deeper structural problem with regards to Malaysia's health financing system.
04:57And when you look at your question just now, what is really driving the increase in medical claims?
05:04As I mentioned, it's not just about dealing with higher hospital charges, treatment costs,
05:10but it's actually about the volume, because when you look at the higher utilization rate,
05:19and Bank Negara has said this, that medical payouts have risen because of the increase in average cost
05:25and utilization of treatment, especially for the treatment of chronic and acute cases.
05:31Now, this is overall telling us very clearly, this data, this almost 10 billion bill
05:39for medical claims under insurance tells us very clearly that Malaysia's disease burden is becoming heavier, not lighter.
05:47People are getting more sicker, and this is not a unique scenario, yeah?
05:52If we see in countries around the world, especially post-COVID years, post-2022 moving onwards,
06:02every single country has seen a similar pattern where there are more and more people who are unwell,
06:08who are forced to utilize their insurance, and for those who are fortunate to have insurance coverage and protection,
06:15they are seemingly having to use it much earlier in their life, as opposed to maybe some other people
06:22who perhaps only used insurance when they reached the age of, you know, 50 or 55 or 60 even.
06:28But now we're seeing insurance for the purposes of treating chronic disease being accessed by those who are aged like
06:3730 or even in their late 20s.
06:39So this is quite worrying, especially if it's used to treat chronic diseases like chronic kidney disease,
06:45cardiovascular disease, hypertension and so forth.
06:49Hence also what you mentioned earlier, we also need to rethink how we approach treatment,
06:53when maybe focusing on early interventions before conditions become chronic.
06:58And if claims continue to rise at this pace, how likely is it that consumers will face higher premiums
07:04or greater out-of-pocket expenses, even in the near term?
07:09Well, okay, so I have to emphasize here that when we look at this data, this almost RM10 billion bill,
07:16it's not simply about insurers paying more claims, it's also about the cost of care itself that you've mentioned earlier
07:25that's rising faster than what households can actually absorb.
07:28So what is the likely outcome here, right?
07:32So we're all asking ourselves, will we likely to face higher premiums or pay more for out-of-pocket, right?
07:40Out-of-pocket payments.
07:42So unfortunately, we've already seen this over the past several years now.
07:46I think past three years, we have seen significant increases in the premiums that people have to pay.
07:55This is something that we are quite concerned about, of course.
07:59And this has been highlighted to the different players, Bank Negara, Ministry of Finance, Ministry of Health and so forth,
08:05that these premiums have increased from maybe 10% all the way up to we have seen even 200%
08:15increases in high premiums that people have to pay.
08:19And this is something that is affecting not just older people, yeah?
08:24It's also affecting those who are just starting off work, who are just getting their first paychecks, getting insurance,
08:30you know, they're thinking ahead, right?
08:32But they are also seeing their premiums also increase.
08:35What we are worried is that the repricing that has occurred with regards to these higher premiums are
08:42disadvantaging those who are in the age category of 60 years and above or 55 years and above
08:47because they are likely to either be paying higher premiums or not covered at all.
08:53And this is something that because the insurers are having to manage and contain the costs that are as a
09:02result of perhaps bigger hospital bills,
09:05they are having to increase the premiums for older people who are considered much more higher risk, right?
09:11So they have more non-communicable diseases, they have pre-existing conditions,
09:14they have more, you know, they have multiple NCDs all at once,
09:20they have heart disease, they have chronic kidney disease and they have diabetes.
09:23So for insurers, these people are considered almost like nightmares, you know, for them to cover because it would be
09:31very expensive.
09:32So the repricing will disadvantage this group of people and this is something that we're worried about
09:38because it will price them out of coverage and force people in their 60s where they have the least amount,
09:48you know, I mean, it's retirement, right?
09:49They're not working anymore perhaps and they're having to force,
09:52they're having to pay more out of pocket for their healthcare and this is something that we are worried about.
09:58But what we are going to have to expect, a reality here is that the days of cashless admission to
10:06hospital,
10:07you know, are over, you know.
10:08So we're going to be seeing a combination of higher premiums, there's going to be co-payments, deductibles and unfortunately
10:17more out-of-pocket payments that are going to be made.
10:21So currently we see the data is showing us around 30, more than 30%, almost 40% of current costs
10:29are made out-of-pocket at the moment.
10:31All right, this is some of the unhealthy situation of the scenario that we need to address immediately.
10:38And taking a look at the total claims have reached RM17.4 billion while industry growth is slowing.
10:45Are we starting to see pressure on the sustainability of the insurance model itself?
10:51No, absolutely.
10:53I mean, at the end of the day, the insurance model only works if there's a lot of subscribers to
11:00the model
11:02and a smaller group of people who are tapping into the investments that they've made or the coverage that is
11:11being provided, right?
11:13If everybody were to be able to utilize the yearly RM1 million coverage that, you know, insurance tends to promote,
11:23then the insurance would be out of business, right?
11:26So at the end of the day, what you want to be able to have is a much more larger
11:30pool of people
11:32who contribute into the overall system so that payments can be made to the smaller group of people who need
11:40to pay for treatment and coverage
11:43and to be able to access, you know, innovative medicines, treatment, rehabilitation, surgery, etc.
11:51But the current model right now tells you that if payouts increase and you do not have a growth of
11:59subscribers or policyholders into it,
12:02then it becomes unsustainable.
12:04And this is something that has been worrying the insurance and the private healthcare system overall over the past several
12:12years.
12:12Because again, as I mentioned, post-COVID, there's been a dramatic increase in people who are falling ill, having to
12:20use the insurance
12:21and unfortunately having to be treated for much more serious chronic and long-term conditions as opposed to before COVID.
12:33So this is something that Bank Negara has issued a direct warning with regards to the medical cost pressures right
12:41now.
12:41You know, they're just not making the current pricing structures sustainable.
12:45And this will definitely have an impact on growth in the insurance and takaful business,
12:53especially when we're talking about medical insurance, you know, medical health insurance and takaful.
12:59So it's not going to be that the insurance are going to collapse tomorrow.
13:03What I'm worried about is that when, you know, you and I need insurance coverage in the future,
13:09we're not going to be able to get that.
13:10And it's going to be harder to be able to sustain and obtain for policyholders.
13:15Hence, these discussions lead me to talk about policies.
13:20As we know that policy enforcement is one of the big or one of the important and essential aspects
13:27when talking about the whole ecosystem of protection.
13:30But Azrael, please stay tuned with me as our program will be taking a short break and we'll be right
13:35back.
13:53Welcome back to Pantah Belanjawan and we're going to continue discussions about the main issues on this program right now.
14:01It's talking about the healthcare insurance sector, especially with the numbers or the reports seeing medical claims that have risen.
14:11And you want to understand further what is changing in the protection program.
14:15And we are still with our guests who are ready with us on the line is Azrael Mohamed Khalib, CEO
14:23of Gallen Centre for Health and Social Policy.
14:26I want to say thank you very much, Azrael, for joining me.
14:28From the first segment, you have just helped us understand behind the medical claims what are the factors of the
14:36increase in the numbers.
14:37And now for the second segment, we are going to be focusing more on the policies.
14:42With the number of policies in force declining by 2.3% to 12.7 million.
14:49Are we seeing early signs that some Malaysians may be reducing or dropping their coverage due to cost pressures?
14:58You know, unfortunately, it can't be read that way.
15:01Definitely, it's an early warning sign or symptom.
15:06In Bank Negara's report just last year, we were informed that there was 340,000 policies that were surrendered or
15:21dropped during the process or time for which there was premium increases.
15:27And this was quite unfortunate because it does show that there are some people, Malaysians, who are making the decision,
15:38you know, between paying for the repriced premiums that have been presented to them versus household expenditure that may or
15:50may not include healthcare.
15:52They are forced to make a decision to say, okay, we're just going to drop our insurance policy and when
16:01the time comes, we're going to have to resort to the public healthcare system for our healthcare.
16:06And this is something that is quite unfortunate because obviously those affected that we're talking about are in the middle
16:13class category.
16:15You know, the so-called M4T that we like to talk about or the some lower income households.
16:23So what this has shown is that the repricing has made medical health insurance and takaful coverage to be considered
16:33beyond affordability of some households.
16:36And that's quite unfortunate because I want to be able to see more people to be protected from financial catastrophe.
16:43And when we say financial catastrophe, it means that 30% of household expenditure is going to be just spent
16:49on healthcare.
16:51Insurance and takaful help do that, you know, by providing that protection.
16:56But if you can't pay for the premiums, then you can't afford that protection, right?
17:01So a lot of people now, because of the repricing that occurred, and despite the fact that there has been
17:07a so-called moratorium for the past two years or so, which will end very soon next year,
17:16instead of tapping it at a 10% increase for all premium increases, we will actually unfortunately see more people
17:25deciding that in the event of another repricing exercise, they may drop it altogether.
17:31So the 340,000 dropped or declined policies that we saw from January 2024 to June, I think 2025, it's
17:43perhaps just the tip of the iceberg.
17:45I'm hoping I'm wrong, but I can tell you that many of these issues are being compared or decided upon
17:54through the lenses of household purchasing power.
17:58And especially in this ongoing crisis, right, we are seeing more and more hard decisions being made.
18:04And a lot of people will consider that insurance or medical health insurance and takaful coverage or this kind of
18:14shield is going to be considered luxury.
18:16I can tell you that parents are dropping their insurance policies in favour of ensuring that their kids have insurance.
18:25And this is something that's worrying.
18:27So the family unit is affected as well in terms of who is being covered and who's not.
18:33And that is a very dangerous situation because we want to make sure that not only the children are shielded,
18:39but also the parents, the provider are also well protected.
18:43And investment linked policies are growing while traditional policies are declining.
18:48Does this reflect changing consumer preference or a shift driven by affordability and market conditions, actually?
18:56Well, you know, it's actually a combination of both probably because, you know, obviously we're looking at affordability as a
19:03key issue and investment linked policies.
19:12And when consumers are struggling with prices or in terms of how much they're supposed to pay for their monthly
19:23premium, then this could be something that is less preferred.
19:27So a lot of the recommendations that are going around today when it comes to when people are thinking about
19:36whether or not they should have insurance or takaful coverage for healthcare is to not be saddled with investment linked
19:44policy.
19:44So you separate it, right?
19:47So you only have medical coverage.
19:48So it's slimmed down.
19:50It's a lot more focused and becomes much more easier to manage because it's just looking at healthcare, right?
19:55It's not talking about investments.
19:57But even that, when you look at medical inflation, you know, it was told to us it was 15.6
20:03% a couple of years ago, but today it's closer to 18% in terms of medical inflation.
20:10This could mean that even the premiums today, when it's focused on just looking at medical coverage, could actually cost
20:17more for people, especially when they're at a certain age range.
20:21You know, obviously it's going to be cheaper relatively for someone who's in the age of 20, early 20s, late
20:3220s to get insurance.
20:33It gets more and more higher in terms of pricing when it gets older and perhaps even totally not able
20:41to cover for those above the age of 70 later down in life, right?
20:45But what we are seeing is the repricing is affecting all of the different categories or the cohorts of people
20:53in this sector.
20:58So the traditional policies right now are becoming harder to sustain when there's such a high medical inflation.
21:04We're expecting this to continue to occur, especially with this ongoing Iran crisis,
21:09which will now have an impact in terms of the cost for medical devices, pharmaceuticals,
21:17all of which will see the market adapting to the cost pressure and repricing realities.
21:23At the end of the day, insurance premiums don't exist in the vacuum.
21:27They respond to realities.
21:30The cost of the healthcare that's accessed through the private hospitals,
21:35the price of medical equipment, the prices of medical devices,
21:41pharmaceuticals, and even the services of the healthcare workers themselves.
21:45All of it needs to reflect realities.
21:48And so we have to look at it.
21:50It doesn't exist within a vacuum.
21:53What you mentioned to highlight is very important.
21:56We can see the insurance, the protections are right now responding to reality.
22:01And one of the reality that we have to acknowledge is that it's the big cause for the rise in
22:10medical supplies,
22:13medical delivery is also because of the war right now.
22:16And also take a look in one of the, we know, the groups who are very, very exposed to vulnerability,
22:24to risk of the healthcare, and we include the disability claims that search by over 77% in a single
22:34year.
22:35What's behind this sharp increase?
22:37And does it point to a deeper issue in workforce health or even protection gaps?
22:43Well, definitely those issues are very much important when we talk about chronic disease.
22:50Non-communicable diseases do not just result in premature death, but they can also result in disability.
23:01So disability isn't just someone who is born with a disability or becomes disabled later in life,
23:07but there is a situation, obviously, due to chronic disease, non-communicable diseases,
23:14such as diabetes, stroke, cardiovascular disease, the person becomes disabled.
23:23And this is where we see there being a cost here.
23:28And when we are able to have good healthcare systems that are able to provide the best possible care for
23:35an individual
23:36during what is basically the worst time in their life, you know, they're in hospital,
23:40they're being struck with, say, stroke, and the health system and the health workers around are trying to desperately save
23:48this person's life.
23:49And the person is able to be saved, but unfortunately may have deficits or become disabled due to that experience.
23:57It becomes yet another situation where people who we are seeing today are living longer with chronic illnesses,
24:06but they are also living with disability.
24:10They have delayed treatment.
24:13They have reduced functional capacity.
24:16And all of which, at the moment, when you look at insurance and takaful,
24:22this protection from income loss and disability is very much needed because of that.
24:29And you look at where we are in terms of the aging population.
24:34Malaysia is becoming increasingly aged.
24:37There's been a lot of conversation about how Malaysia is going to be an aging population by 2040,
24:45but I would argue that when you look at the percentage of those who are about the age of 60
24:51today,
24:52I think 11 or 13% are already there, meaning we're already aged.
24:57And so in this particular cohort of people, there is a need to address disabilities.
25:03There needs to be deficits, but most importantly, to be able to ensure that they're able to be functional,
25:09to live their lives as productive as possible.
25:11And that comes with a huge price tag.
25:15And when you link that together with the problems that we have systematically in the healthcare system,
25:21we have problems of workforce, you know, declining workforce that's available in the public healthcare,
25:28social protection gaps, you know, because unfortunately,
25:31we still are not very well protected when it comes to disabled communities.
25:37And as you mentioned just now, they're very much vulnerable to all manner of disadvantages,
25:44including unable to work, unable to access social protection, unable welfare,
25:51and even things like rehabilitation equipment.
25:54Then we find that this is a group of people who are increasingly becoming bigger as the years go by.
26:00And this not just includes those who are already disabled, but also those who are aged and becoming disabled.
26:07So that is a very big burden, which has a higher price tag,
26:13for which we are really needing some form of insurance protection or takaful for us to help us through that.
26:20And that is the future that nobody wants to be living in.
26:25Probably my last question before we end a balance of two minutes.
26:29Azrul, from your point, perspective, if nothing changes,
26:32what does this mean formulation in the next three to five years?
26:35Will healthcare protection become a luxury rather than a necessity?
26:40You know, I really don't want to get there.
26:43I mean, when I look at the United States having the insurance industry that they have
26:48and the kind of healthcare they have, I'm going to say very frank and say that I don't want us
26:52to head that way.
26:53But it could very well be a situation where the reality needs a rethink on how we look at healthcare
27:01and to look at both private healthcare and public healthcare together.
27:05We need this to address from a policy perspective, not just looking at the insurance problem.
27:11And the insurance problem is just symptomatic of a larger issue.
27:16And that is Malaysia is facing a healthcare cost crisis,
27:20which is driven by medical inflation, a volume of chronic disease coming in,
27:25aging, and of course, the rising treatment of intensity,
27:28which I mentioned just now where people are having to utilize.
27:32But for the ordinary Malaysian household,
27:36this is experienced as an affordability crisis.
27:40Coverage becomes harder to keep, retain, premiums rise higher than wages,
27:47and more people risk downgrading or dropping their insurance attacker for protection altogether.
27:52So what we need to be able to frame here is that rising costs are making affordability worse.
27:57And unless reforms improve pricing transparency, payment design, and prevention,
28:02more Malaysians will be priced out of meaningful protection from financial catastrophe due to health concerns.
28:11As you said, rising medical claims are no longer just industry numbers.
28:17They reflect growing cost pressure across the healthcare system with real implications for consumers.
28:23And Azra Mohamed Khalid, CEO of Gallant Centre for Health and Social Policy,
28:27Thank you for your insights and for helping us unpack this important issue.
28:31That's all we have for today's edition for Pantah Belanjawan.
28:34I'm Nina Rosman.
28:39Pantah Belanjawan.
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