The idea of a national health and social insurance scheme that builds on the Employees Provident Fund (EPF) is gaining momentum in Malaysia. Recently, the Galen Centre for Health and Social Policy, a health policy advisory group, proposed creating such a scheme. Their suggestion does not involve tapping into existing retirement savings. Instead, it focuses on introducing increased contributions from both employees and employers. This approach aims to strengthen healthcare financing in Malaysia without affecting people’s retirement funds.

How Would the New Healthcare Fund Operate?

The central proposal is to create a dedicated fund for national health and social insurance by slightly increasing EPF contributions. The additional contributions would be set aside specifically for healthcare and social insurance purposes. This fund would then work alongside the existing federal health budget, providing a stable and sustainable source of financing for Malaysia’s healthcare system.

This concept is similar to Singapore’s Central Provident Fund (CPF), where part of each member’s contributions is allocated to a MediSave account for healthcare needs. By following this model, Malaysia could establish a more secure and consistent way of funding healthcare services.

What Benefits Could This Bring to Malaysians?

A key feature of the proposed scheme is comprehensive access to both public and private healthcare services. Importantly, the proposal states that individuals would not be excluded because of pre-existing health conditions. This change would remove a major obstacle to care for many people.

Another benefit is the aim to reduce out-of-pocket medical expenses. The scheme plans to limit high deductibles and include only minimal co-payments when necessary. This approach could make healthcare much more affordable and accessible, easing a significant burden for many Malaysians facing rising medical costs.

Strengthening Public Healthcare Facilities

Beyond individual benefits, the scheme could also improve Malaysia’s public hospitals. A dedicated healthcare fund could help upgrade hospital infrastructure, hire more healthcare staff, and purchase modern medical equipment. Consistent funding would also make it easier to expand access to essential medicines and advanced treatments. These improvements could reduce waiting times, improve service quality, and make public healthcare facilities more responsive to the needs of patients.

Comparing EPF Savings and New Contributions

This discussion follows earlier suggestions by the Health Minister about allowing Malaysians to use their EPF Account 2 savings to pay for health insurance premiums. While the EPF is still reviewing that idea, the current proposal focuses instead on creating new contributions specifically for national health insurance.

It is important to distinguish between these two ideas. Using existing EPF savings could undermine people’s retirement security, especially as many Malaysians already struggle to save enough for retirement. On the other hand, introducing new contributions dedicated to healthcare would avoid depleting retirement funds and instead create a sustainable pool of resources for health financing.

Balancing Current Health Needs and Future Financial Security

The success of any new healthcare financing initiative will depend on finding the right balance between addressing immediate health needs and maintaining long-term financial security for individuals. A careful evaluation of how increased contributions or adjustments to EPF accounts would affect retirement savings is essential.

As discussions continue among policymakers and health experts, the focus remains on building a fair and sustainable healthcare system that ensures universal access to quality care without putting future financial stability at risk. The goal is to create a financing model that is inclusive, secure, and capable of meeting the evolving healthcare needs of all Malaysians.

Inside Insight

“We need to get to the root cause of the problem. Healthcare costs in Malaysia have been rising too quickly. Bank Negara Malaysia Governor, Datuk Seri Abdul Rasheed Ghaffour, said Malaysia’s medical inflation rate stands at 15%, compared with the regional average of 11%, based on data from Aon International Insurance Brokers. The government and the healthcare industry need to find ways to bring these costs under control. Otherwise, more and more Malaysians will not be able to afford the healthcare they need.”  Siew Yuen Tuck, Group CEO, RinggitPlus

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• CPF
• Employees Provident Fund
• EPF
• Health Insurance
• Healthcare
• MediSave
• Premiums
• Singapore’s Central Provident Fund