A private hospital group has challenged the widely cited 15% medical inflation rate for Malaysia in 2025, saying the figure overstates actual cost increases by including higher patient utilisation rather than just price growth.

The concern was raised by Dr Kuljit Singh, president of the Association of Private Hospitals Malaysia, during a panel discussion on healthcare reform at the 2026 Malaysia Economic Forum.

Claims Data Blurs True Cost Increases

Kuljit said the 15% figure is largely derived from insurance claims data and does not accurately reflect underlying medical price inflation.

He explained that claims-based data captures both price increases and higher usage of healthcare services, particularly as more patients rely on medical cards for treatment.

According to him, this makes the headline inflation figure appear higher than the actual rise in treatment costs charged by hospitals.

Bank Negara Data Shows Sharp Rise In Medical Costs

Bank Negara Malaysia has reported that Malaysia’s medical cost inflation rose to 15% in 2025, higher than the global average of 10% and the Asia-Pacific average of 11%.

The increase has been linked to factors such as wider use of medical technology, the growing prevalence of non-communicable diseases, and an ageing population.

These pressures have contributed to medical insurance premium increases of between 30% and 50%.

Base Medical Insurance Plan Aims To Manage Cost Pressures

The government is expected to introduce a base medical and health insurance and takaful plan, known as MHIT, next year.

The plan is intended to provide Malaysians with more affordable and sustainable protection against major healthcare expenses while helping to manage rising private healthcare costs.

Kuljit said the base MHIT could reduce excessive claims by encouraging patients to take greater responsibility for their healthcare spending, noting that medical cards are often used like credit cards.

Private Hospitals Shifting Towards Value-Based Care

Kuljit said some private hospitals are already moving towards value-based care models.

These include tracking patient outcomes more closely and reviewing anomalies in treatment patterns to improve efficiency and reduce unnecessary costs.

Experts Say Reforms Are Only The Starting Point

Also speaking at the forum, Dr Ramesh Rajentheran, operating partner at TVM Capital Healthcare, cautioned against viewing the current healthcare financing reforms as a final solution.

He said the reforms should be treated as a starting point, with unresolved issues such as insurance access for seniors and people with pre-existing conditions still needing to be addressed.

Implementation Will Determine Reform Outcomes

Ramesh added that the success of technical reforms would depend heavily on how they are implemented.

He pointed to international examples where issues such as upcoding and code inflation emerged after the introduction of diagnosis-related groups and structured fee schedules, stressing the need for flexible and responsive oversight.

What This Means For Medical Bills And Insurance Premiums

The debate over Malaysia’s 15% medical inflation figure highlights how healthcare cost growth is measured and why it matters for patients and policyholders.

While hospital pricing is one factor, insurance premiums are also driven by how frequently medical services are used. Higher utilisation, such as more patients making claims through medical cards, can push up total claims even if individual treatment prices rise more slowly.

For consumers, this helps explain why insurance premiums can increase sharply even when providers argue that actual price inflation is lower than headline figures suggest. Insurers price policies based on overall claims risk, which includes both the cost of treatment and how often claims occur.

The proposed base MHIT is intended to standardise coverage for major healthcare expenses and potentially curb excessive claims. Its impact on premiums and access will depend on how it is implemented and whether utilisation patterns change over time.

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