Slide 19 shows that private insurance companies will design, administer and underwrite 1Care's Social Health Insurance (SHI). This will create a similar situation as America where insurance decides what healthcare citizens will get. Watch the movie "Sicko" to see the result of such a system.

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2. Role of Private Medical Insurance
Anusha Thavarajah
Deputy CEO / CFO
ING Insurance Malaysia, July 2011

3. Presentation Outline
• Malaysia’s Changing Healthcare Landscape
• Private Medical Insurance Gaining Prominence
• The Role of Private Medical Insurance
• Final Thought
• Q&A
2

4. Malaysia’s Changing Healthcare Landscape
ING 3

5. Current Conditions in Malaysia’s Healthcare System
i. Rising healthcare
Current issues in healthcare system
expenditure – 5%
of GDP
Countries Indicators 2000 2001 2002 2003 2004
Total 11,330.93 12,287.152 13,339.608 19,478.917 21,200.439
expenditure
Malaysia on health 2005 2006 2007 2008 2009
(in RM
millions) 21,574.5 24,778.67 28,021.895 31,140.871 32,648.524
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6. Current Conditions in Malaysia’s Healthcare System
ii. Highly subsidized services &
Current issues in healthcare system
overdependence on
government health facilities
iii. Gaps in present healthcare
delivery system
– i.e. equity, efficiency,
accessibility
iv. Inadequate integration
between public & private
sectors
v. Increasing trend of private
health expenditure – 41%
Out-of pocket (OOP) spending
vi. Globalization & liberalisation
Increased deficit in
Malaysia’s budget if these
remained unsolved
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7. What’s Driving the Change?
Healthcare has grown to become a much bigger part of the
Malaysian economy owing to four major drivers
Wealth Longevity
Medical advances and
When people can afford it,
improvements in living
they will spend almost any
standards are contributing to
amount on health
growing life expectancies
Lifestyles
Technology
Rising affluence is altering
New therapies, products,
lifestyle patterns and diets,
medical procedures are driving
thus leading to higher
up patients’ expectations;
prevalence of chronic diseases
pulling up demand
which are costly to treat
6

8. Demographic trends – Higher Population Growth
Rates & People are Living Longer
Population Pyramids for Malaysia (1980, 2000,
Malaysia Life Expectancy by Gender: 1980-2025
Projected 2025)
85
80
75
70
65
60
1980
1985
1990
1995
2000
2005
2010
2015
2020
2025
M a le F e m a le
i. Aging Population
• Extended longevity
• The % of ageing people (60 years+) is projected to
increase to 3.4 million in 2020 (9.9% of total
population).
ii. Population Growth
• Increased 17% from 2000-2010
• Projected to increase to 34.3 millions in 2020.
24.3% growth rate from year 2010.
Source: International Database, US Census Bureau, Population Division
(http://www.census.gov/ipc/www/idb/)
7

9. Affluence Effect – Standards of Living Are Higher
Source: World Bank, WHO
8

10. Lifestyle Diseases – From Communicable to Non-
Communicable
Changing Disease Patterns
• Cardiovascular diseases (such
as coronary heart disease)
• Hypertension
• Stroke
• Diabetes
• Cancer
• Mental health conditions
(mostly dementia and
depression)
9

11. Private Medical Insurance Gaining Prominence
ING 10

12. What’s Triggering the Need for Private Medical
Insurance?
• It is estimated that 40% of the country’s
population or 10.8 million Malaysian are
medically insured. 16.2 million people are
without health insurance. 60% out of the 40%
healthcare spending is supported by the
Government
• Demographic Changes
• Increases in medical bills are outpacing the
general inflation rate each year
Average inflation rate for the past 10 years = 2.2%
each year
Medical inflation is escalating at between 13% -
15% annually due to rise of investments in
research and adoption of new technologies to deal
with new illnesses
• Increasing demand for Private Healthcare
11

13. How can we as a nation
address these needs?
12

14. Government’s Proposal on Healthcare Reforms
Vision 2020
Vision
High income and high productivity nation
Healthcare is 1 of 12 NKEAs
Sectors with potential to generate high income
ETP
1Care 1Malaysia EPPs NKEA Labs
• Restructured integrated • Foreign workers insurance • Seniors Living Coverage
health system • Health tourism
Healthcare Sector
Powerful engine of
Highest historical growth economic growth. Creating more than
rate of 8.8% between 2000 Potentially grow to 180,000 jobs.
& 2009 among all sectors. RM35.1b to GNI by 2020.
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15. Private Sector to spur Growth in Healthcare
Service Industry
What role can private Health expenditure:
sector play in health
system reforms?
The most predominant expense factor in
government’s spending – 5% of GDP
• Need for private medical insurance -
Increasing role of • Access to private health care
the private sector • Help alleviate government’s burden
• To reduce OOP and therefore reduce
Health system financial indebtedness
reforms
NB: OOP in developed nations is only 14%.
Increasing pressure on
public health
•Vast growth opportunities in private health
expenditures insurance –
• Only 14% penetration
• Private insurance spending is only 8%,
Total health expenditure
where high income nations recorded 20%.
growth
Source: OECD health data (2008), Munich RE
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16. Healthcare system in Canada: Role of Private
Health Insurance
Total Healthcare Expenditure • 10.9% of GDP in 2009
• Many choose to rely on the Public • Public healthcare being • Private
Health System (1st tier) administered on a provincial health
• Primary health coverage given to all basis (2nd tier) insurance
citizens (irrespective of medical • Additional services provided at (3rd tier)
history & personal income) provincial level
Characteristics of the • Publicly funded (taxation from • Physiotherapy, dental &
Healthcare System personal & corporate income taxes) prescriptive medicine
• Type of healthcare services provided • Funded by sales tax & cash
(Preventive care / primary care, contribution (health premiums
access to hospitals, dental surgery, for individuals)
some additional medical services)
• Supplementary role in the healthcare system
• To cover what is not covered in the public / provincial health insurance
Role of Private Health
• Corrective lenses, medication, home care
Insurance (PHI) • Not so much to gain access to quality care
• Usually offered as part of employee benefits packages
Total PHI Expenditure • 11.4% of total healthcare expenditure
Population covered by PHI • 65%
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17. Healthcare system in France: Role of Private
Health Insurance
Total Healthcare Expenditure • 11.7% of GDP in 2009
• Dominated by Public Health Insurance • Complementary health Private health
Characteristics of the System insurance covers other insurance
Healthcare System • All citizens are covered benefits not covered under the
• Funding – employee and employer National Health Insurance.
contributions and personal taxes Covers those
• Covers outpatient, hospital care, • Whose health expenditures
prescription drugs, home nursing have been exceeded
care, certain alternative therapies. • With chronic illnesses
• No gate-keepers regulating access to • Whose incomes are low
specialists & hospitals • Finances 12.5% of total
• Finances 70-75% of total personal personal care expenditure
care expenditure
• Supplementary role.
Role of Private Health • To reduce out-of-pocket expenses which could be quite substantial
Insurance (PHI) • Not so much to gain access to quality care.
Total PHI Expenditure • 12.7% of total healthcare expenditure
Population covered by PHI • > 90% of population covered by complementary & supplementary insurance
16

18. The Role of Private Medical Insurance
ING 17

19. Private Insurers: Vital Link in Healthcare System
Insurers
Providers
(Clinics/ Regulator
Hospitals)
3rd Party
Administrators
18
18

20. What’s the Role of Private Medical Insurance?
Part of health financing scheme
to ease the government’s
burden by alleviating the
increasing healthcare cost
Healthcare
Financing
New product innovation under
Healthcare NKEA Working with
• Foreign workers insurance Product 3rd Party Offer expertise to public
• Seniors living Design Administrators health financing scheme
• Portable health insurance (TPA)
19

21. Role in Healthcare Financing
Healthcare Financing
Health Funds Social Health Insurance
• Discipline & consistent savings • Mandatory medical savings scheme
towards healthcare / medical regulated by the government – i.e.
needs. healthcare financing in Singapore.
• Reduce OOP spending. • Design & provide affordable medical
• Increased affordability for better insurance plans tie-in with the EPF
health services. account (auto-deductible
mechanism).
• Encourage the nation to contribute
certain amount of premiums to
purchase a health insurance plan.
20

22. Where are Insurers in the Current Malaysian
Healthcare System?
Primary Secondary Tertiary
• General Practice • Specialist • Specialist
consultation
• Hospitalisation
& Surgical
In the future?
21

23. Health Product Evolution in Malaysia
Without credible claims Identify Claims Start to gain Periodic review of
data abuse market share claims experience
First Non-
Offer choice
cashless First Non- Replace with of Cashless
Plan sold cashless Cashless Plan & Non-
through Plan (Medical Card) cashless
Employee Individually Plan
Benefits
1995………......….1997……..……….…….2001………..………..2003……………………2004
• Inner Limits Premium • Premium increase
• Slight change in Increase • Annual limit increase
benefit design
ING 22

24. Health Product Evolution in Malaysia
More Regulations/ Guidelines on
Hospital & Surgical Business
• Introduce • Revised Health
deductible Regulation leads Risk Management
• Disclosure & to change in Reporting for better
Transparency product design claims and pricing
• Breakdown of • Male/Female controls
attained age group Premium Rate
<21
2004…………….....................….2006………………………… 2007..................................
•Premium increase Annual limit increase
•Annual limit increase
ING 23

25. Health Product Evolution in Malaysia
Extended Longevity & Rising Medical Cost
• Extended entry
age & expiry age
• Higher annual
• No Claim Bonus
limit and lifetime
• 2nd Medical Card
limit
• Major medical
plan
2007……………..............2008……………………..2009..........................2010………. NOW
•Premium increase
ING 24

26. Moving Forward…Continuously Enhance & Innovate Health Insurance to
Complement Government Proposed Initiatives
Product enhancement New product innovation
Extended coverage Foreign Workers Insurance
• Extending maturity age or age of entry in view of • Only 75% of 1.8m foreign workers are covered by
the improved longevity among Malaysians workmen’s compensation schemes
• Increase annual and lifetime limit to meet the • 2005-2009, RM64m of unpaid healthcare bills
increasing medical cost • Mandatory insurance on –
• Juvenile medical plan with “Coverage before birth” • Workmen’s compensation
features • Medical insurance
Multiple-layers coverage Seniors Living
• Provide coverage at different stages of illnesses • Malaysia is likely to reach ageing nation status by 2035 –
to ensure the wellness of policyholders by # of elderly people reaching 15% of the population
obtaining early treatment • LTC insurance – provide coverage for seniors living
support
Preventive healthcare / health management
• Provide regular medical check-up to policyholders Healthcare Tourism
help the policyholders keep track of their health • Grew at 25.3% every year since 1998*
status • Malaysia attracted > 1m foreign patients with total
medical receipts of RM800m
• Possibility of influencing product design among Asian
affiliates in providing portability feature of medical
insurance?
* Source: International Medical Travel Journal 25
25

27. Final Thought
ING 26

28. In conclusion…
The future is all about
achieving greater synergies
among all parties for the
benefit of the public
27

29. Q&A
ING 28

30. THANK YOU
Disclaimer: Any views or opinions expressed in this presentation are those of the presenter and
do not necessarily reflect the official stand, policy or position of ING Insurance Berhad. Examples,
illustrations shared are based on the presenter’s views which may include information sourced from
publicly available information. They should not be taken as professional advice.
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