18/08/2026
The MediAsas Mirage: How Malaysia’s Flagship Health Plan Betrayed Its Promise To The Chronically Ill — Dr Rajeentheran Suntheralingam
The betrayal of the chronically ill is not merely a failure of MediAsas’ product design. It is a failure of political will – voluntary, market-driven insurance cannot deliver universal protection.
A government-designed product should be governed by a government body, not left to the discretion of private insurers. This fund should offer community-rated premiums and guaranteed coverage for pre-existing conditions, regardless of “insurability” assessments.
Need to note the following to understand the current situation of our Healthcare crisis:
1. Medical inflation rate has creeped up above 16% in Malaysia compared to its general inflation rate ranging from 1.5% - 2.5%.
2. The RESET strategy functions as an immediate, near-term operational framework to tackle surging private medical inflation before the broader, 15 year long-term structural reforms of the Health White Paper fully roll out.
3. The Malaysian Healthcare system is based on a dual-tier framework - an overstretched, tax-funded public sector rubbing shoulders with an expensive, profit-driven, fees-for-service private sector - and it is now reaching its breaking point.
4. Urgent intervention is needed for this healthcare crisis, as it will not auto-correct itself.
5. The current health financing model is based on a tax-funded public model.
The income tax revenues from private healthcare services is not ring-fenced to the public healthcare budget. The budget for public healthcare is based on the Federal budget which is based on Parliament approval. This is currently at 2.4% of the GDP amounting to Rm 46.52 billion which is nearly 10% of the total govt spending. This may not be adequate. There are calls for the healthcare budget to be increased to 5% of the GDP.
Subsequently the MOH expects a 10% cut of its 2026 budget, as part of cost-cutting measures to save government funds amid the impact of the Iran war. This cut would be equivalent to RM4.65 billion.
5. The public healthcare sector is heavily tax-funded. Around 2.5 to 2.7 million individual taxpayers currently actively pay income tax in Malaysia, accounting for roughly 15% of the country's total workforce of over 17 million. The remaining workers do not pay income tax because their earnings fall below the minimum taxable threshold, while the remaining workers fall below the minimum taxable income threshold.
6. 2.7 million individual tax payers paying the healthcare for a 33 million Malaysian population will not sustain itself any longer.
7. This is the core structural and financial reason why a National Health Insurance (NHI) scheme is currently unfeasible in Malaysia.
8. Soaring claims ratios - approaching or hitting 100% - pose a severe threat to the traditional pricing models of medical and health insurance and takaful operators (ITOs) making health insurances unsustainable, which leads to private ITOs having no other choice but to implement periodic premium adjustments.
9. For this reason MediAsas should be a government-designed product governed by a government body, and not left to the discretion of private insurers.
10. We should find a middle ground where MediAsas becomes a government-funded public health insurance. Alternatively, the government could partially fund ITO (Insurers and Takaful Operators) schemes to offer affordable MediAsas coverage. This should include people with chronic illnesses and pre-existing conditions. Otherwise, these patients will move to the public health sector and crowd the public hospitals. The government would then spend more money on their care. Investing in MediAsas is a better solution than paying to move public hospital patients (decanting) to private hospitals.
11. Voluntary insurance cannot deliver universal protection. The government must eventually move towards mandatory participation.
If I have time, I will write more on the necessity of whether Malaysia needs to implement a National Health Insurance, Social Health Insurance, or forge a separate middle path effective financial health model.
Dr Rajeen
18 August 2026
The betrayal of the chronically ill is not merely a failure of MediAsas' product design. It is a failure of political will – a refusal to confront the uncomfortable truth that voluntary, market-driven insurance cannot deliver universal protection.