For many Malaysians, having health insurance or employer coverage is supposed to make medical treatment more affordable.
But what if it’s actually costing some patients more?
That’s exactly what seems to be happening with patients who use guarantee letters for private hospital treatments.
Instead of getting a financial break, they might end up paying more than those who pay upfront and later claim reimbursement.
Deputy Finance Minister Lim Hui Ying brought up this concern in the Dewan Rakyat, pointing to an analysis of private hospital billing claims submitted to insurance companies and takaful operators (ITO).
Why are some patients paying more?
The problem, according to Lim, lies in the lack of transparency in how hospitals set their charges, reported FMT.
When patients use guarantee letters, the actual cost of treatment isn’t always clear, and it appears that some hospitals may be charging more for those using this payment method.
“There needs to be a deeper study to understand why this is happening and what can be done to fix it,” Lim said in response to Sim Tze Tzin (PH-Bayan Baru), who raised the issue in Parliament.
Sim had asked the finance ministry to explain why patients using guarantee letters sometimes face higher bills than those who pay out-of-pocket and claim later.
How do Guarantee Letters work?
A guarantee letter is basically a financial safety net issued by an insurance company or employer.
It assures the hospital that the patient’s bill will be covered, meaning the patient doesn’t have to make an upfront payment.
In theory, this should make things easier for patients.
But in practice, it seems that hospitals may be billing these patients differently—potentially charging them more compared to those who pay in cash first and later get reimbursed.
The government steps In
This issue isn’t new, and Lim acknowledged that concerns over hospital billing practices were also raised during recent Public Accounts Committee (PAC) hearings.
To tackle the problem, she said the health ministry, in collaboration with the finance ministry, private hospitals, and ITOs, is working on long-term solutions.
The focus is on making pricing more transparent so patients can compare costs more easily and understand what they’re paying for.
“This includes enhancing the transparency of medication costs and facilitating comparisons of common medical expenses. This integrated action plan was presented to PAC yesterday,” she said.
What else is driving up medical costs?
Aside from pricing differences with guarantee letters, there’s also been a spike in medical insurance claims.
Lim shared findings from the ITO industry’s integrated claims database, which showed that certain illnesses had high claim rates in 2023. Among the most commonly claimed conditions were:
- Pneumonia
- Spinal issues
- Digestive system disorders
- Heart disease
These high claim rates impact insurance companies’ costs, which in turn could lead to changes in premiums for policyholders.
Will insurance costs go up?
With rising claims, the government is now looking into whether insurance companies should be required to provide more detailed financial reports on medical policies.
Right now, ITOs only publish general financial statements under the Malaysian Financial Reporting Standard 17, and premium changes are based on claim costs.
Lim stressed that while insurance companies must ensure their products remain sustainable, they shouldn’t hike up premiums just to boost profits.
“For example, ITOs must monitor the cost experience of MHIT claims objectively, and may only adjust premiums when the actual claims costs consistently decline and exceed the threshold value previously set in the ITO’s internal practices,” she explained.
She also reassured that ITOs aren’t allowed to raise premiums just to increase profits, and any adjustments must be justified by actual claim costs.
What’s next?
The government and key stakeholders are now looking for ways to make private hospital charges fairer and more transparent, ensuring patients don’t get overcharged when using guarantee letters.
At the same time, the rising cost of healthcare and insurance remains a challenge, and policymakers are working on solutions that balance affordability for patients while keeping insurance companies financially stable.
For now, patients may want to compare their options carefully—because depending on how they pay, their hospital bill could look very different.
