ARI Working Paper Series

In Malaysia, the public health care system is funded from central taxation, while private health care utilisation has primarily been financed from out-of-pocket payments.  In the mid-1980s, the Malaysian government made known its intentions of seeking alternative sources of financing health care.  Since then, the rapid growth in the private hospital sector and concomitant drift of medical personnel out of the public sector has led to increasing pressures on government health care.  Privatisation of various components of the public health care sector also contributed to rising public sector costs.  Private health insurance has recently made inroads as a source of financing health care, due to a felt need to utilise the increasingly more expensive private health services.

In this context, the government has announced that it is pressing ahead with plans to further privatise and restructure public health care, reduce its role in providing services, and put in place a health care financing mechanism.  A change in health care financing will reflect a fundamental shift, raising questions regarding the impact on accessibility, equity, and universal coverage.