Is the 2019 health budget well placed?

On November 2, Finance Minister Lim Guan Eng presented the first budget from the new ruling Pakatan Harapan coalition, including allocations of operating and development expenditure to the Ministry of Health (MOH). Most observers expected the government to fulfil its pre-election manifesto promises, such as increasing MOH’s budget allocation to 4% of GDP; the implementation of “Skim Peduli Sihat”; the tackling of non-communicable and rare diseases; and strengthening partnership and collaboration with the private sector and NGOs.

I analysed the MOH budget from two perspectives: first, through the policies and programmes announced in the speech, and second, the estimated federal budget for each department within the MOH. Both the share and absolute amount of the budget allocation are important determinants.

Happily, the MOH allocation for 2019 has reached historic heights, totalling RM28.7 billion. Compared with Budget 2018, the health budget has increased by 7.9%, and takes a 9.1% share of the total federal budget. However, the current allocation equates to only 1.87% of GDP – an almost unchanged figure since the last budget. Health Minister Dr Dzulkefly Ahmad conceded that this round of allocations is unlikely to fulfil Pakatan Harapan’s manifesto pledge to devote 4% GDP spending on the public healthcare sector; instead, he proposed to establish the Real Estate Investment Trust (REIT) to raise an additional RM3 billion. In the budget speech, the finance minister only mentioned the airport REIT, while hinting that hospitals could also be a possibility in future. Raising public funds through this REIT approach sounds as if the government is doing business, and some in the public might not approve of such a controversial plan.

Prior to the budget, the “Skim Peduli Sihat” proposal had been widely discussed. In his speech, the finance minister had announced and rebranded it as the National Health Protection Fund (NHPF). This is a medical-related social welfare programme aiming to help people from the bottom 40% low income households (B40). Unexpectedly, a private healthcare insurance company will contribute RM2 billion in initial seed funding to the same fund managed by Bank Negara Malaysia (BNM). Some have reservations if such a fund pooling mechanism would present a conflict of interest. According to The Edge, the company is looking to negotiate a deal with the government to be exempt from the new requirement of maximum 70% foreign ownership of local insurance businesses, with this contribution. 

The NHPF programme will provide medical care in private medical institutions free of charge only for four critical illnesses. The maximum annual claim threshold given per person (or household?) is capped at RM8,000. This is contrary to the news reported few months ago that the programme will provide the B40 with between RM10,000 - RM20,000 per household, for in-patient care at private hospitals – without stating the restriction of illness categories. To date, which four illnesses the MOH intends to cover is still uncertain, but if these were serious and critical illness, RM8,000 is a mere drop in the bucket. What if these B40 patients find that their medical fees heavily exceed RM8,000 – should they be held liable? What is the claim mechanism for the benefits? Can a B40 patient go directly to a relevant specialist in any private hospital? If the government does not have a good system of claims management, in addition to government provision of RM50 daily hospitalisation income (maximum of 14 days per year), private hospitals are likely to receive a higher number of B40 patients with these critical illnesses and ultimately gain the most benefits from this programme.

Living up to MOH’s commitment to reduce the incidence of non-communicable diseases, a few progressive policies have been proposed, such as the sugar-sweetened beverages excise tax. The sugar tax is fixed at 40 sen per litre, if the beverage exceeds a certain concentration of added sugar content. In my opinion, the magnitude of the excise tax is not large enough to disincentive consumption. Unless the government continues to campaign heavily against high sugar-laden food and beverages, we should not expect this policy to significantly alter people’s food-consumption behaviour, or reduce obesity levels. On the other hand, the government’s determination and efforts at meeting its goal of a smoke-free Malaysia by 2045 are more obvious, with stringent measures to curb smoking in public.

Furthermore, the government should be applauded for a special budget allocation to treat rare diseases, strengthen primary healthcare, and provide health screening services to B40 senior citizens aged 50 and above. These actions reflect the ruling coalition’s election promises, and more are appropriate and timely public health policy directions to take.

Preventive care ensures residents become healthier in the future. However, for those who are currently suffering from various diseases, there is still a need for affordable, accessible and quality medical care. The current budget allocates RM10.8 billion for drugs and supplies purchases, as well as funding to upgrade and improve the quality of healthcare services in government clinics and hospitals. Comparing allocations between Budgets 2018 and 2019, MOH will have RM88 million more in funding for the purchase of drugs and medical products. 

Allocations for public health reflect the government’s policies in strengthening preventive care and primary healthcare, such as providing wider selections of free vaccination and health screening services. The current MOH budget has seen an increase of RM130 million to its public health pharmacy and supplies division, though this is mainly for purchase purposes.

For development expenditure (DE), the government will allocate RM800 million to upgrading and expanding hospital facilities in 2019, amounting to a RM132 million increase in funding. The allocation for building new hospitals has doubled, by an increase of RM140 million. Whether this is sufficient to meet the demand is uncertain, looking at the current situation where many government hospitals are overcrowded and facilities and equipment are desperately in need of repair and maintenance. In any case, the additional DE funding is crucial and pertinent. At least the government has tried its best to increase the allocations despite current budget constraints. 

Budget documents are useful indicators for understanding the government’s departmental operations, policy direction and priorities, as well as political determination for the upcoming year. Whether or not the MOH will manage its financial allocations well and achieve its policy targets by the tabling of Budget 2020 remains to be seen. As the idiom goes, put your money where your mouth is.

The article was published here at The Malaysian Insight, Voices, Nov 13, 2018.