MediAsas: Mind the coverage gap

WHAT was supposed to be the establishment of a no-frills, more affordable medical insurance scheme, with some elements of social justice accorded to it, appears now to be seeing a rather different outcome than what was initially envisioned.

This is the MediAsas medical insurance scheme, and some evidence of this seems apparent based on recent developments.

First came the apparent retreat from earlier assurances on pre-existing illnesses and the “no look-back” provision. Health Minister Datuk Seri Dr Dzulkefly Ahmad had said the government “fought very hard” to secure coverage for pre-existing medical conditions.

He subsequently said people with stable and controlled conditions, including mental health issues, would be eligible for the plan.

The initial messaging by the government appears similar to the aims of the Affordable Care Act (ACA), or the Patient Protection and Affordable Care Act, in the United States – a comprehensive healthcare reform law funded by the government there.

In Malaysia, it remains unclear what led to the apparent pullback in the initial agreed terms for MediAsas that were announced by Dzulkefly.

The discrepancy became evident only after Bank Negara Malaysia published the MediAsas pilot frequently asked questions on July 29.

The document lists pre-existing conditions among 35 major exclusions and describes MediAsas as a fully underwritten product.

Applicants must disclose their medical history, while insurers can request further medical evidence before determining whether they are insurable.

Claims relating to pre-existing conditions remain subject to exclusions and underwriting terms imposed when the policy is issued.

Also, the much-touted no-look-back protection is not as straightforward as initially understood.

Under the pilot terms, policyholders must maintain continuous coverage for seven years before claims can generally no longer be contested over non-disclosure or misrepresentation.

Even after seven years, exceptions remain for fraudulent, deliberate or reckless non-disclosure, as well as several pre-defined medical conditions.

These include cancer, organ failure, major cardiovascular illnesses, neurological disorders and systemic autoimmune diseases.

There is a difference between allowing someone with an existing illness to purchase a policy and covering treatment related to that illness.

An applicant may technically be accepted into MediAsas but still face an exclusion for the condition most likely to require expensive treatment.

Describing this simply as coverage of pre-existing conditions could therefore give consumers the wrong impression.

MediAsas’ Teras plan provides an annual limit of RM100,000 for those below 60 and RM150,000 for older policyholders, while the Fleksi option provides RM300,000.

Interestingly, there is no lifetime limit under either options.

BNM says claims data show that 99% of claims paid in 2024 were below RM60,000.

This suggests the limits could be sufficient for most ordinary hospital episodes, although they may prove inadequate for repeated admissions, prolonged treatment or expensive cancer therapies.

The plan also introduces deductibles, preferred hospital networks and diagnosis-related group payments intended to restrain healthcare costs.

Similar to other medical plans out there, MediAsas’ monthly premiums can rise according to attained age and may also be repriced because of medical costs and the claims experience of the MediAsas portfolio.

Soon after details emerged, some medical insurance agents began highlighting MediAsas’ perceived weaknesses, particularly its lower annual limits, comparing them with the prices they cited for selected procedures at private hospitals today.

However, these agents conveniently left out the fact that MediAsas does not impose any lifetime limits.

At the same time, a number of these agents were promoting comprehensive bundled policies with much higher limits.

Such products may provide higher limits, but they usually also contain investment-linked elements and commissions built into the premium price, along with insurance charges that tend to increase substantially as policyholders age.

An established insurer also appears to have circulated comparisons emphasising its own lower starting premiums and higher limits against MediAsas.

But those are not like-for-like comparisons, and what such comparisons may not show clearly is how much those premiums could rise over several decades and whether policyholders can continue to afford paying them once they reach retirement – the time when such plans could come in handy.

These sales tactics are unsurprising, but they demonstrate the danger of assessing medical insurance through headline premiums and annual limits alone.

Granted, unlike the offering in the United States, which is subsidised by the government there, MediAsas remains an unsubsidised, voluntary private insurance scheme underwritten by commercial insurers and takaful operators.

But this does not excuse the gap between the government’s initial messaging and the pilot terms eventually disclosed.

Now, the real danger is that MediAsas becomes stigmatised as inferior even before it is launched next year.

If MediAsas cannot cover the illnesses people already have, the government should have been more upfront about that instead of suggesting otherwise.