We, the Citizens' Health Initiative, are a group of individuals and organizations concerned with the rapidly changing situation in healthcare and the direction of healthcare reforms set in motion by the government's privatization policy. We feel there is a need to explain our concerns to the government and to the public-at-large, to delineate the principles upon which a healthcare system should be founded, and to state our views and expectations of a just and equitable healthcare system for all the people of our country. 




The Malaysian healthcare system has performed creditably since Merdeka in making healthcare available to the vast majority of the population. Government health services in particular, financed by taxes and other public revenues, have achieved impressive coverage for primary healthcare. People in the rural areas have recourse to an extensive network of government health centers and klinik desa with referral backup, while the urban residents have access to government as well as private hospitals and clinics. This has been a major factor contributing to our favorable health indices which are almost on a par with those of richer industrialized nations.

The poor and the rural residents depend greatly on government health services which either do not charge or charge very nominal fees. For many others, government health services remain as the affordable alternative when circumstances do not allow for a wider range of choice and conveniences. A competent and credible public sector therefore also acts as an important price check to help maintain more affordable fees in the private sector. 

The public sector however has been facing a severe staff shortage. A rapidly expanding private sector, coupled with unsatisfactory working conditions in the government services, has drained away scarce, skilled personnel from a public sector which has become chronically and severely understaffed. The government claims that public financing of health services is onerous and unsustainable, and yet government health expenditure is very modest, even by regional standards and in more prosperous times. 

In the last ten to fifteen years however, the market for private healthcare has grown dramatically. With increasing affluence, somewhat diminished by the current economic downturn, more and more people have been choosing to use private healthcare services. Private hospitals were few in number in the 1970s, but have proliferated in the urban centers since the early 1980s. Most of these are for-profit institutions, in contrast to an earlier tradition of community- and philanthropic-supported hospitals. 

As the private hospital sector expanded, it has drawn upon the staff resources of the public sector. Initially a trickle, the outflow of government doctors, nurses and specialists has grown rapidly and this in turn has set off a vicious cycle: the deteriorating situation has led to heavier workloads for those who have remained. Coupled with unsatisfactory working conditions, it has further reinforced their desire to leave as well. Furthermore, with longer queues and more heavily burdened staff, public dissatisfaction with government services has grown and complaints have mounted. Those who could afford it turned to the private sector, which responded to the added demand by building more hospitals and increasing its charges. If this trend continues, those who have to depend on government health services can expect further declines in quality of service, while private hospitals continue to flourish off the clientele with disposable incomes. In times of economic recession, we witness the twin irrationality of a staggering overload for the public sector, concurrent with underpatronised excess capacity in the private sector. 

The government continues to proclaim corporatisation and privatisation of the public sector as the panacea for these interlinked crises. Privatisation of selected hospital services has been carried out, and our public hospitals are on the threshold of being corporatised. Indeed the University Hospital was corporatised on January 1, 1998, and the remaining teaching hospitals are expected to follow suit shortly. Other government hospitals would be corporatised in parallel with the introduction of some form of national health insurance. Indications are that even district hospitals, a crucial part of primary healthcare in the rural areas and an important link in the referral chain, may be subjected to corporatisation and privatisation. 

Few details have been revealed about the re-structuring and financing scenarios under consideration. No less than five consultant reports have been commissioned in the last decade to look into national health planning, healthcare insurance and financing, and household healthcare expenditures, but none has been made available for perusal by the medical profession or by the public. Malaysian citizens, the non-affluent in particular, are understandably anxious about the affordability and future accessibility of healthcare. Faced with an uncertain future, the Citizens' Health Initiative calls upon the government to be more transparent and to immediately begin a meaningful dialogue with the general public and its civic representatives, who need to be assured that the proposed healthcare reforms would adhere to the fundamental principles of equitable, accessible, effective, and sustainable healthcare. 



In the last ten years, the government has been reluctant to put adequate resources into healthcare services and to improve remuneration and conditions of work so as to retain its specialists, medical officers, nurses, and other health personnel. Government spending on health was 6.9% of the national budget in 1976, 7.0% in 1980, 5.1% in 1986, 5.5% in 1990, and 6.2% in 1996. In 1986, the government health budget was 2.1% of the GNP, in 1990 it was 1.7%, and in 1996 it was 1.5%. This level of spending is very low compared to other countries.

On the other hand, in line with the government's privatisation policy, support services for the government hospitals have been privatised, following upon the privatisation of the P.J. Medical Store which used to produce and distribute medicines to government health facilities. The Institut Jantung Negara now functions as a corporatised entity, and the government intends to corporatise other hospitals in the near future. 

The government believes that corporatisation will stem the tide of government doctors leaving for the private sector because corporatised hospitals can pay higher wages to their medical personnel. With corporatisation, the government also hopes that its burden of financing the health services will eventually decrease further. 

In 1983, the government launched the Health Services Financing Study to review the healthcare financing system. One of the recommendations of the study was to set up a national health security fund as an alternative source of financing for healthcare services. Since then, at least two other studies (one of them ongoing) have been carried out to examine the feasibility of a national health security fund. 

In the Seventh Malaysia Plan, the government announced its intention to set up a National Health Security Fund (NHSF). Beyond that however, very little is known about the operational aspects of an important public issue which is under serious consideration by the government. Nevertheless, there is speculation that SOCSO, as a possible nucleus of the future NHSF, could be expanded to cover the entire population of the country. 


The NHSF, or some variant of national health insurance, would be a compulsory health insurance scheme to which employers, employees and the self-employed in the country would contribute. In this sense, it is an additional tax that we would have to pay; but it is a tax that would be earmarked solely for health, and cannot be used for any other purpose. The regular and fixed contributions go into a collective pool that would be used to pay for much if not all of our medical care expenditures in the public as well as in the private sector. It is possible that the government might additionally require compulsory, personal medical savings to absorb non-catastrophic illness expenses incurred by individuals and their dependents. A social safety net for the medically indigent (those requiring public assistance to pay for their medical expenses) would presumably complete the coverage for the whole population. 

Whatever the eventual setup, these additional funds, mobilized as alternative financing for healthcare will pay for the higher fees and charges of the corporatised (or privatised) hospitals, thereby relieving the treasury of the burden of rising healthcare expenditures. 

For example, the government does not contribute any funds directly to the corporatised Institut Jantung Negara. The majority of IJN patients however are civil servants and the less well-off, who receive subsidies from the government for utilising the services of the IJN. It turns out that after the corporatisation of IJN, the government's expenditures on cardiac services for its eligible patients have increased; but once the NHSF is in place, the treasury will be relieved of this payout as the NHSF would be the source of reimbursement for these services. 



An NHSF is not necessarily bad in and of itself. The real issue is whether these expanded resources for healthcare will be equitably and rationally used to deliver value for money, or whether it would contribute inordinately to the profits of healthcare entrepreneurs. Whatever the case, the setting up of an NHSF will drastically change the structure of healthcare delivery and financing, and bring about far-reaching consequences for the people of the country. What impact these changes will have will depend to a large extent on how the NHSF is to be structured. Many questions therefore ought to be raised, such as: 

  1. What services will the NHSF cover? Will it cover immunizations, ante- natal care, and other preventive health measures? At the other end of the spectrum, will it cover heart bypasses and transplants? What about long-term care for the chronically ill and rehabilitative and palliative care, or home care for the aged? 

  2. Will the NHSF cover entire medical care charges, or will patients be required to pay part of the medical bill? If this co-payment is high, private medical insurance may eventually be seen as a necessity. Consumers may therefore end up paying for both the NHSF as well as for private insurance, and a system with 2-tier quality will very likely emerge.

  3.  Who will pay into the NHSF and how much will each person pay? Will payments be progressively structured; will it be payroll-based, and if so, how will non-employees such as farmers and hawkers contribute? Who will pay for the aged and the indigent? 

  4. Will NHSF benefits be extended to everyone? What about foreign workers and indigenous people? 

  5. In those countries where compulsory and private health insurance is predominant, health care costs have spiralled upwards, primarily because such a system encourages the insured and the provider to use healthcare services liberally and without restraint. The practice of `defensive medicine' in private hospitals, motivated by a desire to avoid medical negligence litigation, will add further to an uncontrolled rise in health care costs. What will the government do to regulate this? 

  6. Conversely, if concerns for cost containment become paramount, how can patients and the lay public ensure that "rationalised, managed care" does not in fact become a cover for unwarranted compromises on quality of care, especially if the management of the national health security fund is privatised to a profitmaking concern? 


A national health security fund is one arm of a two-pronged approach towards healthcare reform. Corporatisation of the government hospitals and other healthcare facilties is the other. In most instances, this is taken to mean re-structuring the hospitals towards more autonomous, self-accounting and efficient units capable of generating sufficient revenues to stem the outflow of staff. 

The public's apprehensions are centred around the following questions. Is corporatisation a way-station along the route to full privatisation, or will these corporatised entities remain as government-owned non-profit institutions accountable to the government and public rather than to private shareholders? How will the financing and reimbursement system be structured to ensure that corporatised healthcare remains widely accessible to the entire population, especially in these times of increased reliance on the public sector? 

To allay these anxieties, it is crucial that there be strong community representation on the boards managing these institutions. It is worth pointing out that one alternative to corporatising and privatising healthcare is to decentralise more responsibilities to other levels of government, together with adequate powers of revenue collection and disbursement. In Sweden, Canada and other countries, provincial, state and even county governments take on direct responsibility for healthcare delivery. For Malaysia, could we perhaps envisage the corporatisation of hospitals being coupled with some decentralisation of functions to regional health authorities which could exercise oversight over the corporatised institutions through their control of a healthcare budget? 

The setting up of community health councils at district and state levels is also recommended by WHO in healthcare systems where there is a public/private mix. This will facilitate meaningful community participation as well as appropriate co-ordination between the public and private sectors. 

Whatever the case, it is clear that the government needs to increase its spending on healthcare, reform its organisational and management approaches, and pay attention to staff grievances in order to lift morale and reduce the exodus of its medical personnel. Above all, we must take resolute action to reverse the already apparent tendency towards two distinct classes of citizens in this country -- one which has the means to pay for advanced, high-quality healthcare, and the other which has to depend upon an underfunded, decimated and demoralised government healthcare service. 



* Re-Affirming a Multiple Role for Government in Healthcare 
We believe that efficient, rational, and socially just healthcare can be better delivered by a publicly-funded healthcare system which is regulated according to accountable and transparent criteria, and which is flexible enough to accommodate meaningful, responsible and motivated community involvement. 

The government should continue to play a provider role, in addition to an enhanced regulatory role in a mixed public/private healthcare system which should be functionally integrated. Notwithstanding the steady decline of many of our public healthcare facilities, it remains true that in the aggregate, the public sector has performed creditably in delivering primary healthcare to the vast majority of our population, and at modest cost. It is unwise to continue dismantling it out of an obsessive faith that market-based solutions will invariably deliver higher efficiency and lower unit costs, clearly not the case in many instances. What is needed instead is a determined effort to re-invigorate the public sector with infusions of personnel, resources, and most importantly, morale and motivation. 

In the long run therefore, we urge the government to work towards a health policy which has at its core a regulated and integrated healthcare system which can capture the more salutary effects of competitive influences and draw upon high standards of ethical, motivated professionalism, which allows for a high degree of community involvement, and which is rationally deployed to provide nationwide coverage of sustainable, quality healthcare on the basis of need. 

Nevertheless, our immediate concerns are the following: 

* Health Promotion and Maintenance 
Individuals do not exist apart from society. Insofar as their health status has social repercussions, individuals have the responsibility to act in a manner consistent with good health. They can best do so however in an environment free of structural and systemic impediments to rational, healthful behavior. The responsibility of social institutions, particularly government institutions, is to bring about circumstances that do not engender ill health. In this regard, government's policies vis--vis tobacco advertisement and promotion, and its apparent inability to curb avoidable air pollution are regrettably inconsistent with its exhortations for a healthy lifestyle. Even more alarming is the retreat of government not just from service provision but also from regulation of health and safety in the workplace. Citizens are beginning to question what has become of the social contract and the proper role of government. 

* Access & Equity in Healthcare 
Whether or not the government continues to be a major, direct provider of healthcare, it remains the unavoidable responsibility of government to create a system which ensures effective and equitable access to healthcare for the entire population. Care must be taken to ensure that vulnerable groups - the very young, the very old, pregnant and lactating mothers, marginal groups such as the indigenous people, the rural and urban poor, the under-served estate population, and foreign labor - are adequately covered for preventive, promotive, curative, as well as rehabilitative and palliative care. 

Emergency medical services, including ambulance services and one- stop crisis centers for women and children should not be turned over to profit-oriented enterprise. 

The healthcare financing and reimbursement system must be designed with sufficient incentives and conditions to ensure that healthcare is appropriately dispersed and accessible, and that all healthcare providers make available the same quality of medical care to patients on the basis of need. Hospitalized patients, who have the means, may opt for the privacy of a single room or the use of a bedside phone or television, but quality medical care must be solely on the basis of clinical need and not on ability to pay. 

* Healthcare Providers 
While Malaysia can retain a pluralistic system for healthcare providers, the government must continue to maintain a credible source of low- to medium-cost care which can serve as a benchmark for quality and as a competitive price check against the private sector. Whether in the form of corporatised hospitals managed by trusts with community representation, or re-invigorated and adequately funded government hospitals, the quality of care in public institutions must be such that they do not become dumping grounds for the medically indigent. We must avoid a de facto benign neglect of the public facilities and the resultant tendency for the non-indigent to turn to the private sector for their healthcare needs. It is imperative that we do not gravitate towards a two-tier system of healthcare quality. 

* Healthcare Financing 
The government should discard the notion that corporatisation and privatization will eliminate or markedly reduce the role of government in healthcare, particularly in healthcare financing. Even in that archetype of free-market health care, the United States of America, more than half of national health expenditures is accounted for by public spending -- on Medicare (for the elderly), Medicaid (for the poor), and on other federal, state, county and city government health services. 

Whether or not the government commits more public resources to healthcare, by raising additional revenues to finance it, it is imperative that the government does not privatize the management of healthcare financing without clear-cut demarcations of function. Where it can be justified, the private sector could be retained to provide management services by contract, but under no circumstances should a profit-oriented enterprise be allowed to determine eligibility for coverage or quality of care to be provided. 

The government is in the best position to uphold the principle of community solidarity, and to ensure that there are no discriminatory barriers to healthcare on the basis of age, sex, and medical history. Rationing of healthcare should be on the basis of explicit clinical, epidemiological and ethical criteria, and should not be a consequence of ability to pay. We are opposed to any attempt to fragment the community on the basis of disease-risk profiles. To prevent the emergence of individual or group risk rating, private insurance should be allowed no significant role in healthcare financing. Instead we should affirm the spirit of social solidarity and social insurance with progressive contributions to a national healthcare fund, in which the healthy and wealthy subsidize the poor and sick. 

* Primary Healthcare 
There is little dispute that nationally accessible and quality primary healthcare should be the foundation for a rational healthcare system for Malaysia. A unified primary healthcare system involving the public and private sectors is necessary for the integrated and rational utilisation of healthcare resources. 

Primary care, if properly organised and staffed with well-trained personnel, can be cost-effective and can provide for continuity of care and act as the channel to secondary and higher levels of care in conformity with professionally and ethically acceptable norms of medical necessity. It should also be comprehensive, well-coordinated, and address community health needs as well as those of individuals. 

We should be wary however about the entry of investor-led, for- profit managed care beholden more to shareholder interests than to patient welfare or good medical practice. Market discipline, in the form of profit-driven managed care, has been a highly unsatisfactory tool for reining in the excesses of fee-for-service healthcare. It is important to re-affirm the WHO Ljubljana Declaration (1996) that the fundamental purpose of healthcare reform is to improve the health of populations through rational development and use of healthcare resources (including efforts to identify and promote efficacious alternative therapies), and not to contain cost through "managed care" or other unwarranted compromises on quality of care.