Health Insurance Premiums Are Soaring – Here’s Why We Need Urgent Change

Previously, I was paying RM188.47 per month, but now I will need to pay RM237.34. Last year, it increased from RM157.69 to RM188.47. The question is, why do the premiums increase every year? This is really a burden. It feels like an annual event. Whenever we ask for an explanation, the company says it’s due to rising treatment costs. What proof is there that treatment costs increase every year?- health insurance policy holder; FMT, 26th November 2004

Malaysians are feeling the weight of rising health insurance premiums, a strain that’s pushing many families to their financial limits. Insurers like Allianz, AIA, Prudential, and Great Eastern say the increases are due to higher hospital costs and claims. But if you’ve ever looked closely, you might wonder why a procedure that probably costs RM5,000 for a self-paying patient suddenly doubles to RM10,000 when billed to insurance. The truth is, this isn’t just about higher costs—it’s about a system that isn’t working for the people it’s supposed to protect.

The problem starts with hospitals inflating their charges. They do this partly because they have to. Running a hospital is expensive—staff wages are rising because of worker shortages, the cost of medical supplies and equipment keeps climbing, and taking care of an aging population means dealing with more complex and expensive illnesses. On top of that, hospitals must comply with strict regulations, which come with a hefty price tag.

But let’s not ignore another reason: profit. Hospitals know they can charge insurance companies more, so they do. Sometimes these higher charges are used to cover less profitable services, but too often, it’s about maximizing revenue, especially in areas where competition is limited. This means patients with insurance end up being charged significantly more than those who pay out of pocket.

You’d think insurance companies would step in to fight these inflated charges, but the reality is more complicated. Hospitals hold most of the power in these negotiations, especially the big ones that insurers can’t afford to exclude from their networks. Without clear information about hospital costs, insurers are often in the dark, and it’s easier for them to pass the higher costs onto us—the policyholders—through increased premiums than to challenge the hospitals. In the end, the consumer gets stuck paying the bill.

This creates a vicious cycle. Hospitals inflate their prices. Insurers accept these prices and raise premiums to cover the costs. Families like yours and mine end up paying more or, worse, are forced to downgrade or give up their coverage entirely. For many, this means relying on the already overstretched public healthcare system when a medical emergency strikes.

The consequences are heartbreaking. Families are being pushed into impossible situations, deciding between paying for insurance or putting food on the table. For those who can’t afford premiums anymore, a single medical emergency could spell financial disaster. It’s not just the money—it’s the growing feeling that the system is rigged against us, with no transparency about where our hard-earned money is going or why costs keep rising.

"Bank Negara should not say this is a free market or a willing seller willing buyer thing. This is not right. If the Domestic Trade and Cost of Living Ministry can investigate over a 10 sen price increase in eggs, why can't Bank Negara look into this matter as well, which saw premium increases by hundreds of ringgit" - YB Sim Sze Tzi; NST, 27th November 2004

So, how do we fix this? It starts with transparency. Hospitals should be required to publish clear, itemized costs for all procedures and services. If we know what we’re paying for, it’s harder to hide inflated charges. Insurance companies and hospitals should also be subject to independent audits to uncover unjustified price hikes. And these audits must be made public so people can see what’s really happening.

We also need stronger regulations. A dedicated body—like the Malaysia Competition Commission—should oversee hospital pricing to ensure fairness. Premium hikes should only happen when they’re genuinely necessary, not because hospitals decide to charge more for no good reason. And hospitals that engage in unethical practices, like charging insurance patients double for the same service, should face penalties.

At the same time, we can’t forget about the public healthcare system. We need to invest more in our public hospitals so they can handle the load and provide quality care, reducing our dependence on expensive private hospitals. A national health insurance option could also give people an affordable alternative and keep private players in check.

Finally, all of this will only work if the government, insurers, and healthcare providers come together to create a system that works for everyone. Instead of focusing on profits or passing the buck, these stakeholders must prioritize fairness, affordability, and accountability. Moving toward value-based care, where hospitals are rewarded for providing better outcomes instead of simply doing more procedures, could be a game-changer.

At the heart of this issue is trust. Malaysians need to trust that the healthcare system is looking out for them—not exploiting them. Right now, that trust is broken. If we don’t act, more families will be left uninsured and vulnerable, while hospitals and insurers continue to profit. It’s time for a system that puts people first, with transparency and fairness at every step. Malaysians deserve better—and it’s time to demand real change.

Wan Agyl Wan Hassan, Agyl & Partners