Why comparing base MHIT to market plans misses the point — Wong Teck Jin

JANUARY 31 — Bank Negara Malaysia’s (BNM) proposed Base Medical and Health Insurance/Takaful (MHIT) Plan has been compared by certain quarters with existing medical insurance products in the market, through neat tables listing premiums, deductibles, and annual coverage limits. 

At first glance, these point-in-time comparisons appear straightforward and compelling. 

Some market plans seem cheaper, others offer much higher annual limits, and many appear to provide “better value” than the government-designed Base MHIT. 

But these snapshot comparisons miss a crucial point: health insurance value cannot be properly assessed at a single moment in time.

Health insurance is not a one-off purchase. It is a long-term contract renewed annually, where the real risk is not whether a product looks attractive today, but whether it remains affordable and dependable over time. 

Judging insurance solely by current premiums and headline benefits is like buying a car based only on the sticker price, while ignoring the long-term costs of fuel, maintenance, and repairs.

This distinction matters because anyone who actually takes the time to read Bank Negara’s White Paper will see that the Base MHIT was designed with a fundamentally different objective from most existing market products. 

Its primary goal is not to maximise coverage or to compete on generosity, but to provide more stable and predictable premiums over the policy term, based on actual claims experience and disciplined cost management.

The limits of point-in-time comparisons

Snapshot comparison tables focus on two things consumers naturally care about: how much they pay now, and how much coverage they get now. 

What they do not show is how often premiums are repriced, how volatile those increases can be, and how insurers respond when claims experience deteriorates.

Malaysia has just lived through a painful reminder of this reality. In 2024 and 2025, many medical insurance policies were repriced sharply following years of rising claims and medical inflation. 

Even in the White Paper it is noted that more than 340,000 policies were surrendered or terminated during this period. 

For many households, the problem was not that their insurance failed in a medical emergency, but that it became unaffordable before they ever needed to claim. 

Clearly, the parties advancing this unfair comparison do so with the ulterior motive of derailing the debate on this topic.

Seen in this light, today’s market premiums are not a neutral benchmark. 

Many products are still adjusting after BNM’s interim regulatory measures slowed repricing during the transition period. 

Some premiums may look competitive now precisely because they have not yet fully caught up with underlying claims costs.

Generosity today, volatility tomorrow

High annual limits, fee-for-service outpatient benefits, and broad coverage “as charged” are attractive features. But they also shape behaviour. 

When utilisation increases without strong cost controls, claims rise. When claims rise faster than premiums, something eventually has to give.

In practice, insurers respond in one of two ways: sharp premium increases, or tighter claims management. 

The first creates affordability shocks for policyholders. The second creates frustration, delays, and disputes at the point of care. 

Neither outcome is desirable, and both have been widely experienced in the Malaysian market.

This is the context in which the Base MHIT needs to be understood. Its benefit design, cost-sharing features, and network arrangements are not accidental. 

They are tools, imperfect and sometimes unpopular ones, intended to moderate utilisation growth and reduce the likelihood of sudden repricing shocks later.

Replicating existing market products feature-for-feature would undermine this objective. A Base MHIT that simply mirrors today’s generous plans would inherit the same structural pressures that led to the repricing cycle in the first place.

A different yardstick for value

This does not mean that all criticism of the Base MHIT is misplaced. Deductibles, network access, and benefit exclusions deserve scrutiny, particularly for seniors and those outside major urban centres. But these concerns should be debated within the correct frame.

The right question is not whether the Base MHIT looks inferior when frozen in a single year’s comparison. The right question is whether it offers a more sustainable form of protection over time, especially for people who have been priced out of the market or who fear future premium volatility more than benefit ceilings.

For consumers who already hold comprehensive plans they can comfortably afford, the Base MHIT may indeed look underwhelming. 

That does not make it a failure. It reflects a category difference. The Base MHIT is meant to be a floor, not a ceiling, a baseline that prioritises continuity and predictability rather than optimisation.

Reading comparisons more carefully

BNM itself has advised Malaysians to assess their needs, browse options, and choose wisely when purchasing MHIT products. 

That advice applies equally to how comparisons are read. Tables are useful starting points, but they should not be the final word.

Insurance value is revealed over years, not headlines. Premium stability, claims experience, and the likelihood of future repricing matter just as much as today’s annual limit. 

Until comparisons account for these dynamics, judging the Base MHIT against existing products will remain an incomplete, and potentially misleading, exercise.

* This is the personal opinion of the writer or publication and does not necessarily represent the views of Malay Mail.