MALAYSIANS with pre-existing medical conditions will be eligible for coverage under Malaysia’s forthcoming base medical and health insurance or takaful plan, Health Minister Datuk Seri Dr Dzulkefly Ahmad said, as the government intensifies efforts to rein in rising healthcare costs and stabilise insurance premiums.
Speaking to StarBiz on the sidelines of the Malaysia Economic Forum 2026, Dzulkefly said the decision followed sustained negotiations with industry players amid growing concern over the number of Malaysians abandoning health insurance due to steep premium hikes.
“It was difficult for us and we fought very hard for this – yes pre-existing medical conditions are covered under the MHIT plan,” he said.
Dzulkefly said more than 340,000 individuals had dropped their health insurance policies between January 2024 and June 2025, a trend he described as deeply worrying given its implications for both households and the public healthcare system.
He said the base MHIT plan would be introduced alongside broader healthcare reforms, including the nationwide rollout of the diagnosis-related group payment model in private hospitals, which has now been deferred to 2027.
“It will definitely be implemented together with the MHIT plan – this has to be done,” he said.
Under the DRG system, hospitals are paid a fixed amount per case based on diagnosis and expected resource use, rather than charging for each service provided. Dzulkefly said this shift was essential to Malaysia’s move away from fee-for-service medicine towards a value-based healthcare system.
“I must stress that the overarching principle or objective of the healthcare reforms under the RESET strategy is to achieve a value-based healthcare system,” he said during a panel discussion at FEM 2026 titled Healthcare Reforms: Towards Equitable, Affordable and Quality Healthcare.
“If it was a fee-for-service, it has now got to be fee-for-health outcomes. This is where DRG will have its role to play to get the private sector in this,” he added.
Dzulkefly said the reforms were intended to reduce inefficiencies, improve clinical decision-making and align insurance changes with wider structural improvements in healthcare delivery.
“It is to move to fee-for-health outcomes. The insurance reforms must be seen as part of the entire healthcare reforms,” he said.
Another pillar of the RESET strategy is the introduction of an electronic medical records system, which Dzulkefly said would provide the data backbone for a more precise and preventative healthcare model.
“This data helps to build up precision medicine and eventually precision public health with big data,” he said.
“This RESET strategy moves it from a model of seeking-healthcare to real health-care. This is where the primary healthcare players including the clinics and general practitioners play a key role as well,” he added.
Dzulkefly said the base MHIT product is designed to be affordable, sustainable and commercially viable, particularly for middle-income earners who risk being priced out of private healthcare.
“If, say, the billing charges by private hospitals remain inconsistent without DRG, then there will be a problem with policyholders being slapped with exorbitant charges, which would be passed on to the insurance companies that would then threaten us with increased premiums,” he said.
He said the government has urged insurers to show restraint over the next few years rather than imposing sharp premium increases.
“We have called on insurance companies to exercise restraint to face this in the course of the next few years and not just resort to drastic increments in premiums,” he said.
Dzulkefly said unchecked cost escalation in private hospitals has also contributed to the problem, underscoring the need for government intervention.
“This is why it is important for the government to step in – and this base MHIT product is an alternative to middle income earners to have continued access to private healthcare,” he said.
He added that the DRG system would help prevent excessive billing, but would require cooperation from private hospitals to share data needed to develop accurate billing algorithms.
“The DRG will help to ensure no hospital would overcharge – this would also require private hospitals to share data so we can build the billing algorithms. The private hospitals are already working with us on this,” he said.
Dzulkefly also voiced concern over Malaysia’s medical inflation rate, which reached 15 per cent in 2024, significantly higher than the Asia-Pacific average of 10 per cent.
“This is disturbing and concerning,” he said.
“Also, the high number of health insurance cancellations in 2024 and 2025 is very disturbing, as it would mean a higher burden and would overstretch public healthcare facilities,” he added.
During the same panel session, TVM Capital Healthcare operating partner Ramesh Rajentheran cautioned that DRG implementation must be carefully regulated to avoid unintended consequences.
“In other countries, when DRG was introduced, we saw outcoding happening, which then resulted in code inflation – who will police all these?” he said.
“When we set fee schedules for doctors, in other countries we see overprescribing,” he added, highlighting the need for strong oversight as Malaysia transitions to the new payment model. - February 6, 2026
