Out-of-pocket health expenditure and catastrophic effects: case of Malaysia

The high private health expenditures are also a cause for concern because most of these expenditures are out-of-pocket (OOP) with insurance claims only covering a small segment of the population. More than 94 percent of OOP spending occurred at private facilities. The private hospitals consumed the largest share of OOP. Higher OOP will increase the healthcare cost. Catastrophic OOP payment can lead a household into poverty. To shed some light on the issues above, the aim of this study is to investigate the catastrophic effects of OOP by states in Malaysia. This study used data from the National Health and Morbidity Survey 2015. To evaluate the incidence of catastrophic expenditures, the study used the methodology introduced by the World Health Organisation in 2005. According to World Health Organisation, whenever the health expenditure is equal or exceeding 40 percent of a household non-subsistence income, it is considered catastrophic. Kedah, Malacca and Sarawak are identified as states in Malaysia that faces catastrophic healthcare expenditure. The OOP payments in these three states are relatively higher compared the rest of the states in Malaysia. The government should take a good measure on solving the issue of ballooning of OOP payments, especially in the lower urbanised states. This will solve the problem of catastrophic healthcare expenditure in Malaysia as a whole