10 hours ago
- Business
- New Straits Times
NST Leader: Healthcare burden
Few wage earners, especially Gen Z and millennials, seem concerned about saving for retirement.
They view a nest egg as a strange concept, believing it's the the Employees Provident Fund's (EPF) responsibility.
Their main concern is current spending, not on big purchases but on daily essentials — utilities, Internet data, rent, food, clothes, transportation and family support.
Whatever little left of their monthly salaries goes towards leisurely pursuits. Even with an inflationary economy, these expenditures have bumped Malaysian consumer annual spending by five per cent, reaching RM904.6 billion, according to one study.
This heavy spending has driven consumption growth back to pre-Covid-19 levels, supported by a rebounding economy that mirrors previous consumption patterns. Apparently, this RM904.6 billion in spending is still insufficient, especially for significant expenses that monthly salaries can barely cover.
This has led to calls for the EPF to expand Account 2 for medical insurance, in addition to existing withdrawals for education, housing and healthcare.
Are Malaysians burdened by medical insurance costs? Premiums can range from RM100 to more than RM2,500 monthly, depending on age, health condition, coverage and policy terms.
Medical inflation in Malaysia is significant, at a high rate of 12.6 per cent. Consequently, falling ill without insurance is difficult, but hospitalisation — unless it's a government–subsidised facility — is almost unaffordable.
Many Malay-sians, preferring smoother and faster admittance, opt for expensive private hospitals even though diagnosis and treatment quality are comparable to public facilities.
Given the rising medical and living costs, the demand to widen Account 2 withdrawals is understandable.
If approved, this expansion could significantly improve medical insurance coverage and take a big weight off the national healthcare system but it would also inevitably deplete EPF savings, particularly if funds are spent on non-essential or poorly chosen insurance plans, a risk further aggravated by aggressive marketing from health insurance companies.
Quantifying the EPF's potential allocation for medical insurance withdrawals is challenging, but it would likely be substantial given that nearly everyone might apply.
While previous figures show personal medical insurance coverage among Malaysians ranging from 22 to 45 per cent, a 2024 survey reported that 42 per cent have no coverage at all.
If approved, the EPF must set clear guidelines on eligible insurance types and treatments. At the same time, contributors need to understand the long-term trade-offs of prematurely depleting their retirement funds.
Ultimately, the quickest way to ensure coverage is to view medical insurance much like rent: costly but necessary.
Perhaps Malaysians could redirect some funds from their monthly budget or "unnecessary" spending. Such choices would be difficult.
Still, EPF contributors will likely argue that present survival is more relevant than worrying about the future.
This perspective stems from an emerging philosophy of "retired but still working", a reality already taking hold.
