At the recently convened Forum Ekonomi Malaysia 2026, the Minister of Health, YB Datuk Seri Dr Dzulkefly Ahmad, outlined the main features of the Ministry Of Health’s (MOH’s) plan to “Reset” the Malaysian Healthcare System. At first glance MOH’s new strategy might appear comprehensive and reasonable, as it attempts to tackle some of major problems plaguing our public health services. However we feel that it does not adequately address some crucial issues, as will be explained later in this article. But first, a quick look at the MOH’s “Reset” plan.

There are five main components of this “Reset” Plan.

1. The Rakan KKM scheme is a key component of “Reset”. This scheme involves the setting up of special clinics within government hospitals, where paying patients can “cut the queue” and see the specialist of their choice. If indicated, the specialist they choose will conduct whatever scopes, surgeries or other procedures that are required – for a fee, that would probably be about 70 % to 80% of the fees charged in private hospitals.

The rationale for the Rakan KKM is three-fold – firstly, it is hoped that the extra income that government specialists obtain from these clinics will induce them to stay on in government service. Second, the money the government collects from these paying patients for investigations, use of operating theatres and scopes, medications etc will augment the funds of the Health Ministry. And third, the lower prices at the Rakan KKM clinics will act as a price bulwark for the private hospitals. private hopsitals will be constrained from raising their charges too high as their patients have the option of going to the Rakan KKM clinics. The inflation in healthcare costs in Malaysia will thus be controlled to an extent.

2. A dedicated National Health Fund will be set up to receive the income derived from the Rakan KKM clinics. The money earned will not be channelled to the Consolidated Fund as is currently the case for all fees collected by government hospitals and clinics, but will instead be placed in this fund, and will be used to upgrade the public health care system. The allocation for the Ministry of Health (MOH) in the 2026 budget is RM 46.52 billion. Though this is the second highest allocation for ministries, it is not sufficient¹ for all the repairs, procurement and upgrading that is required. The extra income from Rakan KKM will make up some of the shortfall.

3. The third component is the Base MHIT (Medical Health Insurance / Takaful) that will be set up by the government. This is envisaged as a no-frills health insurance policy with features like co-payments and annual caps (?RM 100,000 per year) to induce patients² to use this facility judiciously and to keep costs down. In addition to offering more affordable insurance policies to our population, the Base MHIT would also help reduce the inflation in health insurance packages offered by the private sector, as patients now will have the option of switching over the government MHIT.

4. Electronic Medical Records (EMR)is the fourth component of the “Reset”. This will cut costs as well as time, as all investigations and treatment carried out both in the government sector as well as in the private sector will be loaded up to the patient’s EMR. This will reduce duplication of investigations.

5. The government will introduce the DRG (Diagnosis Related Group) system for billing by the private sector. Private hospitals can only charge a fixed amount for each DRG. This is to reduce over-charging by private hospitals.

We, in the PSM, have problems with some aspects of this “Reset” strategy. Dato Dzul has accused us of misrepresenting facts and playing politics. But we do have valid reasons, as laid out below

1. At present only 25% of the specialists with more than 5 years experience post specialisation are in the public sector. But 75% of the in-patients are treated by the public sector. There is therefore a large mismatch of resources, and the patients in government hospitals have to endure long waiting times to see specialists.

The Rakan KKM is good for the T20 and upper M40 who can afford going to the private sector, as they now have more choices. If the private sector is too expensive, the upper middle class can turn to the Rakan KKM. But this is at the expense of the 75% of Malaysian patients who are dependant on the public health care system. Their access to government specialists will be further impaired and their waiting times will go up even further.

This is why we are asking for the cancellation of the Rakan KKM scheme. It will definitely further marginalise the bottom 70% of our population.

2. We do not believe that the extra RM3000 to RM 6000 that government specialists can earn through the Rakan KKM can counter predatory practices of private hospitals. For example, when the Sunway group set up a new hospital in Ipoh last year, 12 specialists from the Ipoh GH and another 4 specialists from other government hospitals, resigned from government service to work in Ipoh Sunway. Some of these specialists told us that they had been guaranteed RM 70,000 income monthly for the first year. Sunway promised to top up their earnings to RM 70,000 if their patient load wasn’t sufficient to reach this target. As a result of aggressive recruiting, 2 Anaesthetists, a Cardiologist, a Dermatologist, an Emergency Medicine specialist, an ENT Specialist, a Gastroenterologist, a General Surgeon, a Geriatrician, a Neurosurgeon, an Oncologist, 2 Paediatricians, a Radiologist, a Respiratory Physician and an Urologist resigned from government service in 2025 to join Sunway Medical Centre Ipoh. How can an additional RM 6000 via the Rakan KKM neutralise this pull factor? Our proposal is a Moratorium on new private hospitals for the next 5 years. This will not cost the government any extra expenditure. Nor will it adversely affect the specialists who are already in private practice.

In addition, we are are asking the government to set up a separate Service Commission for the public healthcare sector. This is what the MMA (Malaysian Medical Association) has been asking for, for several decades. A separate Service Commission will make it possible for the government to offer better remuneration for health care staff – perhaps modelled on the pay structure in IJN (Institut Jantung Negara).

3. We have been pursuing a low wage policy for decades as part of our effort to attract foreign direct investment (FDI). As a result our median wage in the formal sector is at about RM 2,900 per month. Only 22% of our households have health insurance at present. This is the group that will be benefitted by Rakan KKM and the base-MHIT. We would have no objection to any program that benefits the upper middle class in this country, if that program does not marginalise the bottom 75% of the population. The indisputable fact is that the Rakan KKM will make specialist care even more inaccessible to the B40 and most of the M40 of pour population. This is why we are asking that this be abandoned.

4. We have been chronically under-funding our public health care system for the past several decades. According to the WHO,

Health Budget Allocations of Selected Countries 2024 

Country Health % of Total % of GDP

Budget Budget 

Malaysia RM 41.2 bil 10.5% 2.14% 

Singapore USD 18.7 bil 16.8% 3.74%

Thailand USD 20.9 bil 21% 3.97%  

Britain 258 bil Pounds 20.2% 9.6%

Even Thailand is putting a larger percentage of its GDP into public healthcare. But shouldn’t we be comparing ourselves to advanced countries like Britain, which allocate 9 to 10% of GDP to public health care. After all, we claim that we are at the threshould of becoming a high income nation. Shouldn’t we then benchmark ourselves against Britain, Japan and Germany. This is the basis for our proposal that the health care budget should be increased to 5% of GDP over the next 5 years.

5. We are not a poor country. Our GDP has gone up 24–fold in the past 50 years³ – in real terms, that is after accounting for inflation. How is it that we cannot find the funds to look after the health of our people? The answer to that question lies in the gross maldistribution of national income.

56% of our nation income of about RM 2 trillion per year, accrues to the top 10% of our population and the biggest corporations. 28% of national income goes to the bottom 90% of our population, while the government only gets 16% of national income.

Our proposal is that the share of the largest corporations and the T10% could be reduced to 51% and an additional 5% of GDP chanelled to government as revenue. That would put an extra RM 100 billion into the Federal Budget. This is what we want the Madani Government to look into. We want them to consider the following issues

– Why has government revenue dropped from 30% of GDP in the 1980s to only 16% of GDP now?

– Why have corporate taxes dropped from 40% of profits in the 1980s to the current rate of 24% of profits now?

– Is the competition among ASEAN countries for FDI the cause of this reduction in corporate taxes? If so, why hasn’t the Malaysian government initiated talks with our ASEAN neighbours about halting this race-to-the-bottom?

These are, we think, reasonable questions to pose to our government. And we hope that the Malaysian public will take the issues brought up in this article with their Members of Parliament who will be intensifying their forays to meet voters as the general elections are now not so far away. Ask your MPs to push for

– the cancellation of the Rakan KKM Scheme⁴

– a 5 year Moratorium on new private hospitals

– a separate health commission so that public sector health staff will get better salaries

– increase the budget allocation to the Ministry of Health to 5% of GDP.⁴

If enough people bring up these issues, the government will have to listen.

A nations health care system speaks volumes about the ethos of the nation – how compassionate are we to the sick, the old, the poor? Whether we are building a system based on solidarity that ensures everyone gets the health care they need irrespective of their social and economic status? Are we doing enough to support the health care personnel in public sector who are now working impossibly long hours to try and serve their patients?

What is at stake here is not just health care, but the soul of the nation. We hope that you will join us in safeguarding and rehabilitating our health care system. We owe that to ourselves, our children and to the nation!

Jeyakumar Devaraj

9th Feb 2026

Notes

1. YB Dr Dzul feels constrained from asking for a higher allocation for the MOH because our estimated deficit for 2026 is about RM 76 billion or 3.5% of GDP, and the Federal Government’s total debt is now RM 1.3 trillion or 65% of GDP.

2. When there are no co-payments at all, patients have less incentive to question their health care provider about different modalities of investigation and treatment. This leads to over investigation and escalation of costs, and ultimately, to rising insurance premiums.

3. Malaysian GDP in current prices increased from RM 11.83 billion in 1970 to RM 1.5 trillion in 2019.

1500 divided 11.83 = 127 (Malaysia Plan documents)

Consumer price index of Malaysia increased from 23.7 index in 1971 to 120.1 index in 2020.

(WORLD DATA ATLAS  MALAYSIA  TOPICS  ECONOMY  INFLATION AND PRICES )

120.1 divided by 23.7 = 5.1 (ie CPI went up by 5.1 times in those 50 years)

127 divided by 5.1 = 24.9. ie Real GDP went up 24.9 times between 1970 and 2019

4. The PSM does not have objection to the base-MHIT that the government intends to set up, if the Rakan KKM scheme is cancelled. We also do not have objections to Electronic Medical Records and the DRG system for charges in private hospitals. All these initiatives, if properly conceptualised and implemented, can improve health care in Malaysia.