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On Sept 16, Malaysia celebrated 58 years of being a federation.
This federation, originally formed by the union of Malaya, Singapore, Sabah and Sarawak today consists of 13 states and three federal territories functioning with a federal and individual state governments.
While most of us know that we are a federation; some may be confused about what that actually means.
As a federation, power in Malaysia is distributed between central and state governments, as defined by the Malaysian Constitution. Some matters are exclusively within the purview of the central government such as foreign policy or defence, while others, such as land, and forest fall under the jurisdiction of the individual states.
Health and social welfare, interestingly, are matters which fall under shared concurrent jurisdiction in Malaysia.
The health ministry provides and funds most public healthcare services; but states also have roles in implementing and managing local health programmes.
As everyone probably is well aware of, the bulk of the funding for the health ministry comes from tax revenues; and there has been a significant challenge in growing the amount of money available from this pool- a problem faced by many countries across the world including Malaysia.
The observable gap in federal capacity to fund public healthcare services i.e. a health financing gap continues to grow in recent years amidst the growing need nationally in terms of health expenditure.
In the spirit of Malaysia Day and federalism, I provide some thoughts on whether a more (or less) federalist approach can be utilised to close some of the health financing gaps.
The first question which arises is why should we be looking to states to finance health solutions?
In the spirit of federalism, this is easily answered. States also have a significant responsibility to the well-being of their residents- and health plays an important part in this.
To depend purely on the federal government to provide &#8220;health&#8221; via infrastructure such as hospitals; and services through the staffing and provision of healthcare personnel has been the name of the game in the past; but this may not be the only way forward.
States also have other revenue channels which are not from the federal tax revenue pool. States obtain revenue from land-related taxes, fees from various services and charges, royalties (especially from those with oil and gas resources) and income from their investments.
However, the amount of revenue obtained by each state is really quite varied, and most states are dependent on significant financial assistance in the forms of grants and other federal government transfers.
These federal government monies (which again come from that ubiquitous federal tax pool) are often used to finance public infrastructure and social projects.
So while states should be playing a bigger role in health financing, in reality, some may not have the financial capacity to do so.
The next question is: Are states already providing health financing solutions? The short answer to this is yes. Some states are already doing this.
One of the most progressive states in this aspect has been Selangor, through its various state-level health initiatives such as:
i) Iltizam Selangor Sihat (ISS)- through which outpatient care is provided at panel clinics, and RM 10,000 hospitalisation assistance at panel hospitals.
ii) Saring Selangor which is a health screening programme for non-communicable disease (NCDs).
iii) Bantuan Sihat Selangor which provides direct financial assistance for specific treatments such as eye cataract surgery and kidney dialysis.
iv) Rawatan Jantung Selangor which covers the costs of health treatment; and Insentif Rawatan Tibi which provides incentives and support for treatment of tuberculosis. Of course, these are all only available for natives and residents of Selangor.
Pahang has also just begun rolling-out a scheme called Kasih Makmur Health Card- Warrior Edition, in which veterans of the armed forces and police services residing in Pahang can receive up to RM500 for treatment, medication purchase and health screenings from panel clinics.
Many states are also providing health financing solutions for state employees i.e. where state employees are covered by group hospitalisation and surgical plans where employees are provided benefits for hospital visits, surgeries and specialist care.
Often, these plans are also extendable to cover spouses and children.
States are also able to tap on an additional source of non-tax revenue which has been used for financing health, namely zakat which comes under the jurisdiction of state Islamic religious councils or specialised bodies such as State Zakat Boards which are formed specifically for this purpose.
Zakat funds have been used to subsidise medication costs, provide aid for critical illnesses and even in building health infrastructure such as dialysis centres at the state level; providing services to state residents.
One such stellar example is the MAIWP-Hospital Selayang Cataract Centre, financed and run by the Federal Territories Islamic Council and staffed together by the health ministry which provides highly subsidised cataract surgery services designed to improve access for the general public.
Overall, an important take home point is that the level of health financing solutions in place vary quite significantly from state to state, and perhaps also driven somewhat by the state’s own financial capacity and economic wealth.
So by relying on state-level financing solutions, there may be significantly worsening geographical inequities in health; something already visible today between some of the more economically worse off states compared to their more developed counterparts.
A federalist approach to health financing certainly seems to still be the primary mechanism to finance healthcare services at this time; but there may be larger roles for states to play- at least in terms of financing infrastructure or smaller, targeted health financing solutions at the state level for their residents.
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The views expressed are those of the writer and do not necessarily reflect those of FMT.

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