Medical Cost and Inflation in Malaysia:
A Leadership Dilemma

by Jaswinder Singh A/L Gurnam Singh

October 2021

Abstract

The general inflation rate is seen on a continuous rise over the recent years. The inflation rate, however, remains at a single digit growth. Looking deeper at the components of the consumer price index that measures the inflation rate, the medical cost inflation rate has been on an alarming double-digit inflation over the recent years. Several researchers have identified the qualitative factors that contribute to this phenomenon. Some researcher found that the increase in new technology adoption, changes in behavioural and lifestyle and overutilization of insurance are amongst the leading factors contributing to the double-digit inflation rate.

Many insurance companies have since modified its product design towards catering preventive and lifestyle changing reward program to help manage the increasing cost of claims due to the high inflation rate. However, modifying one factor is insufficient to manage the overall inflation rate in medical & healthcare area.

This case study will analyse the leadership dilemma faced by various agencies in managing the effect of economic factor towards the medical cost inflation rate. A deep study of the relationship between various economic factors against the inflation rate is required to further analyse and understand the appropriateness of current medical cost model in Malaysia.

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