Effect of supplementary private health insurance on inpatient utilisation: evidence from Malaysia

Supplementary private health insurance (PHI) provides better access to healthcare, improves health outcomes, potentially lowers the costs for health systems and supports the social security system. Improperly regulated PHI, however, may aggravate inequity of access towards preferential care and encourage moral hazard among PHI purchasers, altering the health-seeking behaviour, which is often observed through the pattern of health care utilisation. We investigated the effect of PHI ownership on private inpatient care utilisation, its frequency of admission and length of stay by conducting secondary data analysis of the Malaysian National Health Morbidity Survey (NHMS) 2015 data, a nationally representative community health survey. Malaysian adults 18 years of age and above who utilised inpatient healthcare facilities were included. In this cross-sectional study, we addressed the endogeneity effect of health insurance by employing instrumental variable estimation and a two-stage residual inclusion analysis. We found a significant increase in private inpatient utilisation among those who owned PHI compared to those who did not (β = 4.39, p < 0.001). There was no significant difference in the frequency of admission and length of stay. The increase in private inpatient utilisation among PHI owners may reflect the demand for timely care and hospitality provided by the private sector, potentially exacerbating the moral hazard behaviour among PHI owners. Further exploration of this issue could impact future healthcare systems financing designs and PHI regulation.