Designing the money part of Malaysia’s long-term care system: Economists share what to look out for

KUALA LUMPUR, Nov 14 — Malaysia faces the complex challenge of determining the funding mechanism for its long-term care system for older citizens, said World Bank senior economist Matthew Dornan. The financing options, whether tax-funded or insurance-based, carry their own challenges and require careful consideration. Dornan highlighted that Malaysia's limited fiscal space may make a tax-funded system difficult, suggesting a potential need for fiscal reforms or tax base expansion.

The insurance option, while sharing some tax funding elements with countries like Japan and Korea, could be built on existing systems like the Employees Provident Fund, though this raises inclusion issues for those not covered. Debbie Muirhead, a senior health economist at the World Health Organization, emphasized the importance of considering the entire pension system and financial wellbeing while designing the benefits package.

She suggested starting with a small, affordable benefits package and involving older people and caregivers in decision-making to ensure the system meets their needs.