Between 1990 and 2005, dialysis treatment rates in Malaysia increased more than eightfold. Dialysis treatment reached a level comparable to rates in developed countries. This remarkable transformation was brought about in large part by the Malaysian government's large-scale purchase of dialysis services from the highly competitive private sector. This paper traces a series of public- and private-sector reforms that dramatically increased access to dialysis for patients with kidney failure from 13 per million people in the population in 1990 to 119 per million in 2005. Not all developing countries have had uniformly positive experiences with private-sector participation in health care. However, our data suggest that strong participation by the private sector in Malaysia has helped make for a stronger health care system as well as healthier patients. Yet the policy decisions that enabled the private sector to participate fully in providing dialysis have not been repeated with other medical services.
Malaysia has made substantial progress in providing access to health care for its citizens and has been more successful than many other countries that are better known as models of universal health coverage. Malaysia's health care coverage and outcomes are now approaching levels achieved by member nations of the Organization for Economic Cooperation and Development. Malaysia's results are achieved through a mix of public services (funded by general revenues) and parallel private services (predominantly financed by out-of-pocket spending). We examined the distributional aspects of health financing and delivery and assessed financial protection in Malaysia's hybrid system. We found that this system has been effective for many decades in equalizing health care use and providing protection from financial risk, despite modest government spending. Our results also indicate that a high out-of-pocket share of total financing is not a consistent proxy for financial protection; greater attention is needed to the absolute level of out-of-pocket spending. Malaysia's hybrid health system presents continuing unresolved policy challenges, but the country's experience nonetheless provides lessons for other emerging economies that want to expand access to health care despite limited fiscal resources.