By Karina Widowati ( MPH, Health Specialist UNICEF Country Office Jakarta, Indonesia)

In 2004, Law No. 40/2004 was issued in Indonesia, several days before President Megawati resigned from her position.  The law mandated the establishment of a National Social Protection System (Sistem Jaminan Sosial Nasional   (SJSN)) and was sparked by the severe economic crisis in 1999 which had wreaked havoc in the Indonesian society (and in the wider region).  The social security law aimed to protect all citizens from economic risk due to illness, injury, old age and death.  For its progressive implementation, five years of transition were foreseen for the four state-owned insurance companies [1] (Perseroan Terbatas (PT)) to adapt to the requirements and become a single non-profit Social Protection Agency. However, implementation proved more difficult than anticipated. Lack of political commitment to implement the Social Security Act from the first government directly elected by the people, the government led by president Susilo Bambang Yudhoyono, during its first term (2004-2009), was probably the main cause of the slow implementation in the years immediately following the law, but there were plenty of other implementation challenges.

Political commitment  became somewhat more visible with the formation of a new National Social Security Council (DJSN) on June 24, 2008, nearly four years after the Social Security Act was passed. The implementation of the law really started to gain momentum during the presidential election campaign in 2009 under pressure from labour organizations, universities and the former chief of the SJSN team.  The national parliament drafted legislation for the establishment of a National Social Security Agency (Badan Penyelenggara Jaminan Social,  or BPJS) and urged the central government to review it. The year 2010 was filled with debate on the institutional form of this agency. The parliament wanted to merge the four state insurance companies into one non-profit social protection agency, whilst the government, represented by the Ministry of State Owned Enterprises, insisted to keep the separate agencies that are currently profit oriented and obligated to reimburse dividends to the central government. Legislation on BPJS was finally enacted on 24 November 2011 (Law No 24/2011) with the establishment of two national agencies, BPJS I for health insurance and BPJS II  for employment benefits (including injury, retirement, pension and death). The state-owned insurance companies are required to hand over their beneficiaries to these two administering bodies by 2029 (at least according to the law; this seems a bit late, though, taking into account the proclaimed aim of UHC by 2019). The 2011 law calls for the merger and unification of Jamkesmas, the government-financed health insurance programme for the poor and near-poor (which was started in 2005), with all other existing health insurance programs (Askes, Jamsostek, mostly, but also a number of local health insurance schemes (Jamkesda). This integration should kick off in January 2014. According to the plan, the current (for-profit) administrator for the civil servants insurance program, PT Askes, would be converted into BPJS I, a not-for-profit agency which is, from then on, meant to administer all social health insurance programs in the country.

Meanwhile, the Ministry of Health in collaboration with health practitioners, universities, and other related ministries developed a road map to National Health Insurance – INA Medicare 2012 -2019. This document will serve as a platform for the implementation of the health insurance part of the social security (SJSN) law. In the road map, MoH predicted that when BJPS I begins operating at the beginning of 2014, it will cover 121.6 million people.  This figure  would include 96.4 million people from Jamkesmas, the health insurance programme  for the poor and near poor (however, there seems to be a huge issue of mistargeting and leakage to the nonpoor, an issue for which the local Jamkesda to some extent try to compensate), 17.2 million people from PT Askes (for civil servants), 5.5 million from PT Jamsostek (for private sector employees) and an additional 2.5 million people from a subnational scheme. 50 Million people would have some form of insurance from another scheme (local schemes mostly) (and would thus not yet be managed by BJPS I)  and  73.8 million people would remain un-insured at the beginning of 2014, according to this projection. Recent World Bank figures are less optimistic. Total coverage would be achieved by 2019 (Indonesia’s population will be 257.5 million then), after the harmonisation of existing schemes and the expansion of coverage to currently uninsured people. The transition towards UHC would thus be achieved in stages, but the deadline –  2019 – is clear. The target seems quite ambitious for a low-middle income country like Indonesia if you keep in mind that a country like South Korea needed around 12 years to achieve full health insurance coverage.

The benefit package will be “comprehensive” in that all illness caused by natural disease will be covered. Beneficiaries for which the premium is paid by the government (the poor and near poor) will be entitled to use a third class room in the hospital; people who pay a (mandatory) contribution will be entitled to a first or second class room, depending on the scheme they choose. Provider payment options will be based on a combination of capitation and diagnostic-related groups, it seems, but lots of challenges remain with respect to the unification of provider payment mechanisms, different benefits packages, premium rates,  etc. The picture is still a bit fuzzy and this will probably remain so for a while.

With more than 20 billion USD to manage (not including the pension fund), resistance is still high regarding the institutional form of BPJS I, mainly because the government gets a  marginal profit  from current state insurance companies but also because the reform will involve large-scale organizational restructuring.  Recent headlines pointed out that the Finance Minister agrees to allocate only 1.5 USD/month/person instead of 2 USD for the premium. This amount would allocate for 84.6 million poor (and near-poor) people (instead of the proposed 96.4 million). Even with an average economic growth of 6.1 % in the last decade, it remains unclear whether the government can afford to pay out subsidized premiums that will cost them 5 billion USD per year. The mandatory insurance contribution has been decided (at 5% of the income or salary), but there is still debate on the proportion of the contribution that should be paid by the employer and employee. An additional challenge is how to collect the premium, should it be embedded in the current tax system or transferred directly to the national agencies by the employer?

It’s clear that on the road to UHC, Indonesia still has a long way to go.  2019 is not very far away and implementation challenges are enormous.  The current fragmentation will need to be overcome and strategic choices will then have to be made in order to improve the coverage especially with regards to informal labour (workers in the informal sector now account for 70% of the total amount of workers). In a country where the ratio of formal and informal workers is 30:70, setting up a social security system is anything but straightforward. Other challenges on the path towards UHC are to ensure that services are available in line with benefit packages – see for example the huge gap between the theoretical benefits package offered by Jamkesmas and the actual availability, especially in remote, rural locations and in a dispersed archipelago of more than 17000 islands – and to eliminate the barriers to access these services, not only geographically but also socially.

Different packages based on different premiums should be avoided not only to minimize cost sharing but also to avoid discrimination. The challenge ahead is to define adequate remuneration packages for providers that reflect health service costs based on benefit packages, and to close the gap between providers’ and the public interest. We will also need a strong political commitment from our Finance Minister to increase the budget allocation for health. Instead of the current 2.2 % of total government expenditure going to health, up to 5% is needed ( the 2009 Law on National Health also mandates this figure) to ensure the wellbeing of Indonesia citizens.

Everyone has the right to health, in Indonesia and elsewhere. Our constitution states that it’s the job of the state to protect this right, and common people in Indonesia are increasingly aware of this.   No doubt it will be hard work to achieve UHC by the end of the decade, but I’m sure we can do it.



[1]  PT Askes provides health Insurance coverage for civil servants

PT Jamsostek is the social insurance fund for private sector employees; it includes benefits for health, employment injury, retirement & pension and death.

PT Asabri : social insurance for the armed forces and the police, a similar scheme as PT Jamsostek minus health insurance.

PT Taspen: Social insurance for retirement benefits and pensions for civil servants. It previously included the army and police staff until 1989 when ASABRI was established.

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