Indonesia’s Prize Health Insurance System Mired in Debt

In January of 2015, shortly after Joko Widodo became President of Indonesia, the government launched an ambitious comprehensive health insurance system designed to make basic care available universally by 2019.

Today the scheme, the Health Insurance Administering Agency (BPJS), continues to face large budget deficits, built on out-of-control financing and unpaid contributions. The deficit actually doubled in 2016, reaching Rp9.7 trillion (S$717.5 million). To patch the budget and pay hospitals, BPJS relies on State Equity Participation now totaling Rp6 trillion annually. Funding from the state budget is limited, although the government has tried to raise funds every year. If this is not resolved soon, the burden will become more severe.

The immediate implication is the delay in payment of claims to the hospitals, damaging their own cash flow. That has been experienced by the Network of Muhammadiyah Hospitals in East Java where 70 percent of its patients are registered under BPJS. Accumulated debt to the network from January to August 2017 reached Rp53 billion. Although the agency promised a maximum threshold of 15 days, late payment has risen to up to three months.

The disruption of hospital cash flow resulting in taking debts to third parties cannot be avoided. Often the hospitals owe for the purchase of drugs to pharmaceutical companies. Short-term obligations including salaries for doctors and other medical staff as well as maintenance and purchase of medical equipment face the danger of disruption.

Several major factors are involved, illustrating why the problem is so difficult to overcome. BPJS, which in practice assumes responsibility for implementing the government-owned JKN, the national health insurance program, is not designed as commercial health insurance. Aiming to provide health insurance for every segment of society, all BPJS members are entitled to receive direct health care and claim as soon as they are officially registered and receive a health card.

The membership of BPJS as of Nov. 1 reached 183 million people. Millions of participants have a wide variety of medical histories, some healthy, some sick, some severely ill. In fact, many have long-standing health problems but haven’t had the funds to seek a doctor. The absence of guaranteed waiting time for BPJS’ members makes those who have lived in the poverty line flocking to health centers and hospitals. This is the major cause of soaring spending.

The government itself argues that the deficit experienced by BPJS is closely related to the low contribution imposed for members, thus the income received can’t meet the cost of operations. For example, from January to July 2017, contributions earned in the first half were only Rp35.96 trillion against expenditures of Rp41 trillion.

What are the possible solutions?

In the short term, raising the monthly rate seems to be the government’s first choice, as Finance Minister Sri Mulyani Indriati told the media a few days ago. However, an in-depth study is necessary, as the government should always be reminded to return to its original principle, which is to a minimum individual contribution towards national health insurance. Provided that the contribution increase is adjusted to the increase of inflation and coupled with the good socialization of the government, it is hoped that the public will not be antipathy to this initiative.

Actually there are other steps that could be taken. After the national health insurance scheme was formed three years ago, the government did advise that insurance and health assistance should be centralized. The consequence is that many local governments then tend to be 'off hand' and make the scheme the sole organization that deals with the financing of citizens' health insurance.

Although some local governments have also helped to pay the contributions of their poor and registered beneficiaries which are free of obligations every month, the amounts paid by local governments can still be increased. Central and local governments must share responsibility for funding the national scheme. The inclusion of local government funds must be immediately decided as obligations and the amount should also be determined immediately. It is intended so that the equity injection from the state budget and the injection of funds from all local governments are able to cover the state budget deficit.

However, the struggle of all these parties will be meaningless if spending continues to swell. The high claims can actually be examined from two different viewpoints. Firstly, it could be a sign of the government's success which has made people who previously have antipathy towards hospitals, rural and inland people who have not even had a lifetime of medical treatment, and who have been sick for years and years can finally check themselves and treat their health conditions without worrying about cost. Or, it can also be an indication that the majority of the Indonesian population is not particularly in good health.

Of the various diseases that affect the people of Indonesia, the five that are the biggest consumers of funds are cardiovascular disease, failure, cancer, stroke, and thalassemia, an inherited blood disease that interferes with the normal manufacture of hemoglobin. The following diseases are not infectious diseases or diseases caused by outbreaks that cannot be avoided. These diseases can be substantially reduced by the implementation of healthy lifestyles.

As one of the largest cigarette producing countries in the world, the majority of Indonesia's population still smoke. Although anti-smoking campaigns have been echoed throughout the country, smoking is rooted as a habit and many day-to-day expenditures go to cigarettes. Often their cigarette budgets are greater than their consumption budgets, let alone their health budgets.

In addition, traditional Indonesian cuisine, while delicious is synonymous with high cholesterol. Processed, fatty and fried foods are ubiquitous. The majority of Javanese prefer sweet tea to water. Traditional snacks also use large amounts of sugar. Nonetheless, there are traditional foods that are healthier. Spreading awareness of healthy diet is a goal for health authorities.

Unbalanced nutritional intake, lack of exercise, and an unclean environment are also other major factors. Health services that focus on settlements and the environment, regular education on the importance of maintaining health from the implementation of healthy lifestyles should be flagship programs.

Encouraging preventive health with healthy lifestyle education would reduce the health budget. There are various diseases that can’t be prevented or avoided even though a healthy lifestyle has been implemented, but with Indonesia’s massive population, improving public health and lowering the risk of disease due to unhealthy lifestyles would have a significant impact on the health budget.

Muhammad Zulfikar Rakhmat is a doctoral candidate at the University of Manchester. Dikanaya Tarahita is an Indonesian freelance writer. They are regular contributors to Asia Sentinel.