Esai / Haluan
Beyond moral hazard: the politics of Universal Health Coverage in Indonesia
Unraveling the political journey to healthcare and how it has reproduced injustices in Indonesia’s public healthcare system beyond the mainstream claim of ‘moral hazard’.
Playing the blame game
The novel coronavirus pandemic has made us realise that taking care of our health, both through curative and preventive measures, is now more important than ever. Even the pandemic aside, while many Indonesians today enjoy living longer lives, health scares from communicable diseases are still common and the once Global North-related non-communicable diseases such as cancer and heart failure are also on the rise.
One of the main reasons why many are still vulnerable to such scares is due to the lack of access to affordable healthcare facilities. But now that Indonesia has established its own public health insurance, or Jaminan Kesehatan Nasional (JKN), one of the largest state-run health coverage in the world, to ensure that everyone has access to healthcare, why are we still seeing people vulnerable and without proper healthcare when they need it most?
For starters, it is not a secret that Badan Penyelenggara Jaminan Sosial (BPJS) Kesehatan, the administering body of JKN, has been in deficit and this has resulted in many out-of-pocket (OOP) expenses by its users (contributing up to 62.2% in 2018, while public insurance covers 37,8%) and subpar health service performance, rendering healthcare still unreachable for some. Additionally, it has also failed to meet its target of 100% coverage by 2019 as it stands at around 85% in 2020.
This is not to say that the government has not tried to improve this situation by increasing government’s health expenditures, having increased 222% in the past 8 years, but expenditures are still low compared to neighbouring countries in East Asian and the Pacific countries (second only to Lao PDR), resulting in public healthcare performances still to the dismay of many.
Others have concluded that undisciplined users are to blame. The so-called moral hazard phenomena imply that people, particularly those under the category of nonsalaried income user groups comprising mostly of informal sector jobs, only pay up their premiums when they get sick and stop paying when they recover.
“When these public goods and social necessities are treated as if they are commodities produced for sale on the market, rather than protected rights, our social world is endangered and major crises will ensue” — Polanyi scholars Fred Block and Margaret Somers (2014).
What I would like to argue that not only blaming users’ “moral hazard” as a cause for the deficit is not only simplistic, but it is downright cowardly and wrong. Albeit unpaid user premiums comprise a large share in the total deficits, one needs to go deeper as to how problems keep coming up even after reforms and further budget injections.
The Indonesian healthcare system and its social protection policy, in general, has always been political. Reflected from its political settlement is an array of issues contributing to the deficit of JKN that barely scratch the surface of popular media. In the end, the blame game is not even needed because healthcare itself is regarded as Polanyi’s “fictitious commodity”, not a right. It has always been politicized, shaped by a broader power structure all along.
Approaches to social protection and public healthcare
Social protection is defined as the means to ‘respond to poverty and vulnerability’ (Barrientos & Hulme, 2008). Basically it makes sure that people have their basic needs covered, their rights fulfilled, and are protected from any potential of them being deprived of any instance that puts people at risk.
Theoretically, social protection policies comprise of three main components: social assistance, social insurance, and labour market regulations. However, most of the time social protection policies, including public healthcare, do not come as a given entitlement to citizens. Rather, countries rarely fulfill social protection policies that encompass such grandeur aims.
Munro (2008) lays out 3 main approaches to how social policies come to being in a particular country: 1) based on risk and market failures, 2) based on rights, and 3) based on basic-needs.
The first approach is one that is most common: that when market failures occur, many will be left to fall into poverty and necessitates the state intervention in public welfare. We see this happening around the world, as a result of the 1930s Great Depression, the 1998 Asian Financial Crisis, and the 2008 Financial Crisis.
The second approach guarantees entitlement to the benefits of the public and protects living standards. This rights-based approach is often campaigned by the International Labour Organisation.
Finally, a needs-based approach sees social protection as a means to secure the minimal basic needs as the precondition for human and economic development, often coined by campaigns of the United Nations.
As Schumpeter indicates, crises become the epitome of a creative destruction taking place, in which states can “induce actions towards a direction of change” (Perez, 2001). Hence, it may even be expected that states should act upon social protection policies in the event of a crisis, either by introducing new social protection systems or enhancing old ones. Mladovsky et al (2012) also points out that country responses can be different towards economic shocks: you can reform or even hold out reforms.
The crisis consists precisely in the fact that the old is dying and the new cannot be born, in this interregnum a great variety of morbid symptoms appear. — Gramsci (1971)
But to me at least, by drawing on Gramsci, it also unravels more on what the state did not do, what priorities it really has planned to be negligent enough to let many of its people in a vulnerable state. Though it is not impossible for citizens to be ones advocating for better healthcare, as in the case of Brazil, before the state even has plans for reform.
The next section will briefly discuss the political journey to establish social protection policies in Indonesia, emphasizing how social protection policies are far from being technocratic responses to crises and has instead been political and contested over time.
Towards a Social Protection Narrative in Indonesia
It was not until Soeharto’s Presidential Decree (Keputusan Presiden) №230/1968 that Indonesia’s formal workers, notably civil servants and military personnel that comprised 15% of the population (Mahendradhata, 2017), were given healthcare benefits.
The developmental successes of Indonesia’s oil boom and the adoption of Structural Adjustment Programmes by the World Bank and International Monetary Fund made the centralist authoritarian government ever more dependent on the formal working class. By 1992, Soeharto launched PT Jamsostek, PT Taspen, PT Asabri, and PT Askes to administer social benefits to formal workers among other social welfare policies such as basic primary education and low-cost (but limited) primary healthcare.
The 1998 Asian Financial Crisis was a huge blow for Indonesia, despite many socioeconomic gains in the past years. Alongside the fall of Soeharto, many political elites scrambled to capture political legitimacy upon those suffering from poverty and vulnerability.
The BJ Habibie administration, eager to put Golongan Karya back on the right track after its fall, introduced Indonesia’s Jaringan Pengaman Sosial or Social Safety Net programme. It included fuel subsidies, subsidized rice, supplements for women, operational funds for community health centers, Kartu Sehat, and others (Jung, 2016).
A critical point in this period was the rise of multiparty-ism and the prominence of technocrats such as Adi Sasono (then-Minister of Cooperatives and Medium and Small Enterprises and former NGO-activist) and Sulastomo (director of PT Askes 1986–2000) that played key roles in aiding the swift take-up of JPS (Aspinall, 2014).
The years that proceeded became more intense with the prevalence of decentralisation and democratisation. After finally passing Law №40/2004 about the National Social Guarantee System (Undang-Undang tentang Sistem Jaminan Sosial Nasional, SJSN), many local governments took up their own form of localised public health insurance systems. On the one hand, it has helped extend the take up of public health insurance. On the other, Indonesia’s competitive clientelistic politics have used public health policies as electoral tools to gain cheap support.
Even at the national level, Susilo Bambang Yudhoyono’s presidency (2004–2009 and 2009–2014) only started discussions around the administering body of SJSN nearing the time of his elections and instead set up his own populist pro-poor social protection policies.
Civil society organisations also stepped up their game, either by advocating for better social protection services such as the Social Security Action Committee or setting up community-based healthcare and education facilities like Muhammadiyah or Nahdlatul Ulama.
After a lengthy period of debates between the House of Representatives and the state over rent distribution of social protection benefits (Utomo, 2017), BPJS Kesehatan and BPJS Ketenagakerjaan as administering bodies for healthcare and social benefits in Indonesia were established in 2014 and 2015 respectively. Since then, health expenditures have risen and its benefits scaled up nationally. Nevertheless, Indonesia’s struggle for equitable public health insurance is yet to see the light of day.
Ticking time bomb
The politicized nature of BPJS Kesehatan and social protection in general in Indonesia (thanks to its competitive clientelist political settlement) opens up the myriad of issues related to its service delivery beyond the fault of its beneficiaries. Again, this is not to disregard the enormity that beneficiary premiums contribute to the single-pool insurance deficits, but other issues are not to be disregarded. If anything, these issues should not be depoliticized. For brevity, among other things, I will focus on three main issues.
- Lack of priority for social protection within the political settlement
Going back to how social insurance policies took 15 years to be proposed and to finally have an established administering body clearly shows how the state narrates development. Decentralisation and democratization have taken a toll on the competitive clientelist state with many hungry politicians who’d rather favour populist wins than developmental, long term socioeconomic outcomes because they live off the distribution of favours (Kelsall et al, 2016).
It was a huge turn around when 2016 marked changes in Indonesia’s developmental outlook from poverty reduction to infrastructure provision/indirect social welfare (Warburton, 2016). Village funds were also an innovative policy never before seen, despite its implementation still falling short of even benefits throughout the country.
The government seems to still be treading on shaky waters, balancing tensions from professional medical associations, corporations, and the general public, when BPJS Kesehatan deficits were to be covered through increases in premiums before public upheaval forced the government to revoke the reform in May 2020. An update on May 12, 2020 reveals the government will continue to raise premium prices by 100% as of July 2020 (Pratama, 2020).
2. The increasing burden of medical imports
While UHC is expanding its coverage, current trade, manufacturing, and distribution of pharma and medical goods are becoming strains to BPJS Kesehatan operations. Due to strict government policies, BPJS Kesehatan mandates the use of domestic generic drugs that are more low-cost than patented ones.
These domestic pharma goods are manufactured in-country, resulting in the flourishing domestic pharmaceutical industry compared to the liberalised days of Soeharto. However, the raw materials needed for manufacturing still imports 95% of its production from India and China (Mahendradhata et al, 2017).
As with medical equipment, imports for surgical instruments and other sophisticated medical infrastructure account for 97% of the market (EIBN, 2016). Despite regulations to enable foreign imports and investments are loosening up, the competitiveness of domestic manufacturers also serves as a cause of caution.
3. Overlapping beneficiary data
The sheer scale of UHC under BPJS Kesehatan is not just of a technical matter, but also one that is political. Jamkesda (and other local health programmes) and JKN operate under subnational and national levels, justified under the notion of extending and enhancing service delivery for those previously left out.
It has been a huge struggle to ensure that local governments allocate a minimal 10% of their budget for health expenditure, as mandated by UU SJSN. Likewise, the state also has failed to ensure its minimal 5% of the state budget for national health expenditures.
The problem lies in the fact that due to decentralisation the state cannot enforce local allocation of health expenditures. Overlapping data and mistargeting of beneficiaries, particularly those who are fully subsidised by BPJS Kesehatan, are not uncommon. One goes to question whether decentralisation, if and to the extent that it really is implemented, has helped to ensure the efficiency of public healthcare insurance delivery or instead added on to the burden.
Bringing the politics back in Indonesian public health insurance
BPJS Kesehatan has the potential to secure the lives of many Indonesians, but its progress and constraints should not be narrowed down and depoliticized to only be contingent on the moral hazard of its beneficiaries. Unraveling the political journey of social protection in Indonesia shows that there is much more to healthcare than just paying your premiums on time.
It is important to know that healthcare is not just about the curative measures, but better yet, it should also focus on preventive action. In so doing, social protection policies, in general, do not only stabilise risk but also ought to transform the structural inequalities reproducing the exact vulnerabilities we intend to resolve (Sabates-Wheeler & Devereux, 2008).
For the case of BPJS Kesehatan, we ought not to get carried away with late premiums, but look beyond towards the how our healthcare has been perceived, manifested and contested over time: whether healthcare and health insurance really is our right, our basic need, or are human lives just regarded as fictitious commodities orchestrated to satisfy rent-seeking, clientelist political settlements?
