After an almost 10-year delay, the law on the national social security system will be implemented on Jan. 1. This Law No. 40/2004 is equivalent to the Old Age, Survivor, Disability and Health Insurance Act or the Social Security Law of the US. Both laws were enacted after severe financial crises that alerted the countries to the crucial need for a social security system to overcome financial catastrophes.
While the US law covers four programs, Indonesia’s national social security covers five programs, namely health insurance, occupational injuries, provident funds, pension and death benefits.
There are some differences between the laws of the two countries. The US Social Security Law, without health insurance, was passed just three years after the 1932 Great Depression.
Indonesia’s law was enacted six years after the 1998 financial crisis and two years after the amendment of the 1945 Constitution. Further, the health insurance part of the US law was added later in 1965, creating its Medicare program.
But Indonesia’s health insurance covers only the elderly using a pay-as-you-go funding mechanism. In Indonesia on Jan. 1, the health insurance part will for the first time cover Indonesian citizens and foreigners residing in Indonesia for more than six months. Another difference is that the entire US social security system is administered under a single agency, the Social Security Administration under the federal government.
Meanwhile, the administration of our social security is under two different quasi government agencies under Social Security Providers (BPJS), one catering to health coverage and the other in charge of the other four programs. The Indonesian model follows the similar separation of short-term and long-term programs of social security in Taiwan, the Philippines and South Korea.
Another unique feature of the Indonesian system is that since the beginning, in 2004, the Cabinet of President Susilo Bambang Yudhoyono seemed reluctant to pass the Social Security Law. The government, however, bowed to pressure following a lawsuit and widespread demonstrations mobilized by the Action Committee for Social Security (KAJS), which comprised 66 labor unions, student associations and NGOs.
Indonesia’s national health insurance (JKN) program is administered separately by BPJS Kesehatan, previously PT Askes Indonesia, in a program similar to that in the US, Canada, Taiwan and Australia. It represents a single payer health care to meet basic healthcare needs, meaning all medically necessary treatment, of the entire Indonesian population.
The JKN covers comprehensive benefits, from influenza to expensive medical intervention such as open-heart surgery, dialysis and cancer therapies.
The program covers medical necessities and hotel-type services. JKN funding comes from mandatory contributions from all workers and a government subsidy for the poor and near poor. Hotel-type services are limited to a first- or second-class room and board for those who pay 4.5 to 5 percent of their monthly wages. The poor and the near poor needing hospitalization, covered by the government subsidy, are entitled to a third-class room and board.
The BPJS Law No. 24/ 2011 prescribes that on Jan. 1, the JKN will start by integrating the administrations of four current public health insurance plans. To undertake the JKN, the world’s largest national health insurance plan, PT Askes (currently a parastatal company) has been transformed into a public, non-government entity named BPJS. While PT Askes was tasked to make money or profit from the sick for the government, the BPJS must ensure that every contributor gets necessary medical care. From the New Year, public health insurance will first cover about 120 million people.
An additional 10 million to 20 million people may enroll during 2014, most likely those suffering from chronic diseases or catastrophic diseases such as renal failure and cancer.
Many have criticized the fact that the scheme is not supported by adequate number of healthcare providers. However, the current utilization of healthcare providers shows that, for example, the average bed occupancy rate of all hospitals has been only about 60 percent. Similarly, many offices or clinics are under-utilized.
Meanwhile, our healthcare system is suffering from a shortage of specialists and low-quality care resulting from severe underfunding. In the last 40 years, Indonesia spent only about 3 percent of its gross domestic product (GDP), much below other large countries such as China and India that spend more than 5 percent of their GDP on health.
Despite all the preparations by the government and the BPJS, there are still potential problems — mainly low contribution resulting from unfair intervention by some employers and employee associations.
Some employers’ association representatives lobbied the government to set a low-ceiling for wages and thus low health security coverage contributions; while employees, citing their low wages, refused any cuts for social security.
Similarly in 2014, the government is only willing to contribute Rp 19,225 (US$1.57) per person per month for the poor. Although the amount is much higher than the 2013 allocation, the figure will not meet average market costs to provide good care by the private sector.
The government’s contribution was being criticized as discriminatory; as the President also issued a decree on financing supplemental health insurance for high-ranking officials at Rp 1.6 million per person per month, about 80 times more than the government contribution for the poor. Following such criticism the President revoked the regulation on Monday.
Fearing insolvency caused by current contribution levels, the Health Ministry set low reimbursement levels. Although private healthcare providers are not mandated to contract with the JKN, the low reimbursements will create low interest among private providers, leading to overcrowded clinics and beds at state providers. Currently, state hospitals nationwide supply about 50 percent of beds.
Further, the fact that the BPJS will issue BPJS membership cards will create a perception of non-inclusiveness by healthcare providers. The BPJS should issue a JKN card, as commonly practiced around the world.
The low payments to healthcare providers and the exclusivity of the BPJS will discourage quality medical services. The JKN needs quick monitoring and rapid fixing to ensure sustainability. So, let’s fasten our seat belts to anticipate some turbulence in the first stages of Indonesia’s universal health
The writer is chair of the Center for Health Economics and Policy Studies, University of Indonesia, and was a former member of the Presidential Task Force for the National Social Security System.
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