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Insight: How to maintain the sustainability of health insurance
It has been nearly a year and a half since the government launched the National Health Insurance (JKN) program and its implementation has provided a positive impact on the development of the pharmaceutical industry in Indonesia
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t has been nearly a year and a half since the government launched the National Health Insurance (JKN) program and its implementation has provided a positive impact on the development of the pharmaceutical industry in Indonesia. One of the ways in which this positive impact has played out is by encouraging and expanding the market, especially for new and innovative drugs, to meet the country's increasing and growing healthcare needs.
According to market research done by Asia Health Care in 2010, Indonesia had one of the lowest rates of drug consumption in Asia: spending only US$20 per person, compared to $50 in the Philippines and about $100 in Vietnam. However, that number is rising quickly. As per capita income increases, Indonesians are spending more money on healthcare. By the end of 2015, Indonesia anticipated a significant increase due to the JKN program.
In recent months, the JKN provider, the Healthcare and Social Security Agency (BPJS Kesehatan), reported a deficit between the claims it had paid and the premiums it had received. Even in 2014, the deficit already stood at Rp 1.54 trillion ($116 million), with Rp 42.6 trillion paid out in claims and Rp 41.06 trillion received in premiums. And should the deficit continue this year the sustainability of the program will be at stake.
To bridge the deficit, BPJS Kesehatan has sought to increase subscribers' premiums. The notion was initiated at the beginning of the year, when the program started showing signs of financial trouble after BPJS Kesehatan released a report on its claim ratio. The government has also committed to increasing the state budget allocation for the healthcare sector from 3 percent to 5 percent in 2016.
Increasing the BPJS premiums and state budget allocation for the healthcare sector seems to be a short-term measure to solve the widening deficit, but how long can it go on? Can BPJS increase the premiums whenever a deficit occurs? And would an increase of budget allocation for the healthcare sector burden the economy even further?
European countries such as Spain, Portugal, Italy and Greece have long prided themselves on their public health programs, but with huge debts from the financial crisis they have sought to drastically cut their health subsidies.
Achieving sustainability is about meeting the current requirements without sacrificing future needs. One way to solve the deficit problem in the long run is to beat it systematically. Despite Presidential Decree No. 111/2013 on the JKN, which require all employers to enroll their employees in the BPJS Kesehatan program by Jan. 1, 2015, its implementation is far from ideal.
Until today many companies have yet to register their employees because they feel that they will have no choice but to retain their existing health insurance policies despite their enrollment in the BPJS Kesehatan, simply because the BPJS Kesehatan alone may not provide adequate healthcare coverage for their employees.
Even though it is still being deliberated, it can be seen that companies are still questioning the coordination of benefits (COB) plan that BPJS Kesehatan offers. There is no clear regulation or policy that governs what is covered by the agency and what is not; companies are still kept in the dark.
In principle we believe that such systematic issues may lead to the declining quality of healthcare services provided by healthcare personnel in an effort to adapt to the payment system. Low quality treatments can result in less efficient and effective healthcare services for the patients and can also add to the government's burden.
Access to the right medicines and the latest healthcare treatments are included in the rights of every patient. It is also the right of the patient to receive proper and suitable healthcare treatments based on their individual health profile or needs. Therefore, the JKN should also accommodate flexibility for healthcare personnel to treat patients based on their pre-eminent medical needs.
In order to ensure the sustainability of the JKN program and guarantee suitable healthcare services and coverage expansion for the people, we believe the government needs to enlist the needed help from the private sector if it wishes to expand the outreach of its universal health insurance program and meet the target of covering all residents of Indonesia under the scheme by 2019.
As an alternative method to ensure the stability of the JKN program, the government may want to consider a co-payment or cost sharing scheme. Co-payment helps the government save money by making BPJS Kesehatan members cover part of their healthcare bills ' meaning that members are to pay partially the cost of their care and the government pays for what is covered. This will in turn minimize the country's financial burden.
Cost-sharing in health insurance schemes is a crucial method that may influence both healthcare utilization and the financial burden of the BPJS members. The economic purpose of health insurance is to reduce the financial risk of illness for the insured. Facing decreasing prices of healthcare paid by the BPJS members, they have incentive to increase their wellbeing in the other aspects of their lives.
One example is the formal social insurance scheme applied in Vietnam, where official co-payment by the insured patients is 20 percent in the social health insurance. This cost-sharing policy reduces the financial risk of the insured by 16 percent and 18 percent and this reduction in expenditure is more pronounced for individuals with lower incomes. For the individuals with the mean income, the effect of health insurance may reduce health expenditures between 28 and 35 percent.
The JKN program is one of Indonesia's long-awaited and most important milestones in the history of Indonesia's healthcare sector, therefore we should make it a success.
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The writer is the executive director of the International Pharmaceutical Manufacturers Group (IPMG), a non-profit organization that comprises 24 international, research-based pharmaceutical companies operating in Indonesia. The views expressed are his own.
