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em>The national health insurance program (JKN), administered by the Health Care and Social Security Agency (BPJS Kesehatan), has, since its launch in 2014, suffered from deficits, which, in 2016 alone, totaled Rp 9.7 trillion (US$729 million). Ideas to rejuvenate the scheme have come from many quarters, including the World Health Organization’s tobacco control economics coordinator Jeremias Paul, who shared with The Jakarta Post’s Moses Ompusunggu the success of national health insurance in his home country under Kasulugan Pangkahatan, the Universal Health Care program of the Philippines.

Tell me about your country’s experience operating a universal health care program.

In the Philippines, we have used the reform of tobacco and alcohol taxes to finance universal health care. Of course, this is not the only source, but the bulk of funds to provide for the poor has come from that.

Could tobacco taxation be a possible source for financing health care in Indonesia?

In Indonesia, there is an increasing burden of non-communicable diseases, as in the Philippines. Tobacco use is the number one risk factor behind non-communicable disease.

This is recognized in the Addis Ababa action agenda (the Third International Conference on Financing for Development in 2015), which says that price and tax measures on tobacco can be an effective and important means for reducing tobacco consumption and health care costs.

Research has shown that increasing taxes on tobacco and the price of tobacco products is the single-most effective tool for reducing tobacco use. A 10 percent increase will reduce consumption by 5 percent in low and middle-income countries.  

What we first did in the case of tobacco was simplify the number of tiers. The bulk of incremental revenue was then earmarked for universal health care.

From 1997 to 2012, the average tax rate for tobacco products was only 6 pesos. But after we began implementing significant tax increases, the average gradually rose from 14 pesos in 2013 to 29 pesos per pack in 2016. The production of cigarettes also decreased, however revenue increased.

When we increased tobacco taxes, we faced criticisms that the policy would increase smuggling, was anti-poor and would reduce revenue. But instead what happened is that tobacco consumption decreased while the health budget increased. The number of poor with free health insurance also went up, as did tobacco insurance revenue and tobacco tax revenue as a percentage of GDP.

In fact, in the Philippines, the actual incremental revenue was higher than projected. The budget for health almost tripled from $42.2 billion to $123 billion in 2016.

Because we increased taxes, we were able to generate money to cover health insurance premiums for the poor. Also, because of the high taxes more than 1 million Filipinos have quit smoking. The tobacco taxes increase is a win-win formula for increasing government revenue and improving public health.

This is not unique to the Philippines. We followed the example of Thailand, where similar measures were taken, and also learned from Turkey’s experiences.   

What have been the benefits for health services in the Philippines?

Public health facilities in the Philippines have definitely improved and the number of poor with access to health care has also expanded. But heath services always require constant improvement and attention. Having the funds is not enough in itself, they must be spent wisely.

Are patients with tobacco-related diseases excluded from the national health care program?

I cannot comment on Indonesia, but in many countries people with tobacco-related diseases still receive treatment. In the Philippines, they can still go to hospitals and get the help from Philhealth [Philippine Universal Health Care].

Was there a political tug of war to pass the Sin Tax Law in 2012?

There was significant political pressure against it, but our president, Benigno Aquino III, was committed. So he essentially supported us.

We also received support from the Congress and the Senate. At the end of the day, more congressmen and lawmakers than not believed it would deliver benefits for the whole country, not just the tobacco industry.

Indonesia faces challenges collecting premiums to finance the JKN. What has been the experience in the Philippines?

There will always be difficulties collecting premiums, especially from the informal sector. From the formal sector, you need to strengthen administrative capacity to ensure compliance. In the Philippines, if a company does not remit the premium they get penalized.