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Higher healthcare premiums ‘urgent’
With a ballooning deficit over five years of operations putting pressure on the state budget, the Health Care and Social Security Agency (BPJS Kesehatan), which is in charge of Indonesia’s universal healthcare insurance system, is pleading for an increase in premiums
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With a ballooning deficit over five years of operations putting pressure on the state budget, the Health Care and Social Security Agency (BPJS Kesehatan), which is in charge of Indonesia’s universal healthcare insurance system, is pleading for an increase in premiums.
BPJS Kesehatan finance and investment director Kemal Imam Santoso acknowledged that the increase in premiums would only address one of the many problems that cause a growing deficit in the institution’s finances. However, he said it was necessary to stem the financial losses suffered by the state insurer.
“The need is quite urgent,” Kemal told the press after a meeting with the House of Representatives’ Commission XI which oversees state budget and overall financial affairs, which was also attended by Finance Minister Sri Mulyani Indrawati.
Indonesia’s universal healthcare insurance scheme, dubbed one of the most generous in the world covering 223 million people, almost 90 percent of the population, has since its establishment in 2014 run a deficit every year and been backed by the state budget to support operations as the large medical benefits are not matched by the premiums paid by participants.
Starting with a Rp 1.9 trillion (US$133.44 million) deficit, BPJS Kesehatan’s financial losses continued to increase to Rp 19.4 trillion in 2018. The government did not always fully plug the hole, but from 2014 to 2018 it had spent a total of Rp 25.7 trillion to support BPJS Kesehatan’s finances, on top of a budget allocation for a government-funded premium assistance program (PBI) for low-income people to participate in the BPJS Kesehatan insurance coverage.
This year, the financial loss is expected to balloon to Rp 28.5 trillion, of which Rp 9 trillion was carried over from last year’s deficit. These losses primarily stem from high benefits redeemed by participants while premium payments remain low.
Vice President Jusuf Kalla has said the government agreed “in principal” to increase the premiums as a measure to improve the state insurer’s financial condition, as reflected in the draft 2020 state budget showing a significant increase in the PBI.
State budget allocation for the PBI is set to jump 82 percent to Rp 48.8 trillion next year from Rp 26.7 trillion this year, while recipients are to remain at 96.8 million people.
Sri Mulyani said BPJS Kesehatan losses primarily stemmed from low premiums, inactive premium payments by nonwage recipients, extremely high catastrophic illness coverage and companies under-reporting their employees’ numbers and salaries, based on a comprehensive audit by the Development Finance Comptroller (BPKP).
“The premiums are affordable, the benefits are many, while the risks are high,” she said. “The premiums did not reflect the balance between premiums and risks.”
Sri Mulyani urged BPJS Kesehatan to improve its database in order to prevent fraudulent practices, which are among the many sources of financial losses, to improve the organization’s financial condition, based on the BPKP’s recommendations.
One of the most common fraudulent practices apart from companies under-reporting is hospitals over-stating their class category to allow for higher premium coverage, the BPKP finds. BPJS Kesehatan involves 2,453 hospitals around Indonesia and 23,075 level one health facilities.
For enterprises, which are required to allocate 5 percent of their employees’ base salaries for BPJS Kesehatan premiums — 4 percent borne by the company and 1 percent by employees — an increase in premiums would add a burden to companies already constrained by the high existing costs of BPJS Kesehatan.
“BPJS premiums account for 12 percent of costs borne by companies,” Indonesian Employers Association (Apindo) labor and social security head Harijanto told kontan.co.id recently. “This cannot be treated carelessly; it’s about the competitiveness” of Indonesia’s private sector, he added.
