Indonesia has room for private health insurers

Already in operation for a year, Indonesia’s national health insurance scheme (JKN) aims to provide cover to the entire nation by 2019, and private insurers are paying close attention. The JKN is expected to create opportunities for the private sector, as Indonesians become more aware of their insurance needs and potentially more inclined to buy supplemental cover. “The mandatory insurance scheme will not only benefit health insurers, but also the sector as a whole by introducing a large number of potential new customers to the market,” Roy Ibrahim, president-director of Asuransi Jiwa InHealth Indonesia, told OBG.

A Decade in the Making

Universal health care in Indonesia has been a long time coming. Although Law No. 40 of 2004 called for a national insurance programme, it languished for over a decade as employers resisted implementation and the previous administration showed minimal interest in undertaking the challenge. In 2010 a court case forced the authorities to act, and the much-anticipated national health care programme became a reality, starting January 1, 2014.

In the initial stages, the JKN will be little more than a cobbling together of systems already in place, as roughly half the population already had some form of government health insurance prior to the scheme’s roll out. However, the JKN will evolve into something more broad and comprehensive in the medium term, as it extends coverage to Indonesia’s population of roughly 250m The JKN will begin by taking in the 86.4m people already covered by the Jamkesmas scheme, a state-funded low-income health insurance programme. Another 16m civil servants and their family members, previously covered by Askes; 7m workers covered by the private sector employee programme Jamsostek; and 1.2m military personnel and their dependents, who were covered by the Asabri social insurance scheme, will also be incorporated into the JKN in the first stage.

Real Coverage

The system has already begun to offer real, usable health insurance to those who did not have any coverage before, as well as those who were neither poor enough to qualify for the previous programmes, nor rich enough to pay for private policies. This is especially true of the self-employed and those in the informal sector. They can now buy into the new system with a small monthly premium: Rp25,500 ($2.11) for so-called third-class treatment, Rp42,500 ($3.51) for second class and Rp59,500 ($4.92) for first class. This marks a significant advancement for the country; those who used to fall through the cracks, were unable to afford care or were left in debt after treatment are now able to access the medical system for rates on par with micro-insurance premiums. Other signs of success are also evident. The majority of Indonesia’s hospitals, including many private ones, have already signed up for the programme. In addition, the local pharmaceutical industry is set to benefit, as the JKN formulary is almost entirely locally manufactured generic drugs.


Support from the current administration is helping to drive implementation. During his time as governor of Jakarta, President Joko Widodo demonstrated a shared commitment to health insurance, rolling out the Healthy Jakarta Card programme citywide. A similar initiative, the Healthy Indonesia Card (KIS), was launched in November 2014, with the goal of covering the 88m Indonesians who fall below the poverty line. Widodo’s administration has argued that the KIS programme is an improvement over the JKN, offering preventive care and free contraceptives, as well as extending coverage to more social groups, including the elderly, addicts and disabled persons.

After the success of KIS, the government is working to merge the two systems under the JKN’s governing Social Security Management Agency (BPJS). Hasbullah Thabrany, a professor of public health and one of the architects of the JKN, expressed optimism at the prospect of integrating the two, suggesting that keeping them separate would waste both time and resources.

History Repeating

For all the talk of innovation, the national health care system will largely replicate what previously existed. Under the Suharto administration, basic health coverage was provided to the entire nation at a reasonable cost, though the care was in some ways minimal. However, after the crash of 1997-98, state spending on primary care fell by an estimated 25% in three years, as state coffers became strained and incomes fell. The hospital and clinic network weakened, and overall coverage declined.


In addition to the premiums paid by the self-employed, the JKN receives the equivalent of 5% of each covered person’s salary if they are regular company workers – 1% from the employee and 4% from the employer. The rest of the funding comes from the government, which spent Rp20trn ($1.65bn) to subsidise premiums for low-income citizens in 2014. However, the state contribution per person, at Rp19,225 ($1.59) per month, falls below the cost of third-class care. Thabrany told OBG the minimum subsidy should be raised to Rp54,000 ($4.46) to cover adequate care.

While some hospitals have voiced similar concerns about the level of compensation under the programme, the BPJS has argued that these doubts are unfounded and that many hospitals and clinics are able to work with the funding provided, adding that pricing pressures will make providers more efficient. However, during the rollout in 2014, when hospitals faced a large influx of patients, local media reported inconsistent service and a general lack of understanding about the programme and how to process JKN patients.

Long-term concerns remain over the lack of infrastructure and medical staff. According to two recent studies, one conducted by Gadjah Mada University Centre for Health Service and the other by Paramadina Graduate School of Diplomacy, the 2019 coverage deadline may not be met due to uneven geographical investment in medical infrastructure and training.

Private Options

Nonetheless, the JKN is succeeding in many respects. Significantly, awareness about the programme is high. An Ipsos survey conducted at end-2014 found that only 24% of those polled were unaware of the programme. Furthermore, according to some insurers, the JKN may ultimately increase demand for private plans, helping close coverage gaps and take some pressure off the public system. Although the JKN offers universal coverage, it only provides minimal care. Even if this is adequate, many may opt to buy policies that provide access to hospitals and clinics with a better drug formulary that allow them to avoid long wait times. Private policies could come to be seen, especially for the middle class, as supplemental to the JKN.

At the direction of the president, private insurers are already working with the BPJS to coordinate benefits. The JKN will pay up to its per-patient limits, while private insurers will cover the rest, up to the policy maximum, thereby solidifying the private system’s role as an add-on to public coverage. According to local media, there is some concern that the private sector will cherry-pick the healthy, more profitable patients and leave the most sick in the public sector; however, if coordination is well managed, private insurance has the capacity to complement public coverage and make the wider health care system better financed and more stable.