All change: Plan to provide universal care has opened up a host of opportunities

While Indonesia has traditionally had limited resources to commit to health, it has provided a decent basic service to its citizens. According to the World Health Organisation (WHO), the country has an adequate level of primary care, delivered through both health centres and sub-centres. Indonesia has faced significant setbacks in the past, but it has made real progress in health care provision, and the system is about to dramatically improve. The country is currently implementing a universal health care plan and, if all goes according to schedule, by 2019 everyone in the country – including those who were too well off to be considered for the Jamkesmas system for the poor and near-poor – will receive medically necessary services free of charge. It is a time of great opportunity for the sector, as well as great and potentially positive changes for the people of Indonesia.


In 1950 the country had only 1200 doctors for 72m people. Some improvements were made that decade, but investment was limited due to the weak economy and lack of funds. Health care improved greatly under the Suharto administration, and outcomes and indicators suggest that real achievements were made, according to the paper “Surviving Decentralisation – Impact of Regional Autonomy on Health Service Provision in Indonesia”. Community health centres (puskesmas) were established starting in 1968, a year after the beginning of Suharto’s rule. The goal was to have one health centre per 30,000 people, and by the late 1980s that was achieved. Smaller sub-centres were also established in villages. The centres focused on preventive and basic medicine, such as immunisations, pre- and post-natal care, dentistry and nutrition. They were well staffed by nurses, midwives and doctors, who were required to do mandatory government service after graduation. The system was in many respects a great success. It was highly centralised and tightly managed, and fees were set low, so treatment was within the reach of the average Indonesian. While the local centres mainly focused on the most simple goals, such as sanitation, the results were good. For many years Indonesia was seen as a country that was able to effectively improve the health of its people. In 1968, for example, average life expectancy at birth was 51 years. It is now 70. Infant mortality fell from 120 per 1000 life births to under 30.


In 1968 the government began providing health insurance to civil servants in a programme managed by Indonesia Health Insurance (Asuransi Kesehatan Indonesia). It currently covers over 4m workers and 11m of their family members. A programme for formal sector workers was added in 1993, managed by Workforce and Social Insurance (Jaminan Sosial dan Tenaga Kerja, Jamsostek). However, this coverage was not widely utilised and membership was low for many years; the International Labour Organisation put the total at 10m in 2011. While the country has a number of different programmes to provide health coverage, much of the cost is still paid by the people seeking treatment. Currently, around two-thirds of all relevant costs are covered by the individual out of pocket.

After The Crisis

The Asian financial crisis of 1997-98 greatly weakened the country’s ability to deliver quality health services. Incomes declined and government finances weakened, resulting in an estimated 25% drop in health spending per person.

According to the WHO, decentralisation, which began in 2001 at the suggestion of international donors, has had a significant impact on health care delivery. While decentralisation did not dismantle the national health programmes, it did lead to a weakening of relevant institutions and create difficulties in managing the system. The WHO notes a breakdown in information reporting, which has made distribution of funds, and investment and training, difficult. This has led to a lower quality of work, inefficiency and less-than-ideal use of available resources. Others argue that decentralisation led to inconsistent expenditure, as finance was largely left to the localities and some areas are much poorer than others.

Some indicators do suggest that the health of the average Indonesian has been worsening in recent years. This was not only the result of the 1997-98 crisis and decentralisation, but also general trends in terms of increased stress and worsening diets.

Diabetes affected an estimated 2.1% of the population in 2013, up from 1.1% in 2007. Hypertension affected 31.7% of the population, up from 25.8% in 2007, according to the Ministry of Health’s “Basic Health Survey”. Mortality from non-communicable diseases rose from 41.7% in 1995 to 59.5% in 2007.

Universal Health Care

The country has been working for more than a decade to implement universal health care. In 2004 Law No. 40 was passed, declaring that universal health care would be provided. However, it took years for the programme to be initiated, due in part to logistical difficulties, costs and resistance from employers, who will have to contribute toward coverage.

It took the intervention of the judiciary to push the programme forward. In 2010 the Social Security Action Committee (KAJS) sued the government because it had failed to implement the 2004 law. The KAJS won the action, and the central Jakarta court ordered that the coverage begin.

The programme started on January 1, 2014, with testing having taken place in three pilot areas – Aceh, Gorontalo and West Java – from July 2013. A total of 1700 hospitals are included in the programme, as well as 9000 community clinics.

According to the World Bank, the programme will cost between $13bn and $16bn per year once it is rolled out nationally in 2019. Funding will come from the budget and premiums paid. Formal workers will contribute 5% of their salary, with 1% coming from the worker directly and 4% coming from the employer. Workers in the informal sector will pay premiums of between Rp25,500 ($2.55) and Rp59,500 ($5.95) per month, with the higher rates gaining the person covered a higher standard of hospital room.

Attracting Criticism

The system has many critics. According to The Jakarta Post, the roll-out has not been smooth. Hospitals are still demanding payments from patients, because they are concerned that the government will be late in reimbursing them. In the past, the government has taken up to a year in some cases to transfer funds to hospitals for treatment given under official programmes, and hospitals are seeking to protect themselves.

The introduction of free health care has been characterised by confusion. Patients do not seem to understand the system. To get treatment at specialist hospitals, they are supposed to get a referral first. This is done to limit overcrowding and prevent people from using hospitals for primary care.

However, when free health insurance for the poor became available in Jakarta in 2012, people flooded the hospitals, bypassing the proper procedure. As a result, service quality declined, according to reports in the local press. The budget for the education of both people and providers on how the project works and what it provides has been low – an estimated Rp20bn ($2m), versus the Rp1trn ($100m) that is needed, according to Hasbullah Thabrany of the University of Indonesia.


Service providers and administrators are also having difficulty understanding the programme. The payment system has been changed, which is causing confusion at all points in the process, from the Social Security Management Agency to the government and hospitals. Charges were previously made on a fee-for-service basis. Now they are made on a fee-for-diagnosis basis, resulting in administrative bottlenecks throughout the system.

In its initial stages, the programme does not actually do much that was not already done. It simply cobbles together a number of different schemes which already cover about the same number of people. Jamkesmas, originally called Askeskin, was formed to insure the poor. Some districts also created their own organisations, called Jamkesda, to provide health care for the near-poor. According to the US Agency for International Development, all the programmes put together, including the system for military personnel and voluntary health insurance, covered half of the country by 2008. By 2013 the number of insured was an estimated 65% (Jamkesmas had 86.4m members, up from 76.4m just a year earlier).

Most of all, critics of the system say that payments, when they are made, are too low to cover treatment. The government pays Rp19,225 ($1.92) per month per eligible low-income individual to cover hospitalisation. However, this level was set in 2004, and costs have greatly increased since.

According to Hasbullah, the minimum payment should be Rp54,000 ($5.40) per covered person per month. He said that if the amount is not increased people could lose faith in the system, and that the higher payments could encourage greater private participation in the sector.

Hasbullah also believes that the programme should not be totally free for the end users, as this encourages overuse, and does not incentivise people to consider whether they really need medical attention. However, the price should be low enough that it does not prevent people from seeing doctors – and perhaps waived altogether for the poor.

Doctor Shortage

Structural issues remain that cannot be solved overnight and may become more pressing as the number of patients increases.

For example, Indonesia is currently facing a severe shortage of medical professionals. It has been estimated that in the next decade, the country will need 10,000 more physicians, largely because of the introduction of universal health care.

At present, the country has only 0.3 physicians per 1000 people, compared with 1.2 per 1000 in Malaysia and 1.9 per 1000 in Singapore. Ali Ghufron Mukti, Indonesia’s deputy minister of health, said in 2013 that the ideal ratio in the country is 1 for every 2500 people, or 0.4 per 1000. That would mean increasing the number of doctors from 88,309 to 101,040.

Medical professionals are unevenly distributed throughout the country, which serves to exacerbate the shortage. According to the Indonesian Doctors Association, 60% of the country’s doctors are in Java. The main problems, according to the association, are the lack of proper medical facilities in remote areas and the low wages paid outside of urban centres. Its research indicates that doctors in rural Indonesia receive just above the nation’s minimum wage, so qualified professionals, particularly specialists, are not interested in working in these places.

In some ways, though, the country is a model of efficiency in terms of utilisation of its medical workforce. While it has a low number of physicians, the structure of the system helps leverage skills and take care of people, even as the numbers rise due to the introduction of universal care and earlier schemes. Expectant mothers, for example, have received free care related to pregnancy since 2011 under the Jampersal programme. And while demand has risen, the system has been able to handle the uptick in usage.


The country utilises an integrated model for care. Midwives, who used to handle only delivery, now provide a wide range of services. They offer pre-natal care, blood work and ultrasounds, and can independently handle low-risk pregnancies.

The midwives act as the service gatekeepers. They receive a bundled payment from the government per patient to provide a full range of services and only refer to the physician, under which they are registered, in the case of complications or high-risk deliveries. The programme appeared to have improved both services and outcomes in its first two years. Attended deliveries in the country rose from 73% to 83%, while deliveries in health facilities jumped from 46% to 63%. In that two-year period, infant mortality dropped from 34 per 1000 to 21.

As of 2012 the country had 93,889 midwives, according to UN Population Fund figures. It has a full system in place for the licensing of midwives and the accreditation of midwifery institutions, of which there are 436 in the country. When all health care professionals are taken into account, including doctors, nurses and midwives, the rate of coverage is much better that the oft-quoted headline physician rate: 2.3 per 1000. The UN also notes that 93% of new mothers receive at least one antenatal checkup and 82% receive four antenatal check-ups.


The situation with nursing is more complicated. While some hospitals report a shortage, the country has unemployed nurses and is an exporter of these professionals. Historically, it has had one of the highest ratios of medical support staff to doctors. According to a 2011 article in The Lancet, the ratio of nurses and midwives to doctors was 6.8, by far the highest in the region. The global average is 2.1. In Malaysia, the number is 2.5. In Thailand, it is 4.6, in Myanmar 2.8. The ASEAN average is 4.7.

Private Participation

Indonesia is increasingly seen as a country of opportunity for care providers. Increased investment – the government will build 150 hospitals in 2014 – rising incomes, a large and young population, and growing problems with lifestyle-related diseases mean the makers and sellers of medical equipment and technology are viewing Indonesia as a good place for business development, according to Frost & Sullivan (F&S). In particular, the consultancy says the country is now of great interest for companies dealing in medical imaging, medical devices, health care information technology, pharmaceuticals and biotechnology. F&S predicts that Indonesia’s medical sector will double in size to $61bn by 2018. The pharmaceuticals segment, in particular, could be set for changes in the years ahead. “As wages rise, automation will take a larger role in pharmaceuticals manufacturing,” Elfiano Rizaldi, president director of Indofarma, told OBG.

Stemming The Flow

The government is particularly motivated as it sees medical tourists leaving – to places like Singapore, Malaysia, Thailand and the Philippines – as a drain on the country’s balance of payments. According to estimates by Edelman Indonesia, Indonesia may have lost $1bn in outflows to Malaysia alone in 2013, and maybe another $500m elsewhere. More than half of all medical tourists to Malaysia were from Indonesia, and the total number of people leaving the country for medical treatment is estimated to be over 1.5m per year.

By improving its domestic health care infrastructure, the country will be able to keep more of its people and their money at home. Also, given the cost base and the right investment, Indonesia may itself be able to attract some medical tourists.

Private participation is important. By the end of 2013, the indications were that most services for universal care would be handled by public hospitals. The private sector is waiting to see how much actually gets paid for services by the government, and how it gets paid, before committing to accepting patients under the programme. Yet if the country is to build the necessary infrastructure it will need funds from the private sector. Reimbursement rates need to be set at a level that the government can afford, but also one that attracts the full participation of the for-profit medical groups. The development of private health insurance may also help, as it would create an incentive to build more specialist hospitals.


Indonesia is undertaking a major transformation of one of the largest health care systems in the world. It will not be easy, especially in terms of funding and logistics. Yet it is important that the programme be implemented to improve the country’s health metrics, and ensure that its young and growing population is productive. Indonesia is investing not only in health but also in its economic future. For that reason, it has a good chance of succeeding. The country will likely become more efficient and effective in deploying its health care resources.

For international medical groups, the country will become a major target for business and investment. It needs equipment, technology and capital to build the sector. If the government allows for enough international participation on good terms, it will be a profitable and growing market for them.

Observers note, however, that the country has a small window of opportunity. It has the wherewithal and the political will to implement a programme that could take Indonesia on a path toward better overall health and productivity. However, if it fails to make the right investments or allow the right level of international participation, it may be hard to find the support to rebuild the system next time around.

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The Report: Indonesia 2014

Education & Health chapter from The Report: Indonesia 2014

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