The Impact of Health Insurance in Low- And Middle-Income Countries

Chapter 7: The Impact of Health Insurance on Use, Spending, and Health in Indonesia

122 The Impact of Health Insurance on Use, Spending, and Health in Indonesia Facundo Cuevas and Susan W. Parker Classified by the World Bank as a lower middle-income country, Indonesia had per capita gross national income of US$3,600 in purchasing power parity terms in 2008. With about half the population residing in rural areas, life expectancy remains fairly low—at 69 years for men and 73 years for women—and under-five mortality high—at 41 per 1,000 in 2008. Child vaccination remains far from universal: in 2008, 77% of children had received the full course DPT vaccination (three doses) by their 23rd month, a good metric for the performance of immunization programs. Total health spending was about 2.2% of gross domestic product (GDP) in 2008, about 55% of it public and 45% private (World Bank 2010). In this chapter, we study health insurance coverage and its relationship to health, health care use, access to services, and financial protection in Indonesia. For the empirical analysis, we use the 1993, 1997, and 2000 waves of the Indonesian Family Life Survey (IFLS), a multipurpose longitudinal household survey. (A more recent wave was collected in 2008 but was not available at the time of this analysis.) Observing outcomes and decisions of the same individuals over almost a decade provides a unique opportunity to understand the impact of insurance coverage and yields estimates that are purged of some of the most concerning sources of bias. Chapter 7 The Impact of Health Insurance on Use, Spending, and Health in Indonesia123 The Indonesian health system The Indonesian constitution stipulates that every citizen has the right to social security and emphasizes the role of the state in providing universal social security coverage. But coverage remains far from universal. The social security systems include Askes, a mandatory social health insurance program for civil servants, and Asabri, for police, military, and their dependents. Jamsostek insurance for private sector workers is theoretically mandatory, but firms can opt out if they provide similar health services. Askes covers an estimated 13.8 million people (plus 1.4 million commercial members), and Jamsostek 2.7 million (1.5 million of them workers). So formal health insurance schemes cover about 18 million people. Adding those covered by private or employer-funded health insurance, about 30 million individuals, or 15% of the population, are estimated to have health insurance. In September 2004 the Indonesian House of Representatives endorsed a law on the National Social Security System mandating several social security schemes for citizens: old-age pension, old-age savings, national health insurance, work injury insurance, and death benefits for survivors of deceased workers. The new scheme aims to cover all Indonesian citizens—whether formal or informal workers or selfemployed (World Bank 2010). The main program is Askes, which provides basic health benefits to poor individuals.1 The proportion covered by health insurance is remarkably constant over time, at about 15%, with a majority receiving coverage through the workplace in all three survey years. In 1993 we cannot disaggregate by type of coverage, but data from 1997 and 2000 show that most insurance is through Askes, then Jamostek. Nearly all insurance plans cover outpatient care and some hospitalization as well as some types of surgery. Usually there is an assumption of fairly static coverage of formal sector and government workers, that they get and retain insurance coverage upon entering a covered job. We discovered the opposite; in fact, our empirical strategy uses changes in insurance status among the same people to analyze the impact of insurance. Of those insured in 1993 (about 15% of the sample), only about two-thirds remained insured in 1997. Similarly, of individuals with insurance in 1997, only about two-thirds remained insured in 2000. Of the uninsured population in 1993 (86%), about 5% gained insurance by 1997, and of the uninsured population in 1997, about 5% gained insurance by 2000. In sum, whereas about 15% of the population is covered by health insurance in any round of the IFLS, only about two-thirds of them retain insurance coverage in the next wave of data collection. 124 Chapter 7 About 23% of the population is covered by insurance in at least one of the rounds. Only about 8% of the population are constantly insured. Overall, then, about 15% of the population have changes in insurance status—that is, are “sometimes insured.” This population is...