INDONESIA
HEALTH FINANCING SYSTEMS ASSESSMENT
SPEND
MORE,
OUTLINE
Background
Macro-fiscal Context
Population Health Outcomes
UHC
Health Financing
Overall Health Financing
Government Budgetary Supply Side
Social Health Insurance
OOP
External Financing
Indonesia has made significant progress…
LOWER MIDDLE INCOME WITH
THE GNI PER CAPITA:
US$3,238 (2015)
WITH POSITIVE
MACROECONOMIC OUTLOOK,
INDONESIA IS PROJECTED TO
ATTAIN UPPER MIDDLE
INCOME STATUS
IN THE NEXT
TWO YEARS
OVERALL
DECLINE IN
POVERTY
, BUT
RISING
INCOME INEQUALITY
Broadly conducive macroeconomic environment is
expected over the next five years
With economic growth
projected at a respectable
5-6% per year
Levels of deficit and debt appear to
be at manageable level
Despite economy growth and
poverty reduction: Level of
informality in the labor markets
remains high
OVER 60%
OF THOSE EMPLOYED
CONTINUE TO BE
CLASSIFIED AS
NON-SALARIED WORKERS
FISCAL DEFICIT AND DEBT to GDP RATIO, 2012-2015
0 25 60 150
-10
-20 10
0
Fiscal deficitto GDP ration (%)
100 20
Debt to GDP ratio (%)
Papua New Guinea
Nigeria South Africa Cambodia Rusia Solomon Islands Indonesia China Thailand Philippines Malaysia Brazil Ghana
India Sri Lanka Lao PDR
Government revenues are low …
NATIONAL REVENUE IS LOW:
17% of GDP in 2015
LOWER COMPARE TO BOTH
REGIONAL AND BY INCOME
GROUP
Centralized collection:
90%
RAISED BY CENTRAL LEVEL IN
2013, BUT EXPENDITURES ARE
HIGHLY DECENTRALIZED
Complex inter-fiscal transfers
DECENTRALIZED
SPENDING:
ASYMMETRY
BETWEEN REVENUE
COLLECTION AND
SPENDING
Transfer from
Central to Sub
national 6% of
GDP
~40%
of spending
at the regional level
SUB-NATIONAL GOVERNMENT REVENUES, 2013
LOCAL FINANCING
CATEGORY
Rp trillion
Share of total (%)
Rp trillion
Share of total (%)
Districts
Provinces
DAU
284
54%
31
15%
DAK
30
6%
2
1%
DBH
68
13%
32
15%
Own source
58
11%
102
49%
Other
88
17%
40
19%
Health is getting more attention with increase of share
government spending at central level …
CENTRAL GOVERNMENT EXPENDITURE BY FUNCTION, 2013-2015
Expenditure category
2013
2014
2015
IDR trillion Share (%) IDR trillion
Share (%)
IDR trillion Share (%)
General public services
706 62% 798 66% 695 53%Fuel subsidies
210 18% 240 20% 65 5%Electricity subsidies
100 9% 102 8% 73 6%Non-energy subsidies
45 4% 50 4% 74 6%Interest payments
113 10% 133 11% 156 12%Premiums for poor/near-poor
8 1% 20 2% 20 2%Economic affairs
108 10% 97 8% 216 16%Defense
88 8% 86 7% 102 8%Education
115 10% 123 10% 156 12%Health
18 2% 11 1% 24 2%Social protection
17 2% 13 1% 23 2%Other
86 8% 76 6% 103 8%POPULATION &
Indonesia have become healthier over the past
several decades
KEY POPULATION HEALTH OUTCOMES IN INDONESIA
Challenges still remains while undergoing a rapid
epidemiological transition
BURDEN OF DISEASE BY CAUSE IN INDONESIA, 1990-2013
CHALLENGES REMAIN
Maternal Mortality (MMR
126/100,000), SDGs target less than 70/100,000 live births by 2030
Stunting 36%, SDGs target to reduce by 40% by 2025
Communicable diseases continue growing and at the same time National commitments to achieve targets
Disparity of health outcomes
EMERGING CHALLENGES
Epidemiologic Transition:
Emergence of overnutrition; NCDs
Related to socio-demographic and lifestyle, including ageing
Injuries
9% 9% 8%
7%
43%
33%
27%
56%
49% 58% 66%
37% Noncommunicable Communicable P e rc e n ta g e o f d ist ric ts (% ) P e rc e n ta g e o f d ist ric ts (% ) P e rc e n ta g e o f d ist ric ts (% ) P e rc e n ta g e o f d ist ric ts (% ) 20 100
0 40 60 80
Institutiona l delivery rate (%)
20 100
0 40 60 80
4+ANC visits (%)
20 80
0 40 60
Stunting rate (%)
65
60 70 75
UNIVERSAL
HEALTH
Recently updated/elaborated UHC definition: “…ensuring that all people can
use the promotive, preventive
,
curative
,
rehabilitative
, and
palliative
health
services they need, of sufficient quality to be effective, while also ensuring
that the use of these services does not expose the user to financial hardship
.”
What is UHC?
Indonesia’s Performance is Mixed
WHO-WB UHC monitoring framework UHC Preventive Indicators
Country Family
planning ANC
Skilled birth attendance
DPT3 Tobacco
non-use Water Sanitation
Brazil 80% 96% 99% 93% 83% 98% 81%
Cambodia 51% 89% 71% 97% 76% 71% 37%
China 85% 95% 100% 99% 75% 92% 65%
India 55% 75% 67% 83% 87% 93% 36%
Indonesia 62% 96% 83% 78% 62% 85% 59%
Lao PDR 50% 53% 40% 88% 65% 72% 65%
Malaysia 49% 97% 99% 97% 77% 100% 96%
Philippines 49% 95% 73% 79% 73% 92% 74%
Russia 68% 100% 100% 97% 59% 97% 70%
South Africa 60% 97% 94% 70% 80% 95% 74%
Sri Lanka 68% 99% 99% 99% 85% 94% 92%
Thailand 79% 98% 100% 99% 78% 96% 93%
Vietnam 78% 96% 94% 95% 76% 95% 75%
East Asia & Pacific 48% 90% 83% 86% 71% 87% 67%
UHC Treatment and Financial Protection Indicators
Country
Prepaid/pooled share of total
health expenditure OOP<25% consumpti on Neither pushed nor further pushed
into poverty
Brazil 70% 97% 97%
Cambodia 40% 97% 83%
China 66% 87% 90%
India 42% 99% 72%
Indonesia 54% 99% 82%
Lao PDR 60% 100% 93%
Malaysia 64% 100% 99%
Philippines 43% 100% 78%
Russia 52% 100% 100%
South Africa 93% 100% 93%
Sri Lanka 53% 100% 99%
Thailand 89% 100% 100%
Vietnam 51% 95% 75%
East Asia & Pacific 76% 98% 87%
Lower middle-income 60% 97% 84%
Country ARV TB
Brazil 46% 59%
Cambodia 71% 59%
China 52% 85%
India 36% 50%
Indonesia 8% 28%
Lao PDR 30% 28%
Malaysia 21% 62%
Philippines 24% 73%
Russia 29% 56%
South Africa 45% 53%
Sri Lanka 19% 59%
Thailand 61% 45%
Vietnam 37% 68%
East Asia & Pacific 38% 60%
UHC is One of the Sustainable Development Goals
SDG 3.8:
“achieve
universal health coverage
, including financial risk
protection, access to quality essential health-care services and
access to safe, effective, quality and affordable essential
Outpatient and inpatient service utilization
Outpatient and inpatient utilization have increased,
especially among the bottom
40%
and at private
facilities
Indonesia Health System is Decentralized
MoH plays a stewardship role and operates
some secondary and tertiary hospitals
Provincial Health Office coordinates cross
district issues and run provincial hospitals
District Health Office manages primary health
care facilities and provide oversight over
privately provided care
Central Government & Parliament Central Hospital BPJS Ministry of
Home Affairs Ministry of Health
Provincial Health Office Provincial Government & Parliament Provincial hospitals District Government & Parliament District Health Office
Facility Readiness to Provide Health Services
2007 2014
0 20 40 60 80 100
Percentage (%) Medicine (eg. metformin)
Urine test Blood glucose test Stethoscope Measurement tape BP apparatus Adult Scale Training
Source: IFLS 2007 & 2014
Rural
Urban
0 20 40 60 80 100
Percentage (%) Medicine (eg. metformin)
Urine test Blood glucose test Stethoscope Measurement tape BP apparatus Adult Scale Training
Source: IFLS 2014
Only 70% of all puskesmas reported the ability to do blood glucose test, and only about 65% reported
HEALTH
FINANCING
Health financing is one of the lowest in the world, and far below what might
be expected for its income level and when compared with regional peers
Total health expenditure (THE) per capita was US$126
in 2014 or 3.6% of GDP
–
(LMIC 5.9%, while EAP 6.6%)
TOTAL AND PUBLIC EXPENDITURE ON HEALTH AS SHARE OF GDP IN INDONESIA, 1995-2014 TOTAL AND PUBLIC EXPENDITURE ON
HEALTH AS SHARE OF GDP VS INCOME, 2014
Total health expenditure per capita Share of GDP Public share Social health insurance share Out-of-pocket share External share
Brazil US$ 947 8.3% 46.0% 0.0% 25.5% 0.0%
Cambodia US $61 5.7% 22.0% 0.0% 74.2% 16.3%
China US$ 420 5.5% 55.8% 37.7% 32.0% 0.0%
India US $75 4.7% 30.0% 1.7% 62.4% 1.0%
Indonesia US$ 126 3.6% 41.4% 13% 45.3% 0.8%
Lao PDR US$ 33 1.9% 50.5% 1.6% 39.0% 31.8%
Malaysia US$ 456 4.2% 55.2% 0.6% 35.3% 0.0%
Philippines US$ 135 4.7% 34.3% 14.0% 53.7% 1.4%
Russia US$ 893 7.1% 52.2% 27.7% 45.8% 0.0%
South Africa US$ 570 8.8% 48.2% 1.2% 6.5% 1.8%
Sri Lanka US$ 127 3.5% 56.1% 0.0% 42.1% 1.3%
Thailand US$ 360 6.5% 86.0% 5.1% 7.9% 0.0%
Vietnam US$ 142 7.1% 54.1% 24.1% 36.8% 2.7%
East Asia & Pacific US$ 217 4.9% 49.9% 12.1% 40.5% 6.6%
Lower middle-income US$ 106 4.2% 44.4% 8.6% 46.5% 6.5%
HEALTH
FINANCING
Government budgetary expenditure are the
second-largest source of financing for health in Indonesia…
National government
budgetary expenditures on
health amounted to IDR
467,959 (~US$39) in per
capita terms in 2014
National government
health expenditure has
been rising also as share
of GDP and as share of
total national government
expenditures
WHO data indicate that Indonesia’s prioritization for
health is on the lower side in global comparisons….
Philippines, China, South Africa,
and Thailand devote a much larger
share of the budget to health
At 6.2%, Indonesia health’s share
of the national budget is low
relative to that of general
government administration
(~20%), subsidies (~20%),
education (~20%), and
infrastructure (~10%).
Health expenditure share of GDP
Public spending on health has been growing,
and demand side financing (PBI) contributed to the increase in
recent years
2
7
National Spending on Health (IDR trillion, nominal)0.6 0.6 0.8 0.7 0.6 0.8
1.0 0.9 0.9 0.9 0.9 1.0 1.0 1.1 2.9 3.5 4.3 3.9 3.5 4.2 5.2 4.5 5.3 5.6
5.2 5.2 5.4
5.9 0 1 2 3 4 5 6 7 0 20 40 60 80 100 120 140
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
% o f G DP na d n at io na l s pend in g ID R tr il li o n
Central - non-PBI, LHS Central - PBI, LHS
Districts, LHS Provinces, LHS
Total national health spending as % GDP, RHS Total national health spending as % national spending, RHS
Source: World Bank COFIS database using MoF data
District governments have increasingly taken a dominant role in
government health spending post-
decentralization…
Over half of government expenditures on health occur at the district level, up from less than an average of less than 10% pre-decentralization
The provincial share of government health expenditures has also declined: from an average of over 30% pre-decentralization to just over 15% post-decentralization.
The level of decentralization as reflected in government expenditures for health, in 2013, 57% of spending occurred at the district level, 36% at the central level, and 7% at the province level
Health represented about 10%
sub-national expenditures. At least in aggregate across districts, health meets the legally mandated health expenditures (10%)
…Huge variations across districts in government budgetary health
spending, both in levels and as share of district expenditures
Health’s share of the
district budget varies
(3% to over 18%),
with an average of
10% in 2013 (rapid
assessment in 44
districts)
HEALTH
FINANCING
JKN and Financing for Health
End of 2014 Revenue: 40.7 trillion IDR (US$ 3.4 billion) 50% from Government
financed poor/near poor (PBI)
JKN HEALTH EXPENDITURES (end of 2014)
43 trillion IDR (US$ 3.6 billion): half of national government health spending
US$ 27 per member per year,
(OOP US$ 50 /person/year; US$ 107/person/year in THE)
PLAN TO COVER ENTIRE POPULATION BY 2019
End of 2016 171.8 million (~60% of population,)
91.1 million non-contributory PBI (poor and near-poor)
50.5 million contributory salaried workers
19.2 million contributory non-salaried workers
Challenges with JKN: Population Coverage
Challenges in targeting of
non-contributory scheme
Leakage almost half of
PBI non-poor
Challenges in covering
non-salaried, non-poor
workers
~10% JKN member
Adverse selection, high
per person costs
Challenges with JKN: Benefit Package
“Comprehensive”, with list of
exclusions
E.g., services not following
appropriate referral; cosmetic
procedures; experimental
procedures
Implicit rationing
AVAILABILITY OF BLOOD GLUCOSE AND URINE TEST BY PROVINCE
Limitations linked to
supply-side, finance and FM capacity
constraints need to be
Challenges with JKN: Financial Protection
JKN has no cost
sharing….
OOP has NOT MUCH
decreased as coverage
increased
High OOPs in universal,
comprehensive UHC
point to system
constraints
HEALTH
FINANCING
OOP remains the largest share of THE
At 41.4% of total
health expenditures
was public
(government
budgetary and social
insurance
OOP also reported among those with insurance
About half of the population continues to
remain without social health insurance
coverage; About 43% of all OOP spending
reported came from these household
Annual OOP health spending to be a 2.1%
share of total household consumption
expenditure, with the richest has bigger
share
Economic status Coverage
Outpatient utilization Inpatient utilization OOP health as share of total expenditure With coverage Without coverage All With coverage Without coverage All With coverage Without coverage All
Bottom 40% 56% 17.2% 14.3% 16% 3.2% 1.8% 2.6% 1.6% 1.4% 1.5%
Middle 40% 54% 18.3% 16.7% 17.6% 4.7% 2.8% 3.9% 2.3% 1.9% 2.1%
Top 20% 65% 18.3% 17.9% 18.2% 6.3% 4.4% 6.3% 3.2% 2.7% 3.0%
The effect of out of pocket expenditure
Although OOP health spending is generally
regressive, this is not the case for Indonesia
PEN'S PARADE – IMPOVERISHMENT OOP SPENDING ON HEALTH BY ECONOMIC DECILE
Most of the impoverishing effects of health spending occur
right above the poverty line among the near poor.
HEALTH
FINANCING
Overall the share of external financing for HIV, TB, Malaria, and Immunization fluctuate and vey across
programs
External financing is a relatively small share of total
spending…..with
the EXCEPTION for KEY PRIORITY HEALTH
PROGRAMS
The share of domestic financing has been increasing for the past few years : HIV’s share of domestic funding
POLICY
To make substantial progress towards in service coverage and financial
protection in order to achieve UHC by 2019, Indonesia would have to
spend more, spend right
and
spend better
1. Ensure Adequate Public Financing for
.
UHC:
•
Critical to continue increasing
government health spending as a
necessary, but not sufficient, condition to
progress towards achieving UHC;
•
Challenges in increasing the fiscal space
but options available
•
Raise additional public financing for
health by i) increasing overall
government revenues through improved
tax collection and introduction of higher
sin taxes
ii) encourage labor formality iii)
reprioritize health in the government s
budget iv) increase enrolment of the
remaining formal sector
2. The following could be done related to
JKN:
•
Enroll non-poor by considering other
alternatives to socialization and raising
•
3. Integrate Supply-Side and Demand-Side
Financing to Improve Public and Private
Provider Supply Side Readiness:
•
Capitation payment to puskesmas should be
linked to MSS attainment
•
An appropriate level of autonomy for health
facilities coupled with enhanced capacity to
manage revenues;
•
Inclusion of private providers should also
focus on ensuring supply side readiness and
adequate capitation;
•
At the hospital level, diagnosis-related group
payments could be made conditional on the
adequacy of services provided.
4. Increase Focus on Primary Health Care,
including Prevention and Promotion:
•
Increasing NCD burden in Indonesia will lead
to greater fiscal burden, OOPE or forgone
treatment;
•
Most cost-effective interventions are usually
delivered at the population level as well as
the primary care level;
•
supply side intergovernmental fiscal
transfers as well as demand side financing
through capitation should be more focused
5.
Increase Effectiveness of
Inter-Governmental Fiscal Transfers to
improve quantity and quality of health
services, especially in remote and
lagging districts by:
•
Improving Local Government Capacity to
conduct PSM functions;
•
Ensuring Accountability by strengthening
M&E systems for independent
verification and using social
accountability;
•
Incentivizing Results through
non-financial and non-financial incentives for
districts achieving MSS.
6.
Sustain and Transition
Externally-Financed Health Programs:
•
Though only 1% of THE, these finance
several priority health programs,
including for HIV/AIDS, TB, malaria and
immunization;
•
A transition plan to ensure services
continue to be available and scaled up to
avoid adverse health outcomes;
Health Financing System Assessment team
Ajay Tandon (lead), Eko S Pambudi, Pandu
Harimurti, Emiko Masaki, Ali Subandoro, Puti
Marzoeki, Vikram Rajan, Darren Dorkin, Amit
Chandra, Chantelle Bodreaux, Melissa Chew,
and Nugroho Suharno
contact :
pharimurti@worldbank.org
