expanding universal health coverage in the presence … · this study reports that around 53.7% of...

Teguh DartantoJahen Fachrul Rezki

UsmanChairina Hanum Siregar

Hamdan BintaraWahyu Pramono

LPEM-FEUI Working Paper - 004 ISSN 2356-4008

EXPANDING UNIVERSAL HEALTH COVERAGE IN THE PRESENCE OF

INFORMALITY IN INDONESIA: CHALLENGES AND POLICY

IMPLICATIONS

LPEM-FEUI Working Paper

Chief Editor : I Kadek Dian Sutrisna Artha Editors : Riatu M. Qibthiyyah Setting : Rini Budiastuti

© 2015, November Institute for Economic and Social Research Faculty of Economics and Business Universitas Indonesia (LPEM-FEB UI)

Salemba Raya 4, Salemba UI Campus Jakarta, Indonesia 10430 Phone : +62-21-3143177 Fax : +62-21-31934310 Email : [email protected] Web : www.lpem.org

LPEM-FEUI Working Paper 004ISSN 2356-4008

c©LPEM FEB UI November 2015

Expanding Universal Health Coverage in thePresence of Informality in Indonesia: Challengesand Policy ImplicationsTeguh Dartanto1†∗, Jahen Fachrul Rezki2, Usman3, Chairina Hanum Siregar4, HamdanBintara5, & Wahyu Pramono6

AbstractThe implementation of national health insurance in Indonesia since 2014 has brought out the ”missing middle” problem inwhich the non-poor informal sectors have remained uncovered from the health care due to self-enrollment. Therefore,achieving UHC in Indonesia will take a long process, especially when the proportion of non-poor informal sector in totalpopulation is large enough. This study aims at examining three main issues that may have become obstacles for informalsectors to join the program: (1) observing supply side readiness, (2) examining affordable premium and willingness topay of informal sectors, and (3) exploring why informal workers have been reluctant to join the national health insurance.This study reports that around 53.7% of Sub National Government (SNG) faced a shortage of health facilities of 59,387beds, though in some regions had surplus of beds (per 1000 people). This study also finds that a single premium for allover Indonesia is unfair and unaffordable for some people living in eastern part of Indonesia. Observing 400 householdsworking in informal sectors and applying Triple Bounded Dichotomies Choice Contingent Valuation Method (TCCVM) toobserve the Willingness to Pay (WTP), this study finds that around 70% of respondents had the desire to join the healthinsurance, but their willingness to pay of the premium was lower than the current rate. The current premium seemedless affordable for informal sectors; thus, this created a barrier for them to enthusiastically join the new health insuranceprogram. Our econometric estimations confirm that availability of hospital, insurance literacy, experiences of inpatientsand outpatients, number of family member, sex of head of household, access to internet and household income arehighly correlated to the likelihood of informal sectors joining the national health insurance (NHI). Moreover, in contrastwith findings from many other studies, the insurance premium is surprisingly not the main reason for informal sectors tojoin the program; rather, the main obstacle is the lack of insurance literacy. Consequently, the necessary condition formandating informal sectors to join the program is an improvement of insurance literacy, while the sufficient conditions aresupply-side readiness and affordable premium. This study calls for a massive campaign to educate the public about theimportance of health insurance.JEL Classification: I13; I14; I38

KeywordsUniversal Health Coverage — Willingness to Pay — Informal Sector — Indonesia

1,2,3,4,5,6Institute for Economic and Social Research Faculty of Economics and Business University of Indonesia†Corresponding author: Jl. Salemba Raya 4 Jakarta 10430, Indonesia. E-mail: [email protected] [email protected].

Contents

1 INTRODUCTION 2

2 Review of the National Health Insurance (JaminanKesehatan Nasional) 3

2.1 A Single Carrier for National Health Insurance(BPJS Kesehatan) . . . . . . . . . . . . . . . . . . . . 3

2.2 Informal Sectors and Health Insurance . . . . . 4

3 Supply-Side Readiness 4

3.1 Service Availability . . . . . . . . . . . . . . . . . . . 43.2 Service Accessibility . . . . . . . . . . . . . . . . . . 7

∗This study was written based on the final report of “The Study onOptimal Financial Design for Universal Coverage on Health Insurancein Indonesia through A CGE Model Analysis”. All authors would liketo thank Japan International Cooperation Agency (JICA) for generouslyfunded this research. All views in this working paper are not related to anofficial view of either LPEM FEB UI or JICA. All remaining errors areauthors’ responsibility.

4 “Missing Middle” Problem of Universal Health Cov-erage in Indonesia 7

4.1 Premium: Fair and Affordable? . . . . . . . . . . . 7

4.2 Willingness to Pay of Informal Sectors . . . . . 11

5 Why are the Informal Sectors Reluctant to Join theNational Health Insurance? 12

5.1 Econometric Model . . . . . . . . . . . . . . . . . . 12

5.2 Results and Discussion . . . . . . . . . . . . . . . 12Health Facilities • Health Issues and Insurance Knowledge •Socio-Economic and Demographic Variables

5.3 Why do Not They Register? . . . . . . . . . . . . 15

6 Concluding Remarks and Policy Implications 15

6.1 Concluding Remarks . . . . . . . . . . . . . . . . . 15

6.2 Policy Implications . . . . . . . . . . . . . . . . . . . 20

References 20

1

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Expanding Universal Health Coverage in the Presence of Informality in Indonesia: Challenges and PolicyImplications — 2/20

Figure 1.

Milestones of Universal Health Coverage in IndonesiaSource: LPEM FEB UI, 2014

1. INTRODUCTION

Many low- and middle-income countries have heavily reliedon out-of-pocket health care expenditure, which representsa significant financial burden to households. The challengefor these countries is to modify their health financing systemin order to achieve universal coverage. The World HealthOrganization (WHO) has endorsed Universal Health Cov-erage (UHC) as an important goal for the development ofhealth financing systems. A well-designed health insuranceimproves the access to health care and protects against thefinancial burden of paying for medical expenses. In the longrun, the universal health coverage will improve human capi-tal as well as boast the sustainable economic growth (Figure1).

Universal Health Coverage (UHC) has remained a chal-lenge for Indonesia. The enforcement of the National SocialSecurity System (SJSN) Law No. 40/2004 and the SocialSecurity Providers (BPJS) Law No. 24/11 is a milestonefor Indonesian government to provide UHC for the peopleand therefore improve health financing and health care ac-cess. As of January 1, 2014, the Indonesian government hasimplemented the National Health Insurance (JKN) as theinitial stage for UHC. The challenge of Universal Coverageof Health Insurance (UCHI) in Indonesia is to mandate allIndonesians particularly self-employed people, workers ininformal sectors, unemployed people, and non-labor forceto embark in the JKN program.

As of January 1, 2014, Indonesian government has im-plemented JKN as the initial stage for UHC. Followingthe SJSN law, JAMKESMAS, ASKES, ASABRI, and JPKJAMSOSTEK, will be merged into a single scheme of healthinsurance called BPJS Kesehatan. In the beginning, BPJSKesehatan is expected to cover around 100 million of bene-ficiaries. The Presidential Decree No. 111/2013 stated thatby 2019, all Indonesians would have been covered by BPJSKesehatan. It means there are only five years left to bringUHC into reality. Therefore, the accomplishment of UHCwill be one of major challenges for the new administration

of President Joko Widodo1.UHC is expected not only to protect against financial

burden and increase access to health services but also tobe one of the policies to reduce inequality in Indonesia.Figure 2 shows that the 2013 Gini Index of health expendi-ture was around 0.6724; while the accomplishment of UHCwill significantly reduce inequality in terms of health ex-penditure. The hypothetical Gini Index based on the house-hold microsimulation of National Socio-Economic Survey(SUSENAS 2013) is 0.5039. UHC will present the unin-sured groups, especially those working in informal sectors,an equal opportunity to be provided with health services.Consequently, it will narrow the health expenditure gapamong societies in Indonesia. In the long run, reducing theGini Index of health expenditure will contribute to reducingthe national inequality index.

Few developing countries such as China, Ghana, In-dia, Thailand and the Philippines have implemented and re-formed their universal health insurance system before 2010.Thus, in terms of health insurance coverage, Indonesia isfar behind them. Even though the current health insurancetypes in Indonesia had covered around 72% of the 245 mil-lion people in 2012, the insurance system is still fragmentedand unstandardized. In pursuing the UHC, Indonesia hasaccommodated a single national carrier of health insurancescheme (the so-called BPJS Kesehatan).

Achieving UHC is a long process that will take severalyears, especially when the proportion of non-poor informalsector in total population is large enough. Non-poor infor-mal groups should voluntarily self-enroll to the programbecause they are not eligible to get the premium subsidies.However, due to several reasons, such as asymmetric in-formation, lack of health services, lack of knowledge, andincome, they may not enthusiastically register to the JKNor BPJS Kesehatan.

1The new administration of President Joko Widodo has demonstratedconcerns on UHC through the distribution of Kartu Indonesia Sehat (In-donesia Health Card) for the poor and near-poor family. This card is actu-ally similar to the previous card (BPJS Card) distributed to ex-Jamkesmas’recipient.


Figure 2. The Impact of UHC on InequalitySource: LPEM FEB UI’s Estimate

Under the current system, there are several challengesthat call for different policies to accomplish UHC in In-donesia. First, although the regulation clearly states thatenrolling in BPJS Kesehatan is mandatory, in practice, howto mandate uninsured people that are mostly self-employed,workers in informal sectors, unemployed people, and non-labor force is still questionable2. Those who self-enroll toJKN program are suspected as high-risk people. Second,how much is the suitable, fair and reasonable price of pre-mium? Current premium—a single premium for all overIndonesia—may create a barrier for people to join BPJSKesehatan due to expensive and unfair premium.

Third, supply readiness refers to the availability of healthfacilities or services, such as hospitals, doctors, paramedics,and pharmacies to provide health services to BPJS mem-bers. Lack of health facilities, unequal distribution amongregions and unequal quality of services are three importantissues that need to be urgently solved. Lack of health ser-vices availability and accessibility may create a barrier forpeople to join BPJS Kesehatan. Fourth, financing refers tothe fiscal burden of central government to accomplish UHC.The fiscal burden consists of three parts: fiscal needs forthe widening and improvement of health services and facili-ties, fiscal accountability to subsidize the premium for poor,near-poor, public officers, and fiscal risks to bailout BPJSKesehatan when the premium contribution is not adequateto cover the claim.

This study will deal with three main challenges: evaluat-ing the readiness of supply side, discussing the reasonable,affordable and fair premium and solving the problem ofmandating informal sectors. The fiscal burden, however,will be discussed deeply in a separate study. Therefore, theresults of this study may help Indonesian policymakers im-prove and expand the coverage. In spite of the possibility

2Uninsured groups should exclude poor and near-poor groupssince BPJS Kesehatan should have covered both groups through non-contributory scheme (Penerima Bantuan Iuran/PBI). However, some ofthem might not be covered by PBI due to exclusion and statistical errors indatabase as well as rapid change in household welfare.

that the characteristics of the program may be different withother countries, the findings will also provide valuable in-puts to other developing countries to ensure that informalworkers are enrolled in health insurance program.

The study proceeds as follows: Section 2 presents theoverview of health insurance program in Indonesia. Section3 provides the discussion of supply-side readiness. Section4 discusses the results and analysis of Willingness to Payof informal sectors to join the National Health Insurance(JKN). Section 5 explores why informal sectors have beenreluctant to join the program. The concluding section ofthe paper summarizes the key findings and discusses policysuggestions.

2. Review of the National HealthInsurance (Jaminan Kesehatan

Nasional)

2.1 A Single Carrier for National Health Insurance(BPJS Kesehatan)

There are six categories of Indonesian health insurancetypes, which consist of health insurance for the poor (JAM-KESMAS), social health insurance schemes for civil ser-vants (ASKES), health insurance for private employees(JPK JAMSOSTEK), traditional commercial health insur-ance schemes, managed care schemes (JPKM), and healthcare provided by employers (self-insured). Following theSJSN Law, some of the above health insurance schemeswill be merged into a single scheme, the national healthinsurance program known as JKN.

Such integration would yield several desired objectives,such as the realization of optimal function of the law thatcovers large number of population and ensures standardizedbenefits. The former leads to expansion of cross-subsidizationprinciple (both horizontally and vertically); creation of alarge pool of membership which will provide power for JKNto negotiate prices and quality of health care services withhealth care providers which in turn will push health care


costs down; improvement in efficiency since economies ofscale will be achieved; and a more appropriate risk predic-tion. The standardized benefit package avoids any potentialjealousy amongst the insureds with different schemes [1].

The attempt to merge the insurance schemes into a sin-gle national health insurance (JKN SJSN) started in 2014.This is in accordance with Law 24/2011 on the Social Secu-rity Administrative Bodies (BPJS). The BPJS Law mandatesthe BPJS Kesehatan (the transformation of PT ASKES) tostart its operation in managing national health program byJanuary 1, 2014. Under this scheme, all existing healthinsurance available in the country (JAMKESMAS, ASKESPNS, JPK JAMOSTEK, and insurance for the military) willbe integrated into a single a scheme. The JKN coverage willthen expand gradually to other groups, including informalsectors. The Presidential Decree No 111/2013 has set alist of target population that will be included in the JKNscheme.

The SJSN Law forces all residents to be registered inBPJS Kesehatan, regardless of the risks. Participants ofBPJS Kesehatan are every people who are living in Indone-sia—including foreigners who have been working for aminimum of 6 (six) months in Indonesia. There are twotypes of membership: i) non-contributory members (Pener-ima Bantuan Iuran/PBI): the poor and near-poor and peopleunable to pay the contribution3; ii) contributory members(non-PBI), consisting of (1) employees and members oftheir family; (2) self-employed persons (such as indepen-dent workers and other types of independent workers whoget paid) and members of their family; and (3) non-workers(retired persons and veterans) and their family members.

Figure 3 explains the types of members and contribu-tion in the new BPJS Kesehatan scheme. Wage recipientsand other categories (veterans and retired persons) have topay the premium as a percentage of monthly salary. Fornon-contributory recipients (PBI), the contribution is paidby the government. By 2014, the premium of PBI wasIDR19,225/capita/month (US$1.5) that will be regularlyreviewed considering socio-economic conditions. Contribu-tion for family members of non-wage recipients worker andnon-worker such as siblings/in-laws, household assistants,etc. are: IDR25,500 per person per month in treatment roomclass 3; IDR42,500 per person per month in treatment roomclass 2; and IDR59,500 per person per month in treatmentroom class 1. The package benefits are very generous, cover-ing all medical treatments and services without co-paymentif a patient follows the referral system. Table 1 shows thefacilities for each class.

2.2 Informal Sectors and Health InsuranceMandating all residents to enroll in JKN program (Jami-nan Kesehatan Nasional-National Health Social Security)at once seems impossible, so the proposed JKN will be im-plemented gradually. In first stage (say, 1–3 years), JKN canbe mandated to all formal workers and their family. After allformal workers are insured; the coverage can be expandedto other groups such as self-employed people (e.g., profes-sionals, retailers, etc.). The major difficulty, however, is to

3Poor and near-poor groups previously were covered by JAMKESMAS.The recipients of JAMKESMAS in 2013 were determined based on thePPLS (survey for social assistance program) 2011 database.

mandate workers in informal economy to join the JKN.Indonesian workers are dominated by informal groups,

which put the greatest challenge to the achievement of uni-versal coverage. In 2012, about 60.14% of all Indonesianjobs were in informal sectors. A substantial number of in-formal workers have remained without health insurance(for instance, about 32.5 million (paid) informal workerswere not covered by any health insurance schemes in 2014)[2]. Covering informal sector workers in JKN poses severalchallenges. Until now, there have been no certain criteria fora mandatory policy to request contributions from informalworkers in the JKN.

Two policy options currently exist to include the infor-mal sectors in the health insurance program: contributory vs.non-contributory. Thailand, for instance, has decided to sub-stantially extend contribution assistance and pay premiumsnot only for the poorest, but also for the whole informal sec-tors. Recent studies, such as from Thailand, however showthat paying contributions from government sources for allinformal workers can potentially lead to informalization andundermine the contribution-based system for formal work-ers in the long run. [3] suggests that in the case of Thailanduniversal coverage increased informal sector employmentby two percentage points after the reform, growing to 10percent over the first three years.

Other countries like the Philippines have tried to collectcontributions from informal workers; however, collectingcontributions from informal workers is extremely challeng-ing and potentially costly. The Philippines faced difficultyand complicated journey to universal population coverage,while Thailand has been more rapid and straightforward inachieving universal health coverage with the cost of infor-malization and fiscal burden. Now, Indonesia is followingthe Philippines’s pattern, that is trying to mandate all non-poor informal sectors to join the national health insurancethrough contributory scheme.

3. Supply-Side Readiness

3.1 Service AvailabilityThe availability and accessibility of health facilities arenecessary conditions to achieve UHC. Without accessiblehealth facilities, even if they have been covered by healthinsurance, people still could not use the services. Govern-ments can easily distribute free health insurance for thepeople within short period of time, but it will be very dif-ficult to provide accessible health facilities immediately toentire regions. Consequently, government should focus notonly on how to provide social health insurance but also howto improve and widen health facilities to support UHC.

In a diverse country like Indonesia, the analysis ofsupply-side of health services should not be carried outat the national level, since it will mislead the policy guid-ance. Many regions, especially those in Java, have fulfilledthe minimum standard of health facilities, while other re-gions especially in the remote and eastern part of Indonesiaare still struggling to fulfill the supply gap. At the nationallevel, Indonesia has had hospital bed surpluses, and by 2013,the total bed surpluses were around 96,975 beds per 1000people. If we look at the condition of sub-national level, to-


Figure 3. Contribution of JKN MembersSource: Authors’ compilationa

aNote: Any additional family members such as parents and parents in law may be registered with a contribution rate of 1% per person per month.


Table 1. Facility Classification for Each Type of Class*Facilities Class 1 Class 2 Class 3

Number of Patients in each Room 2 patients 4 patients 6 to 8 patientsPatient Meals 3 x 3 x 3 xPatient Drink 1 x 1 x 1 xNumber of Bathroom 1 1 1Bathroom Location Inside the patient room Inside/outside patient room Inside/outside patient roomGuest Sofa 3 7 7Bedside Cabinet 3 3 3Over-bed Table 3 3 3Air Conditioner/Fan AC/Fan AC/Fan AC/FanTV 3 3 3/7Premium/capita/month IDR59,500 IDR42,500 IDR25,500

US$4.58 US$3.27 US$1.96Source: BPJS Kesehatan, 2014Note: The information in this table is based on the facilities provided by most hospitals in Jakarta, West Java and Central Java.Note: (*) Every hospital offers different facilities for each class.Note: US$1 = IDR13,000 (exchange rate in March 2015).

Figure 4. Bed Condition in Hospitals and Primary Health Facilities in Indonesia(By 1000 Population) – Condition in 2013 Source: LPEM FEB UI’s estimate, 2014


tal shortage of facilities amounted to 59,387 beds per 1000people. Around 53.7% of Sub-National Government (SNG)faced bed shortage. Since beds are not transferable goods,every SNG has to fulfill the minimum requirement of beds.

Figure 4 shows bed condition in hospitals and primaryhealth facilities per 1000 population in 2013 for each provincein Indonesia. The Ministry of Health stated that the idealbed ratio over the population is around 1:1000. On nationalaverage, the shortage occurred in 53.7% of total regions inIndonesia or about 267 municipalities. Furthermore, manyregions in Indonesia had hospital bed surpluses, such asJakarta (12,643 beds surplus), Yogyakarta (7,462 beds) andRiau Islands (1,007 bed surplus). On the other hand, therewere regions with bed shortages, such as Southeast Su-lawesi (58.3%), Gorontalo (66.7%), Central Java (60%),South Kalimantan (69.2%), and Papua (51.7%).

Unfortunately, there is no data related to bed condi-tion in hospitals and public health centers (Puskesmas) atregency level. In fact, the bed shortage still occurred in re-gencies located in surplus provinces. For instance, in DeliSerdang Regency, based on our in-depth interview with lo-cal general hospital officer, they still needed a lot of beds;even though in general, North Sumatra had 73.3% bed sur-plus. This condition reflects that there has been unequaldistribution of health facilities among regions in Indonesia.Notwithstanding the national health insurance system al-lowing BPJS cardholders to utilize health facilities in otherregions, it will be very inconvenient and costly due to poorcooperation among regions in Indonesia. This conditionmay create barrier for those living in the area with shortageof health facilities to join BPJS Kesehatan.

[4] also observed the readiness of supply side of healthservices. Most provinces in Java (except the southern partsof West Java and Banten) and Bali were 100% ready to sup-port UHC, while other areas in Papua, Maluku, Kalimantan,and some parts of Sulawesi and Sumatra were relatively notready to support the implementation of UHC (Figure 5).

Table 2 confirms that around 2.8% of population did nothave access to primary care, while almost 15% of populationdid not have access to secondary care (hospital). At the sametime, almost 20% of village did not have midwife. Althoughthe government provides free health insurance (universalhealth care), it does not necessarily mean people can usehealth services.

3.2 Service AccessibilityThe availability of health services may deter the wideningof UHC coverage in Indonesia. Another issue regardingsupply side is the accessibility of health services. Healthfacilities may be available in certain areas, but these maynot be accessible for some people due to the distance to thefacilities. Both availability and accessibility of health facili-ties create disincentives for uninsured groups to join BPJSKesehatan and reduce the utilization of health services.

Our study confirms the common knowledge that there isa negative correlation between distance to health facilitiesand utilization. In Indonesia, the average distance to publichospital in 2014 was 29.32 km (with a standard deviationof around 22.45 km), while the average distance to publichealth center (Puskesmas) was around 8.17 km (with a stan-dard deviation of around 6.9 km). The distance is quite far

in a country like Indonesia where the transportation sys-tem has not been well-developed. In fact, even people ineasternmost part of Indonesia have to go through longerdistance to hospital and Puskesmas. Furthermore, as if it isnot bad enough, they still have to come across poor roadinfrastructure which results in longer travel time to the hos-pital. These are obvious stumbling blocks for people whoare still yet to join BPJS Kesehatan. They do not enroll inBPJS Kesehatan to get all the benefits because they needextra efforts to reach health facilities, such as longer traveltime and considerable transportation cost.

4. “Missing Middle” Problem ofUniversal Health Coverage in Indonesia

In the first step toward UHC, this scheme covers the poorand near-poor groups and formal sector workers; therefore,Indonesia, like other countries, faces the “missing middle”problem where the enrollment of low-income groups (poorand near-poor) and formal workers (high-income group)is relatively high. This is because the former groups arecovered through government-financed insurance scheme(ex-JAMKESMAS) while the latter group is primarily underemployer-based insurance schemes (ex-ASKES, ASABRI,JAMSOSTEK)4. The informal sectors therefore often re-main uncovered from health care services for shorter orlonger period. Recent data show that the number of self-enrollment of informal sectors was only 9.8 million outof 100 million. Table 3 shows the coverage of BPJS Kese-hatan’s membership.

This number is not sufficient to achieve the universalcoverage in 2019 as stated in the Presidential Decree No.111/2013. Under the current enrollment rate, the universalhealth coverage will be accomplished between 2034–2044[2]. The current rate is very slow compared to the ideal rateto achieve the target in 2019. 16 million registrations peryear are needed to achieve the target in 2019 (Figure 8).

4.1 Premium: Fair and Affordable?The supply-side problems are one of the obstacles to ac-complish UHC in 2019. Nevertheless, the problem does notonly lie on supply side but also on demand side, such asexpensive premium. Even though the premium of healthinsurance is set to follow the actuarial basis, the currentpremium might be too expensive for some people especiallythose working in informal sectors; therefore, they cannotafford the BPJS Kesehatan insurance. Moreover, the cur-rent premium system—uniform premium for all regionsin Indonesia—may be unfair due to differences in socio-economic conditions among regions5. Therefore, we needto examine whether the premium of BPJS Kesehatan isaffordable and equitable for the whole society.

This study uses the ratio between BPJS premium forthird class and monthly health expenditure per-capita (drawnfrom SUSENAS 2013) to examine the reasonable premium

4The current policy suggests that the government not pay for contribu-tions for informal sector workers who are not poor or near-poor.

5The BPJS Kesehatan’s premium stated in this chapter is for the volun-tary members (Peserta Mandiri/Perorangan).


Figure 5. Supply-Side ReadinessSource: Infrastructure Cencus 2011 [4]

Table 2. The Lack of Health ServicesMembership Total National Gap

Number of citizens without access: primary care 6.23 MillionNumber of sub-districts without Puskesmas 383Number of citizens without access: secondary care 35.97 MillionNumber of districts without hospital 42Number of citizens without access: delivery facility 6.77 MillionNumber of sub-districts w/o delivery facility 222Number of Puskesmas without physician 732Number of villages without midwife 14,842Number of Puskesmas without water installation 852 (9%)Number of health facilities without electricity 10,629 (14%)

Source: Infrastructure Cencus 2011 [4]

Figure 6. Distance and Utilization of Health FacilitiesSource: LPEM FEB UI’s estimate, 2014


Figure 7. Distance to Health FacilitiesSource: LPEM FEB UI’s estimate, 2014

Table 3. Coverage of MembershipMembership Number

Non-Contributory Member

A1 Ex-Jamkesmas 86,400,0002 Ex-Jamkesda 8,976,308

Sub Total 95,376,308

Contributory Member

B1 Formal Workers

a. Public Officials 11,577,254b. Military 2,625,518c. Policed. State-Owned Enterprise Employee 128,297e. Local State Owned Enterprise Employee 270,415f. Private Employee 3,242,236g. Private Employee (Ex-Jamsostek) 7,756,720

2 Informal Workers 9,877,9353 Non-Labor Forces

a. Pensioners (Ex-Public Officials) 4,409,808b. Veteranw 429,782c. Freedom Fighters 2,723d. Pensioners (Ex-Private Employers) 42,062e. Others 926

Subtotal 40,363,676

Total 135,739,984Not Enrolled 109,876,906Total Population 245,616,890

Source: BPJS Kesehatan, January 2015


Figure 8. Achieving Universal Health Coverage under Different ScenariosSource: LPEM FEB UI’s estimate

Figure 9. Health Cost of Non-Poor Formal-Informal Sectors by Province Source: LPEM FEB UI’s estimate based on SUSENAS 2013


Figure 10. Health Costs of Uninsured and Non-Poor Informal Sectors by Province Source: LPEM FEB UI’s estimate based on SUSENAS 2013

price as well as the equity of it6. In general, to pay for BPJSthird-class premium, non-poor groups working in informalsectors have to spend only around 75% of their monthlyper-capita health expenditure. It means that having healthinsurance is much more beneficial for these groups sincehaving the insurance means reducing out-of-pocket healthexpenditure7. However, the national average may not besufficient to describe the perfect condition of Indonesia.Looking at regional level, the ratio varies widely acrossprovinces. Non-poor groups working in informal sectorsand residing in North Maluku have to pay about 2.2 timesmore money than their monthly health expenditure, whilethose who live in DKI Jakarta only have to pay around 0.3times (Figure 9). Hence, people in Jakarta should imme-diately register to BPJS Kesehatan to reduce the financialburden of health care.

Figure 10 provides an in-depth overview of third classBPJS premium ratio to average monthly health expenditureof non-poor, uninsured informal groups. The ratio shownin Figure 9 and 10 is not too different in which the east-ern parts of Indonesia, especially Papua, Nusa Tenggara,Maluku and Sulawesi, have to pay a relatively higher pre-mium than those living in western parts of Indonesia. Figure9 and 10 have shown that the premium is too expensive forsome regions and too cheap for other regions. The currentpremium system, the uniform premium, seems to be in-equitable for some parts of society. It appears that there is aresource transfer from the eastern parts of Indonesia to thewestern parts of Indonesia.

6The monthly health expenditure per-capita refers to out-of-pockethealth expenditure drawn from SUSENAS 2013.

7Low health expenditure per-capita may indicate low utilization ofhealth services.

4.2 Willingness to Pay of Informal Sectors

We have examined whether the premium is reasonable andequitable enough according to the secondary data. How-ever, we still need more in-depth analysis from households’(non-JKN Member) perspective on whether the current pre-mium is affordable enough and whether they would like tojoin the BPJS Kesehatan with the current premium system.This study uses the Triple Bounded Dichotomies ChoiceContingent Valuation Method (TCCVM) format to examinewillingness to pay (WTP) of households working in infor-mal sectors. The WTP provides information of whether thecurrent premium is affordable enough and whether theywould like to join the BPJS Kesehatan with the currentpremium system.

This format is the modification of double-bounded di-chotomies proposed by [5] to elicit WTP by rural house-holds for the proposed community-based healthcare prepay-ment scheme. This approach theoretically has properties forincentive compatible or truthful revelation of preferences.The use of this format minimizes the occurrence of many bi-ases that sometimes occur in contingent valuation. Anotherstudy by [6] uses contingent valuation method to assess thewillingness to pay of households in the informal sector ofGhana to join and pay premiums for a proposed NationalHealth Insurance scheme.

The method has the advantage of higher statistical ef-ficiency in welfare estimates over the single and doublebounded model. In TCCVM, three sequences of bids are of-fered to the respondents. First, a respondent is asked whetherhe or she would be willing to accept an initial offer. There-after the second bid is offered. Depending on the respon-dent’s answer to the first bid, the second bid can be moveddownwards and upwards. The third bid will have the similarprocedure with second bid. If the respondents are willing


to accept the second offer, he or she will be offered withhigher bid, vice versa.

If he or she accepts the initial bid for class in BPJS(Bi

1), the second bid will be higher than the first bid (Bh2).

Furthermore, if the respondents are willing to pay for thesecond bid, then the third bid will be higher than the secondbid (Bhh

3 ). Otherwise, if the respondents are not willing topay the initial bid, he or she will be offered lower secondbid (Bl

2). If they do not want to pay for the bid, the third bidwill be the lowest offer (Bll

3 ). Therefore, there will be sixresponses: ‘yes-yes-yes’; ‘yes-yes-no’; ‘yes-no’; ‘no-yes’;‘no-no-yes’; ‘no-no-no’.

Three flowcharts above explain the steps used in thisstudy to capture the willingness to pay for each class. Dur-ing the first step, we explained the national health insurancesystem in Indonesia as well as BPJS Kesehatan. We also ex-plained the benefits of being a member of BPJS Kesehatan.Next, a respondent was asked for her or his response onwhether they would accept the premium of first class. Thesame procedure was applied for other classes.

From our survey in three regions (Deli Serdang District-North Sumatera, Pandeglang District-Banten Province, andKupang Districts-East Nusa Tenggara, there were around70% of respondents or around 280 households willing tojoin the program. Figure 12 shows that most of the house-holds working in informal sectors were willing to pay forclass 3. Around 191 respondents had a tendency to enroll inthe program. There were no differences in number betweenhousehold who were bound to join class 1 and class 2; how-ever, most of the respondents tended to join class 1 ratherthan class 2.

Around 11% of the respondents were willing to acceptthe first bid of IDR59,500 and 89% of them were not. Weconducted the second and third bidding following the mech-anism in Figure 11. There were around 13.25% of the re-spondents willing to join class 1. The average premium thatthey would like to pay for class 1 is around IDR61,740. Forthe second class, there were 6.34% of respondents willingto accept the first bid of IDR42,500 and 93.66% who werenot. After three bids, around 10.37% of the respondentswere willing to join class 2. The average premium that theywould like to pay for class 2 is around IDR40,685. ThisWTP is only 90% of the second class premium. The WTPof the second class ranges from IDR34,000 to IDR51,000.

For the remaining round, there were 54.66% of respon-dents willing to accept the first bid of third class premiumand 45.34% who were not. This indicates that the thirdclass is more favorable than other classes. Since being sickor hospitalized is a rare event and considering the incomefluctuation, households working in informal sectors preferto pay for the minimum premium, although the first andsecond class premium are still affordable for them. Around61.41% of those unwilling to join the first and second classwere willing to join the 3rd class. The average premiumthat they would like to pay for class 3 is around IDR22,368.The initial premium offered by the government is slightlybeyond their ability to pay. In some cases, some people canonly pay for around IDR10,000 for class 3.

From this survey we can also see that most householdsin informal sector do not have big difficulty to pay. Accord-ing to the survey there is no big gap between the mean for

the lowest premium for class 3 that they were willing topay and the premium that they have to pay. However, theremaining problem is that around 30% of respondents werestill unwilling to join the program. This condition wouldhinder the accomplishment of UHC in the future.

5. Why are the Informal SectorsReluctant to Join the National Health

Insurance?

5.1 Econometric ModelAfter observing the WTP, we then tried to estimate the rea-sons/determinant factors of households joining the programusing logistic regression. The econometric model is shownbelow:

WT P(OrderedWT P) = Xβ + ε (1)

where WTP is willingness to pay for joining NHI (ei-ther joining for third class or second class or first class);Ordered WTP is responses ordered in sequence according totheir preferred class; X is vector of explanatory/independentvariables such as socio-economic variables, demographicvariables, health facilities, insurance knowledge, etc.; ε is anerror term. We also estimated the ordered logit to examinethe determinants/reasons of why respondents chose the first,second, or third class. Applying both logistic regressionand ordered logistic regression will confirm the consistencyof estimations, whether determinants are the same in bothmethods. The variables used in the econometric estimationare shown in Table 4.

Table 4 also shows the information of respondents. Char-acteristics of respondents are as follows: 41.5 years old,having completed 9 years of education (66%), belonging tolow middle-income group due to only 19% of them havingmore than IDR 3.5 million of income per month, havinglittle access to internet, having around four family members.In terms of health facilities, most of them have access tomedical doctor in the village/district (66.5%) and hospitalin the district (34.5%). In terms of health issues and insur-ance knowledge, most respondents are very dependent onhospital as the first treatment when they feel sick (41.5%).Around 13.3% of respondents have been inpatients withinthe past year, while around 26% of them have been outpa-tient within the past month. Only 10% of respondents havehad a health insurance previously, while around 73% ofthem have been informed about BPJS Kesehatan.

5.2 Results and DiscussionOur econometric estimation results are shown in Table 5,6, and 7. Table 5 provides the econometric results of lo-gistic regression model where the dependent variable iswillingness to pay for NHI. WTP attempts to reveal therespondents’ willingness to join the program without dis-tinguishing whether they prefer specific class. Furthermore,Table 6 shows the econometric results for ordered logisticregression model while Table 7 shows the marginal effect.Unlike the previous model, ordered WTP examines thateach respondent responds differently to each class of theprogram. Overall, the estimate models fulfill the statisticalrequirements of a good estimation. The Chi-Squares shows


Figure 11. Flowchart of Willingness to Pay for Each ClassSource: Authors, 2014

Figure 12. Household’s Willingness to PaySource: calculated based on LPEM FEB UI survey in 2014


Table 4. Descriptions of VariablesVariables Description Mean

Dependent Variables

WTP A dummy variable representing willingness to payof all respondents

1 if yes for joining either third or second or firstclass, 0 if otherwise

0.7

Ordered WTP A rank of household preference representing thewillingness to pay for class

1 if unwilling to join, 2 if joining third class, 3 ifjoining second class, 4 if joining the first class

2.055

Explanatory Variables

Health FacilitiesMedical Doctor Medical doctor in the village/district 1 if doctor is available, 0 if otherwise 0.665Hospital Availability of hospital in the district 1 if hospital is available, 0 if otherwise 0.345

Health Issues and Insurance KnowledgeFacility for first treatment Preferred health facilities for first treatment when

respondents feel sick1 if hospital, 0 if otherwise 0.415

Inpatient Inpatient in the past one year 1 if having experience, 0 if otherwise 0.133Outpatient Outpatient in the past one year 1 if having experience, 0 if otherwise 0.26Health Insurance Family member having insurance in the past 1 if having health insurance in the past, 0 if other-

wise0.1

Knowledge of BPJS Kesehatan Respondent’s understanding of health insuranceprogram

1 if knowing BPJS Kesehatan, 0 if otherwise 0.73

Demographic and Socio-economic VariablesAge Age of respondent Year 41.5Sex Sex of respondent 1 if male, 0 if female 0.475HH Number Number of household (HH) members Number of HH 4.18Income Income of respondent 1 if above or equal to IDR 3.5 million, 0 if other-

wise0.19

Internet Internet access 1 if having internet access, 0 if otherwise 0.202Education A categorical variable representing average educa-

tional level of respondent1 if completed at least 9 years of schooling, 0 ifotherwise

0.666

Source: Authors

that our model is statistically significantly different to thenull model with no predictors. The estimate coefficients inboth Table 5 and 6 are also consistent in magnitudes.

5.2.1 Health FacilitiesThe availability and accessibility of health facilities are nec-essary conditions to achieve universal health coverage. Theavailability of health facilities might attract uninsured infor-mal sectors to join the NHI program. Our study confirmsthat the availability of hospital at district level is positivelycorrelated to the likelihood of respondents’ willingness topay/join the program, whereas the marginal effects for thisvariable is around 16.5. If health facilities have been estab-lished in such area, people may be interested to self-enrollin the NHI program in order to utilize medical services atlower costs through health insurance. On the other hand, nohospital means lack of opportunity to use health services,hence no incentive for people to enroll in NHI. This callsfor the government to improve health services in order toattract people to join the program.

Unlike hospital facilities, medical doctors have signifi-cantly negative association with willingness to join the pro-gram. If a medical doctor is available in the village/district,probability of joining the program will fall by 26.5. Themain explanation for this negative relations is the cheapercost of medical treatment done by a doctor in the village/districtthan the cost of insurance premium. In some cases in ruralareas, instead of paying with money, a patient can makein-kind payment (rice, banana, chicken) to the doctor. Ourin-depth interview also confirms that visiting directly to

community health service (Puskesmas) or a doctor’s privateclinic costs around IDR5,000–20,000 (US$0.4–1.7), whichis cheaper than the third class monthly premium. Sinceillness is a rare event, they may not frequently utilize in-surance for medical treatments. Therefore, the availabilityof doctors may not provide enough incentive for informalsectors to join NHI since visiting doctor is cheaper andmore convenient for them. This finding does not mean thatthe government does not need to increase the availabilityof doctors at the village level. Instead, the government maycreate a better system in which the cost of medical treatmentwith insurance should be lower than that without insurance.

5.2.2 Health Issues and Insurance KnowledgeRespondents with inpatient treatment within the past year ofthe survey were eager to join the NHI program. The proba-bility of joining the program increases by 12.9% (Table 7)for every respondent with experience of inpatient treatment.Moreover, respondents with outpatient experience withinthe past month also have higher probability to join NHIthan those with no experience. Their probability to join theprogram increases by 15.1%. This is because the spendingfor both inpatient and outpatient treatment is quite expen-sive for informal sector workers. By joining the program,they will be able to reduce the expenditure for those circum-stances. Both findings indicate that people having a highhealth risk tend to join the program to reduce the burden,while more healthy people may not be interested to joinNHI due to the burden to household expenditure. If thiscondition continues to happen, then NHI program will not


be fiscally sustainable.Having had insurance in the past is also highly corre-

lated to the likelihood of respondents’ willingness to jointhe program. The experience of having insurance in thepast will increase respondent’s willingness to pay for theprogram significantly, especially in ordered logistic regres-sion. Moreover, respondent’s knowledge related to BPJSKesehatan does play an important role in increasing theirwillingness to join NHI. Based on Table 7, if the respondenthas a basic knowledge about insurance and BPJS Kesehatan,then the probability of he or she joining the program willincrease by 9.5%. This can be the concern of the regulatorsand government to campaign for the importance of healthinsurance and the existence of NHI program.

As another interesting finding, those highly dependenton hospital as the first treatment when they feel sick (hospital-minded people) have the probability of joining NHI by 8.7%.This behavior is economically rational since the treatmentat hospital is likely expensive than either a self healing orgoing to community health facilities. Therefore, joining theNHI program will reduce the cost of health treatment. Thecurrent NHI program applies a referral system in whicha patient cannot directly visit a hospital for medical treat-ment without any referral from clinic, doctor, or communityhealth service as the first medical treatment facilities. How-ever, our survey shows that almost 41% of respondentspreferred hospital as the first treatment when they feel sick.This means that there is an urgent need to massively social-ize the importance of referral system.

5.2.3 Socio-Economic and Demographic VariablesAccording to the estimation results, both results from logis-tic model and ordered logistic model shows that the num-ber of household members negatively affects respondent’sdecision to join the program. An increase in the numberof household members will lead to lower probability ofjoining the program since a household has to allocate ex-tra resources to pay for the premium. Another interestingfinding in the demographic category is gender or sex. Ourestimations suggest that gender is consistent and significantin explaining respondents’ willingness to pay. If the sexis male, the probability to join the program will decrease.Our marginal effects find that if the gender is male, theprobability to join the program will decrease by 17.8%. Itmeans that health insurance is partially important for maleand extremely important for female.

In the socio-economic variables, level of income posi-tively influences respondents’ willingness to pay for healthinsurance. The higher the level of income is, the more will-ing respondents are to join the program. This result makessense since level of income is a dominant factor in deter-mining people’s willingness to pay. The results show thatfor both estimations, the probability of respondents to jointhe program will increase by around 13.2% if they have anincome level of above IDR3.5 million.

Having access to the Internet will increase the probabil-ity of respondents joining the program by 11.2%. However,there is no impact on education attainment and probabilityto join the program. These two results mean that access toInternet may probably change people’s lifestyle and way ofthinking. As such, people who frequently access the Internet

usually have better knowledge of the importance of stayinghealthy. Well-informed people tend to comprehend the netbenefit of health insurance.

5.3 Why do Not They Register?According to our survey using revealed preference approach,most respondents were willing to join the BPJS Kesehatan.However, one interesting question that comes out is whythey do not register to the program. The main reason isbecause they do not know about the program. The numberof people with this answer to the question is around 39%.It is quite similar with the number of people who do nothave enough knowledge about universal coverage healthinsurance in Indonesia (UHC). Several other reasons includethe following (Figure 13): not having enough money forthe premium (20%) and not knowing how to register (19%).Only a small number of people (6%) think the benefits ofthe program are smaller than the costs of insurance. Lastly,there are only 2% of respondents in this survey who havesaved some money for health necessity.

According to the results, the potential problem of achiev-ing UHC in Indonesia is the lack of insurance literacy. Mostpeople, especially from low-income groups, do not knowhow an insurance system works and what advantages theymay have by enrolling in insurance programs. Furthermore,there are a lot of quite conservative people that embracedeaths and sickness as God’s plans; therefore, insuranceis not very necessary for them. Many people, especiallythe uneducated ones, still differentiate between saving, lifeinsurance, education insurance, and health insurance. Manypeople would want to withdraw the paid premium if theydo not use health services. Otoritas Jasa Keuangan (Finan-cial Services Authority) has to assume a significant role inincreasing financial as well as insurance literacy. However,the current campaign conducted by BPJS Kesehatan is aone-step forward attempt that focuses on how to registerand how BPJS system works. The campaign should focuson educating people of insurance literacy.

6. Concluding Remarks and PolicyImplications

6.1 Concluding RemarksThe implementation of the SJSN Law No. 40/2004 andthe BPJS Law No. 24/2011 promoting the insurance-basedhealth financing system is a milestone for Indonesia toachieve the universal health coverage. A single carrier ofnational health insurance system is expected to integratethe fragmented health insurance system, improve access tohealthcare and protect against the financial burden of payingfor medical expenses. However, Indonesia, like other coun-tries, faces the “missing middle” problem in which informalsectors often remain uncovered in health care services sincethe voluntary enrollment of informal sectors into the systemis very low. There are several necessary and sufficient condi-tions to mandate informal sectors to join the JKN programboth from supply side and demand side.

In the supply side, the main problems are availabilityand accessibility of health facilities. Many regions espe-cially in Java have fulfilled the minimum standard of health


Tabl

e5.

Log

istic

Reg

ress

ions

Var

iabl

eW

illin

gnes

sto

Pay

(WT

P)M

argi

nalE

ffec

ts

Coe

ff.

Stan

dard

Coe

ff.

Stan

dard

Coe

ff.

Stan

dard

Coe

ff.

Stan

dard

dy/d

xSt

anda

rdE

rror

Err

orE

rror

Err

orE

rror

Hea

lthFa

cilit

ies

Med

ical

Doc

tor(

1=av

aila

ble

atvi

llage

/sub

-dis

tric

t;0=

othe

rwis

e)-0

.926

***

0.26

4-0

.992

***

0.27

1-1

.107

***

0.28

-1.6

62**

*0.

323

-0.2

65**

*0.

043

Hos

pita

l(1=

avai

labl

eat

sub-

dist

rict

;0=o

ther

wis

e)0.

657*

**0.

252

0.53

8**

0.25

90.

594*

*0.

263

0.96

5***

0.29

10.

165*

**0.

045

Hea

lthIs

sues

and

Insu

ranc

eK

now

ledg

eH

ealth

faci

lity

fort

hefir

sttr

eatm

entw

hen

they

feel

sick

(1=h

ospi

tal;

0=ot

herw

ise)

0.56

5**

0.24

30.

536*

*0.

249

0.47

9*0.

267

0.08

7*0.

047

Inpa

tient

duri

nga

year

ago

(1=

havi

ngex

peri

ence

;0=o

ther

wis

e0.

768*

*0.

396

0.64

30.

404

0.82

4**

0.42

50.

129*

*0.

054

Out

patie

ntdu

ring

am

onth

ago

(1=h

avin

gex

peri

ence

;0=o

ther

wis

e)1.

073*

**0.

305

1.05

8***

0.30

80.

922*

**0.

331

0.15

1***

0.04

7H

ealth

Insu

ranc

e(1

=ha

din

sura

nce

prev

ious

ly;0

=oth

erw

ise)

0.81

5*0.

479

0.63

80.

505

0.10

30.

069

Kno

wle

dge

ofB

PJS

Kes

ehat

an(1

=hav

ing

know

ledg

e;0=

othe

rwis

e)0.

536*

*0.

259

0.48

8*0.

285

0.09

5*0.

058

Dem

ogra

phic

and

Soci

o-E

cono

mic

Vari

able

sA

ge(y

ear)

-0.0

23*

0.01

3-0

.004

*0.

002

Sex

(1=m

ale;

0=fe

mal

e)-0

.954

***

0.27

-0.1

78**

*0.

05H

ouse

hold

Num

ber

-0.1

66**

0.06

9-0

.031

**0.

013

Inco

me

(1=a

bove

IDR

3.5

Mill

ion;

0=ot

herw

ise)

0.82

4**

0.36

30.

133*

**0.

049

Inte

rnet

(1=h

avin

gac

cess

;0=o

ther

wis

e)0.

674*

0.35

50.

112*

*0.

052

Edu

catio

nA

ttain

men

t(1=

com

plet

ed9

year

s;0=

othe

rwis

e)0.

351

0.28

30.

067

0.05

5In

terc

ept

1.27

4***

0.21

40.

805*

**0.

248

0.45

0.29

12.

483*

**0.

768

#Obs

erva

tion

400

400

400

400

Wal

dC

hi-S

quar

e15

.27

35.7

43.8

687

.28

Psed

uoR

20.

031

0.07

30.

090.

179

Sour

ce:L

PEM

FEB

UI’

sE

stim

ate

Bas

edon

Surv

ey20

14N

ote:

dy/d

xis

ford

iscr

ete

chan

geof

dum

my

vari

able

from

0to

1.N

ote:

***

issi

gnifi

cant

at1%

,**

issi

gnifi

cant

at5%

,*is

sign

ifica

ntat

10%

.


Tabl

e6.

Ord

ered

Log

itR

egre

ssio

ns

Var

iabl

eO

rder

edW

illin

gnes

sto

Pay

(WT

P)

Coe

ff.

Stan

dard

Coe

ff.

Stan

dard

Coe

ff.

Stan

dard

Coe

ff.

Stan

dard

Err

orE

rror

Err

orE

rror

Hea

lthFa

cilit

ies

Med

ical

Doc

tor(

1=av

aila

ble

atvi

llage

/sub

-dis

tric

t;0=

othe

rwis

e)-0

.731

***

0.21

5-0

.768

***

0.21

8-0

.850

***

0.22

3-1

.105

***

0.23

8H

ospi

tal(

1=av

aila

ble

atsu

b-di

stri

ct;0

=oth

erw

ise)

0.26

50.

209

0.17

50.

212

0.19

60.

213

0.32

70.

222

Hea

lthIs

sues

and

Insu

ranc

eK

now

ledg

eH

ealth

faci

lity

fort

hefir

sttr

eatm

entw

hen

they

feel

sick

(1=h

ospi

tal;

0=ot

herw

ise)

0.34

9*0.

198

0.31

60.

20.

214

0.20

5In

patie

ntdu

ring

aye

arag

o(1

=ha

ving

expe

rien

ce;0

=oth

erw

ise

0.67

0**

0.27

50.

562*

*0.

279

0.69

9**

0.28

4O

utpa

tient

duri

nga

mon

thag

o(1

=hav

ing

expe

rien

ce;0

=oth

erw

ise)

0.60

9***

0.22

50.

578*

**0.

226

0.53

2**

0.23

7H

ealth

Insu

ranc

e(1

=ha

din

sura

nce

prev

ious

ly;0

=oth

erw

ise)

0.48

0.31

0.21

70.

319

Kno

wle

dge

ofB

PJS

Kes

ehat

an(1

=hav

ing

know

ledg

e;0=

othe

rwis

e)0.

415*

0.22

0.35

50.

232

Dem

ogra

phic

and

Soci

o-E

cono

mic

Vari

able

sA

ge(y

ear)

-0.0

24**

0.01

Sex

(1=m

ale;

0=fe

mal

e)-0

.283

0.21

1H

ouse

hold

Num

ber

-0.1

63**

*0.

058

Inco

me

(1=a

bove

IDR

3.5

Mill

ion;

0=ot

herw

ise)

1.36

7***

0.26

6In

tern

et(1

=hav

ing

acce

ss;0

=oth

erw

ise)

0.50

9**

0.25

Edu

catio

nA

ttain

men

t(1=

com

plet

ed9

year

s;0=

othe

rwis

e)0.

339

0.23

8/C

ut1

-1.2

560.

18-0

.936

0.21

-0.6

760.

245

-2.2

850.

613

/Cut

20.

893

0.17

31.

278

0.21

41.

564

0.25

60.

251

0.60

2/C

ut3

1.52

70.

191

1.92

10.

232.

211

0.27

0.98

0.60

6#O

bser

vatio

n40

040

040

040

0W

ald

Chi

-Squ

are

11.7

727

.333

.47

97.7

Psed

uoR

20.

012

0.02

90.

035

0.10

1So

urce

:LPE

MFE

BU

I’s

Est

imat

eB

ased

onSu

rvey

2014

Not

e:**

*is

sign

ifica

ntat

1%,*

*is

sign

ifica

ntat

5%,*

issi

gnifi

cant

at10

%.


Tabl

e7.

Mar

gina

lEff

ects

for

Ord

ered

Log

itE

stim

atio

n

Var

iabl

eO

rder

edL

ogit

WT

PN

otJo

inin

gC

lass

3C

lass

2C

lass

1

dx/d

ySt

anda

rddx

/dy

Stan

dard

dx/d

ySt

anda

rddx

/dy

Stan

dard

Err

orE

rror

Err

orE

rror

Hea

lthFa

cilit

ies

Med

ical

Doc

tor(

1=av

aila

ble

atvi

llage

/sub

-dis

tric

t;0=

othe

rwis

e)0.

196*

**0.

039

-0.0

130.

02-0

.070

***

0.01

8-0

.113

***

0.03

Hos

pita

l(1=

avai

labl

eat

sub-

dist

rict

;0=o

ther

wis

e)-0

.062

0.04

10.

012

0.00

90.

020.

014

0.03

0.02

1H

ealth

Issu

esan

dIn

sura

nce

Kno

wle

dge

Hea

lthfa

cilit

yfo

rthe

first

trea

tmen

twhe

nth

eyfe

elsi

ck(1

=hos

pita

l;0=

othe

rwis

e)-0

.041

0.03

90.

009

0.00

90.

013

0.01

30.

019

0.01

8In

patie

ntdu

ring

aye

arag

o(1

=ha

ving

expe

rien

ce;0

=oth

erw

ise

-0.1

19**

*0.

042

-0.0

010.

019

0.04

6**

0.02

0.07

5**

0.03

7O

utpa

tient

duri

nga

mon

thag

o(1

=hav

ing

expe

rien

ce;0

=oth

erw

ise)

-0.0

97**

0.04

0.01

20.

010.

034*

*0.

016

0.05

1**

0.02

6H

ealth

Insu

ranc

e(1

=ha

din

sura

nce

prev

ious

ly;0

=oth

erw

ise)

-0.0

40.

057

0.00

70.

006

0.01

40.

021

0.02

0.03

2K

now

ledg

eof

BP

JSK

eseh

atan

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Figure 13. Why they do not register into the BPJS Kesehatan? Source: Calculated based on LPEM FEB UI survey in 2014

facilities, while other regions especially in the remote andeastern part of Indonesia are still struggling to fulfill thesupply gap. By 2013, Indonesia had a total surplus of fa-cilities of around 96,975 beds per 1000 people. In contrast,looking at the condition at sub-national level, total shortageof facilities was 59,387 beds per 1000 people. Around 53.7of Sub National Governments (SNG) have to overcome theshortage of beds. In terms of accessibility, health facilitiesmay be available in certain areas, but these may not be ac-cessible for people due to the distance to the facilities. Onaverage, the distance to public hospital is 29.32 km, whilethe average distance to public health center (Puskesmas)is around 8.17 km. These will probably pose a barrier forpeople to join the BPJS Kesehatan.

Based on SUSENAS 2013 and field survey, this studyfinds that too expensive premium compared to the currentout-of-pocket health expenditure and uniform premium forall regions have possibly created an obstacle for non-poorgroups including self-employed, workers in informal sectorsand other categories to join the JKN program (BPJS Kese-hatan). Uniform premium for all regions is unfair due todifferences in socio-economic conditions. Non-poor groupsworking in informal sectors living in Jakarta only need topay 0.3 times of their monthly health expenditure, whilethe same groups living in East Nusa Tenggara and NorthMaluku have to spend around 1.4 times and 2.26 times oftheir monthly health expenditure, respectively. This con-tradicts with the principle of mutual cooperation “GotongRoyong”, since people in eastern part of Indonesia withlower socio-economic condition tend to support people inwestern part that are more prosperous. Too expensive anduniform premium for all regions have possibly created anobstacle to non-poor groups including self-employed, work-ers in informal sectors and other categories to join the JKNprogram (BPJS Kesehatan).

Applying Triple Bounded Dichotomies Choice Contin-gent Valuation Method (TCCVM), this study has shownthat many respondents found insurance a new thing andaround 70% of them had the desire to join health insurancescheme. As much as 13.3% of them were willing to payfor a premium of IDR61,740/month (US$4.5) for the first

class, while around 9% of respondents were willing to payfor the second class with an average premium of aroundIDR 40,685 (US$3.13), which is less than the current pre-mium of the class. Moreover, around 47.75% of respondentswere willing to join the third class with the average WTPof around IDR 22,368 (US$1.72). These findings show thatdespite having the desire to join the program, their willing-ness to pay is lower than the current premium. The currentpremium seems less affordable to them; therefore, this maycreate a barrier for informal sectors to enthusiastically jointhe new health insurance system.

Our econometric estimations in both logistic regressionand ordered logistic regression confirm that the availabilityof hospital, experience of being inpatient and outpatient,knowledge of BPJS Kesehatan, sex of household head, age,household income and access to information (internet) areimportant factors that are highly and positively correlated tothe likelihood of respondents joining the national health in-surance. The availability of hospital at district and city levelincreases the probability of joining NHI by 15.5%, whilethe insurance literacy represented by the knowledge aboutinsurance and NHI increases the probability of joining theprogram by 9.5%. Unfortunately, the availability of medi-cal doctor at village/district level is negatively associatedwith the probability of joining the program. This is becauseunder the current health financing system, visiting directlyto doctor for small treatment seems more convenient andcheaper than paying for health insurance. Moreover, oureconometric estimations also confirm that informal sectorswith high health risks tend to join NHI. Those experiencinginpatient and outpatient tend to have a higher probability ofjoining NHI by 12.9% and 15.1% respectively.

Aside from information on willingness to pay and econo-metrics estimations, this study also observed the importanceof insurance literacy as one of important policies to increasethe enrollment rate of informal sector. Around 39% of therespondents answered that they do not know anything abouthealth insurance and 19% of the sample said that they do notknow how to join the program. Only 20% of the respondentssaid that they have limited amount of money. This is con-sistent with the result of our econometric estimation where


basic knowledge about insurance leads to an increase in theprobability of joining the program. It implies that economicreason or unaffordable premium is not the main barrier forinformal sector to join the national health insurance.

6.2 Policy ImplicationsBased on our analysis and conclusion, this study comeswith several policy recommendations to support the accom-plishment of UHC:

1. The service availability and service accessibility aretwo necessary conditions to attract people to jointhe program; therefore, both Central Governmentand Sub-National Government should collaborateto improve health services, for instance through co-financing.

2. BPJS Kesehatan in collaboration with Otoritas JasaKeuangan (Financial Service Authority) should con-duct massive campaign to increase insurance literacy.Campaign priorities should focus on insurance liter-acy instead of focusing on BPJS Kesehatan per se;

3. Assessing the possiblity of regionalization of pre-mium, especially for regions with low utilization, lackof health services and infrastructure, high share ofinformal sector and low income. This policy will cor-rect the unfairness of premium and also attract peoplein the eastern part of Indonesia to join BPJS Kese-hatan;

4. Without any massive intervention, UCH target statedin Presidential Decree No. 111/2013 should be re-vised in a more reasonable way.

References[1] Budi Hidayat, Hasbullah Thabrany, Hengjin Dong, and

Rainer Sauerborn. The effects of mandatory health insur-ance on equity in access to outpatient care in indonesia.Health Policy and Planning, 19(5):322–335, 2004.

[2] LPEM FEB UI. The Study on Optimal Financial Designfor Universal Coverage on Health Insurance in Indone-sia through A CGE Model Analysis. LPEM FEB UI,2014.

[3] Adam Wagstaff and Wanwiphang Manachotphong. Thehealth effects of universal health care: evidence fromthailand. World Bank Policy Research Working Paper,(6119), 2012.

[4] PNPM Support Facility. Infrastructure Cencus 2011:Report On Infrastructure Supply Readiness In Indonesia– Achievements And Remaining Gaps. Ministry for Peo-ple’s Welfare in cooperation with TNP2K and PNPMSupport Facility, 2011.

[5] Michael Hanemann, John Loomis, and Barbara Kanni-nen. Statistical efficiency of double-bounded dichoto-mous choice contingent valuation. American journal ofagricultural economics, 73(4):1255–1263, 1991.

[6] W. Kwadwo Asenso-Okyere, Isaac Osei-Akoto, AdoteAnum, and Ernest N. Appiah. Willingness to pay forhealth insurance in a developing economy. a pilot studyof the informal sector of ghana using contingent valua-tion. Health policy, 42(3):223–237, 1997.

Gedung LPEM FEB UI Jl. Salemba Raya No. 4, Jakarta 10430 Phone : +62-21 3143177 ext. 621/623; Fax : +62-21 3907235/31934310

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