Neoliberal Health Care and its Impact to the Development of Health: the Case of

Jaminan Kesehatan Nasional (JKN) in Indonesia

On the first of January 2014, the government of Indonesia officially launches National Health
Insurance (Jaminan Kesehatan Nasional, JKN). The National Health Insurance (JKN) is part
of the National Social Security System (Sistem Jaminan Sosial Nasional) that are maintained
using the mechanisms of social health insurance which is compulsory based on Law Number
40 Year 2004 on National Social Security System with the aim to meet the basic needs of
adequate public health given to every person who has paid dues or dues paid by the
Government. Through this mechanism, the government wants to provide comprehensive
health care for all citizens of Indonesia while providing free health care for the poor (Firdaus,
2013). With more than 90 milion of people still lives in the poverty line, many believe that
this policy is addressing the real problem of the Indonesian people. While it was being
drafted, this policy even got a lot of support from several popular sectors like trade union,
student, and medical worker (Suhartono, 2011). It can be said that this policy is quite
historical recall of past government often ignore its citizen.
Populist as it is, there are several details that need to be considered. The JKN occurs at the
time when neoliberalism (i.e free market orthodoxy) has been accepted by the government of
Indonesia (for the technocrat of Indonesia embracing neoliberalism see Robison and Hadiz,
2004). What seems interesting from this policy is how this form of neoliberal health care try
to improve the development of health care as such. This paper tries to elaborate how
neoliberalism penetrates the logic of social protection policy like health care in Indonesia and
how this penetration impact the development of health in Indonesia. This paper would argue
that this kind of process would facilitate improvement in the issue of health access that
important for developing health in Indonesia. However, this improvement is so limited.
Current form of JKN is the cause of the limitation.
Neoliberalism of Health Care
Health care is often attributed as part of social protection policy. It means as, the public
actions taken in response to level of vulnerability, risk and deprivation which are deemed
socially unacceptable within a given polity or society (Norton, Conway, and Foster, 2001,
p.11). Thus, health care policy tries to enhance the physical well-being of all member of the
population through public action which usually represent by the government. Funded by
taxation, the government decides the cost, accessibility, quality, delivery and evaluation of the
programmes. The key delivery mechanisms are hospital, health care professionals and public
expenditure.
However, the provision of health care through government only creates infectivity and
inefficiency (Testa and Block , 2013). Instead of enhancing the quality of health of all
member of the society, provision of health care by the government only create rising cost in
medical system. In the practical level, inefficiency and infectivity of the policy construct the
idea of crisis; thus neoliberal reform was seen as the attempt to save the policy from its
crisis. This can be seen through Wolfson (2006) observation on USA social security reform
in 1983. Eventhough Wolfson observe different kind of social protection policy such as social
security, but the very logic on how neoliberal reform subvert the logic of the provision of
social protection by the government can be very useful in case of health care.

To solve the problem of inefficiency and infectivity, neoliberalism constructs its own agenda
in regards to health care. Mcgregor (2001) argues that neoliberal agenda of health care reform
includes cost cutting for efficiency, decentralizing to the local or regional level rather than the
national level and setting health care up as a private good for sale rather than a public goods
paid for with taxpayer money. For her, these three reform agenda reflect three basic tenets of
neoliberalism: 1) the necessity of free market (in which we work and consume); 2)
individualism, and 3) the pursuit of narrow self-interest rather than mutual interest, with the
assumption that these three tenets will lead to social good.
According to Mukhopadhyay (2013), this agenda is needed for structural consolidation of
capital. In his research of health care service in India, the private provisioning encourages
corporate expansion over the last two decades. In 2011 there were some 35 corporations. By
2006 the number jumped to 93. In 2001 total income was only 8,510 million rupee. This
increased 35,300 million rupee in 2007. This meant an annual average increase of 18 per cent
in real terms (adjusted for inflation). This is more than doubvle the real GDP growth rate
during this period. It can be said that there were a rapid consolidation of the corporate sector
because of the removal of government provision in health care (Mukhopadhyay, 2013, p.
185).
However, the question remains; is it possible to completely ignore the role of the government
for the imposition of neoliberal agenda? The answer is no. According to Robison (2006),
neoliberalism was to be more than just a reincarnation of laissez-faire sentiment or a simple
neo-classical attachment to the idea of the inherent efficiency of markets. It aimed at nothing
less than extending the values and relations of markets into a model for the broader
organization of politics and society. Neoliberals recognised the political nature of a task that
included dismantling entrenched systems of welfare and developmental capitalism
characterized by powerful labour unions and welfare coalitions. In this case, the role of the
government still needed to facilitate the operation of market mechanism within the social
protection policy.
In conclusion, neoliberalism of health care means the expansion of market in the realm of the
health care. The role of the government should be limited as the facilitator for market. This
specific role relates to believe that government-run policy would only create inefficiency and
infectivity that enables crisis within the policy in the long run. This believes construct a
rationale about the necessity of private provisioning of health care. Private provisioning
would save the policy from the crisis. However, private provisioning of health care is not
necessarily save the policy; in which it would improve the quality of health care for the
people. On the contrary the private provisioning only benefiting private sector to consolidate
their capital and gain more profit.
Health Care as Insurance: the Case of Jaminan Kesehatan Nasional (JKN)
To understand JKN as a market appropriation of health care can be referred to Asian
Development Bank document entitled, Indonesia: Financial Governance and Social
Security Reform Program (2006). As it explained before about the use of the discourse of
crisis to bring the urgency for neoliberal reform, the rationale for this health care design came
also come from the need to overcome the crisis that hit Indonesia economy. The intention of
this scheme was to help Indonesia respond to the immediate exigencies of the crisis, as well
as to reduce the countrys vulnerability to future crises. By 2002, Indonesia was slowly
recovering, and posted economic growth of 2.9% of GDP. However, continued weaknesses in

financial sector governance undermined the potential for higher growth. Weak and uneven
regulation and supervision capabilities contributed to the development of a fragile,
structurally unbalanced, financial sector. The reform then needed to strengthen and improve
the stability of the financial sector so that it could effectively paly its role in facilitating longterm economic growth.
As mentioned before, JKN is part of the Law of National Social Security System (Undangundang Sistem Jaminan Sosial Nasional, UU SJSN). SJSN itself constructed as part of
broader financial reform agenda in which the objective was to, helping restructure the
banking sector, strengthening financial governance, and reinforcing the financial sectors
legal and regulatory framework. (ADB, 2006, p. 2). The main reason why SJSN considered
as part of financial institution comes from an argument that this policy should be supervised
under the jurisdiction of OJK (Otoritas Jasa Keuangan, Financial Services Authority) (ADB,
2002, p. iv). The establishment of OJK itself is part to improving coordination in financial
sector in which OJK responsible for banking supervision tasks and the supervision of
nonbank financial services. In order to run SJSN, the government should establish a quasistate institution called BPJS (Badan Penyelenggara Jaminan Sosial, Social Security Agency).
BPJS itself replace all state-owned insurance company, which then divided two forms of
social security services which are BPJS Kesehatan (health care, BPJSSh) and BPJS
Ketenagakerjaan (employment, BPJSTk). The JKN itself is held by BPJSSh.
The nuance of market logic in JKN is becoming more obvious if the detail of the
implementation is considered. In the article 14 of the Law of Social Security Agency
(Undang-undang Badan Penyelenggara Jaminan Sosial, UU BPJS), it is mentioned that it is
mandatory for all citizens of Indonesia to join this program. However, the membership in the
JKN is not referring to the rights of citizens to obtain qualified social security. In order to
gain membership, citizen still needs to pay a premium like paying insurance. In here, it can
be seen that the main principle of the administration of JKN is based on individualism.
However, there is still a doubt in this mechanism. Statistically, there are only 37 percent of
formal workers in the whole Indonesian labor force (Ahniar and Akbar, 2012), which is
considered capable to pay premiums on a regular basis. The rest 63 percent of the workforce
has the potential to not be able to pay the premium regularly because they are categorized as
informal workers that doesnt have any regular income, which is therefore close to the
poverty line. To overcome this issue, government intervention is needed. In the early stages
JKN program, the government will disburse Rp 15.9 trillion (around AUS$ 1.5 billion) from
the state budget to subsidize health insurance for 86 million poor people (Ariefana, 2013).
Here, it is important to look JKN not as a usual form of profit-based insurance but as a form
of social insurance.
The consequence of this differentiation between profit-based and social insurance is they
were operating in different market share. If profit-based insurance is targeting middle-high
income, JKN is more focusing on middle-low income population. However, despite of this
difference, JKN as social insurance still operates in the logic of insurance. In article 47 point
the law of SJSN, the BPJS (the institution that run JKN) is obligatory to manage and develop
the social security fund (i. e. collected premium) as an asset that needs to be invested in
financial sector based on the principle of liquidity, solvency, prudence, security of funds and
adequate results.

Another consequence for JKN as insurance-based health service is the health benefits for the
Indonesian people highly dependent on premium that being paid. The government decides the
minimal amount of premium that considered can cover the health needs of the people. The
minimum premium for informal worker, which considered dont have regular income, is Rp.
25,000 (around AUS$ 2,5), while for formal worker the minimum premium is 4% of their
wage (Wicaksono, 2013). After it is being decided, BPJS, as the government instrument,
provides several standard for the health service that limited by the amount of the premium. If
the people want to improve her/his health benefit, BPJS facilitates a mechanism that allows
the upgrade of the health service by paying more insurance premium.
JKN: Improving the Health of Indonesian People?
It can be argued that JKN as health initiatives open up new possibility for improving health
care in Indonesia. Compulsory principle that adopted in the policy is really important to
increase the people access to healthcare. One of health problem in Indonesia is a lack of
access towards health care. Major population in Indonesia still faced difficulties to gain
health service in their area. According to USAid (2013), the infant mortality rate in Indonesia
has not decreased over the last 10 years; which more than 88,000 infant mortality and
maternal mortality is increasing every year. To encourage the people to be insured are
important step towards improving health in Indonesia.
However, to put solely the problem of health as the problem of access to health is also
problematic. The health problem in Indonesia is also associated with under-investment by the
state in health sector. There are three major problems that relates with the under-investment
of health in Indonesia. First problem is on the availability of medical worker in Indonesia.
According to World Health Organization, Indonesia still faced a lack number of general
practitioners. There should have been 40 general practitioners per 100 thousand inhabitants.
Currently, only 33 general practitioners are available for 100 thousand inhabitants in
Indonesia (Listyanti, 2013). Second problem can be seen on how Indonesia still lack of health
infrastructure like hospital. Indonesias current hospital bed to population ratio of 6.3/10,000
compares unfavourably with a global average of 30/10,000. Despite low hospital bed-topopulation ratio and a significant double burden of disease, bed occupancy rates range
between 55% - 60% in both government and private hospitals in Indonesia, compared with
over 80% hospital bed occupancy rates for the South-East Asian region. Annual inpatient
admission in Indonesia is, at 140/10,000 population, the lowest in the South East Asian
region (Awofeso, Rammohan, and Asmaripa, 2013, p. 49). Finally, the under-investment
generates uneven development of health. The distribution of human resources of health is
really uneven. This can be seen on how the distribution of health human resources by region,
highest number was in Java and Bali with 301,402 health workers or 45.08 percent. Then
followed by Sumatra with 182,997 people, or 27 percent. Nusa Tenggara and Papua into the
area with the least amount of health human resources are each only 26 168 people, or 3.91
per cent and 2.44 per cent, or 16,293 people (Listyanti, 2013). None of these problems is
being addressed by JKN.
The situation getting complicated since JKN not only neglects the problem of underinvestment by the state, but it accelerate more under-investment in health sector and even
undermine the right of the people to get qualified health care. There are three reasons why the
JKN undermine the improvement of health development in Indonesia. First, JKN makes the
the state should not be responsible for providing the necessary health infrastructure to public
health services. While it can be admitted that the state still subsidize JKN, but the amount of

subsidy would decrease exponentially to adjust fiscal burden (Ariefana, 2013). This situation
is alarming since the percentage of the health budget in Indonesia even much lower when
compared to the number of poor countries (low income country). 22 of the 36 countries
categorized as low income (GDP per capita of less than S $ 1,025) has been allocated 11% of
its budget from the state budget for health. Even three low-income countries in Africa, such
as Rwanda, Tanzania, and Liberia, have dared to allocate funds for the health sector to 15%
of its national budget. On the other hand, Chile, which is actually the same level with the
Indonesian (lower middle income country), even able to allocate funds for health to 16%
(Eko, 2013). Second, insurance-based service creates disparity of health service since health
service is solely depends on how much you paid the premium. This kind of mechanism will
enable a class bias and discriminatory health service among the people since the only people
who have right to access qualified health care would be those who are able to pay more the
premium. Third, to manage the social security fund as asset that can be invested is
problematic. While this practice can be considered as common in insurance industry, but to
integrate the (poor) people money into financial system would only put the program into
another risk, which is the risk of vulnerability and uncertainty of the financial system. The
experience of 2008 global financial crisis; when many pension fund that being managed
through financial system, has to experience losses even bankruptcy after their return has to
fall up to by 35% (Allianz Global Investor, 2009), was an experience that cannot be ignored.
Conclusion
To ensure the people to have insurance is indeed a good start to guarantee people access to
health. However, JKN alone is not sufficient to improve the quality of health care in
Indonesia. Further government intervention needed to invest more resources in health sector.
In this case, neoliberal orthodoxy should be challenged, especially on how to understand the
role of the state. The role of the state cannot be limited to just a facilitator for the market, but
as a social provider of peoples basic needs. If this realized, the objective of JKN as a
provision for better and qualify health care for Indonesian people can be realistically
achieved.
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