The views expressed in this presentation are the views of the author and do not necessarily reflect the

views or policies of the Asian Development Bank Institute (ADBI), the

Asian Development Bank (ADB), its Board of Directors, or the governments they represent. ADBI does not guarantee the accuracy of the data included in this paper and
accepts no responsibility for any consequences of their use. Terminology used may not necessarily be consistent with ADB official terms.

Missing Middle and BPJS:

A socio-cultural and economic
analysis

Laksono Trisnantoro
Department of Health Policy and Management
Faculty of Medicine, Public Health, and Nursing
Universitas Gadjah Mada

1
 Content:
• Current Health Care Financing, BPJS
deficit and wrong targeted subsidy
• The Middle Class and BPJS
• Future Analysis
- GDP and problems of Tax Collection
- 2-tier system health care
Policy Options

2
 Current Health
Tax Non-tax
Income Income Financing
(simplified)
Foreign
Donors
Single Pool system in BPJS
PPU (Salaried workers)
APBN
PBI PBPU (Informal workers)
BPJS
MoH Private Commercial
Insurance
Other Ministries
Primary Referral Care
Care
LG

Local Gov Income Out of pocket 3

 Three Big Groups of
Tax Non-tax
Income Income Members Segments in
BPJS
Foreign
Donors PPU (Salaried workers)
BPJS Non-PBI

APBN
Rp

PBIRp PBPU (Informal workers)

PBI
Rp Non-PBI
MoH Private Commercial
Insurance
Other Ministries
Primary Referral Care
Care
LG
PBI: Subsidized premi
Local Gov Income Out of pocket for the poor and
4
nerapoor
 Member Coverage
Are they missing-
middle? Segment growth

Non-
PBI

PBI

Number of member Non PBI increased fast

 BPJS is experiencing deficit
Rp
41,240
Rp
35,802
• Fixed income, with
Rp Rp
33,776 34,766
broad and unlimited
benefit
• PBPU (informal
workers segment ) is
making loss. Premium
2016 2017
is too low
Premi per member/month (BPJS income)

Cost per member/month (BPJS expenditure)

6
Mundiharno, BPJS. 2018
 What happened per segment
Member Segment Class Premium per Cost per member/month
member/month
PPU Government 62,270 69,597
PBPU 1 80,000 257,706
2 51,000 172,958
3 25,500 136.452
PPU Enterprise 59,327 31,541

Making Loss:
PPU G
PBPU Adverse selection: the sick and high risk
groups entered the system first

7
 Tax Non-tax
Wrong Targeted Subsidy
Income Income PBI claim ratio is less than 100%
PBI is used for non-PBI
Foreign
Donors PPU (Salaried workers)
BPJS Non-PBI

APBN
Rp
PBPU (Informal workers)
PBI PBIRp
Rp
Non-PBI
MoH Private Commercial
Insurance
Other Ministries
Primary Referral Care
Care Worsening
LG
problems in Equity
Local Gov Income Out of pocket 8
 Current research finding on Equity
using Susenas data:
• Access to outpatient care at public primary facilities, mainly
puskesmas, is pro-poor. Access to most other types of health care is
pro-rich.
• Access to inpatient care at public hospitals is nearly universal at the
national level but this masks significant variation according to
geographical location.
• Inpatient care at public hospitals in urban areas is pro-poor whilst it
is pro-rich in rural areas.
• Pro-rich access is driven by pro-rich non-health factors, mainly
households’ economic status, geographical factors and non-
targeted health insurance (SHI).

ACCESS INEQUITY, HEALTH INSURANCE AND THE ROLE OF SUPPLY FACTORS

Meliyanni Johar, Retno Pujisubekti, Prastuti Soewondo, Harsa Kunthara Satrio, Ardi
Adji. TNP2K WORKING PAPER 1 - 2017 December 2017

9
The Middle Class

10
Who are the Middle Class
• One in every five Indonesians
now belongs to the middle-
class group.
• Another 45 percent are no
longer poor or vulnerable to
poverty.

World Bank 2017

11
Today’s
Middle class counts at least
52 million people whose
consumption accounts for
43 percent of total
household consumption

12
Another data:
In 2016,
Indonesia: the world’s fourth
largest middle class with 19.6 But,
million households. Where are
they in the
expected to rise to 23.9 million Indonesian
in 2030 economy and
health
Euromonitor International’s Indonesia Income finance
and Expenditure Country Briefing

13
 Middle class Why they do not buy
BPJS premi?
• They are wealthy and
- Are they risk taker
young
- Is BPJS regarded as
• Internet users
inferior service (low
• Spend for healthy life- price, low quality)
style products but not
medical care
Unfortunately:
no behavioral economics research on
the middle class in using their income
in health care and insurance
14
 Future Analysis

• How to handle middle

class?
• The danger of relying on • Forecasting Health
BPJS in the missing- Revenues
middle

15
 Tax Situation
14.000.000,00

12.000.000,00

10.000.000,00 GDP
GDP Nasional (harga
berlaku)
Tax Revenue
Miliar Rupiah

8.000.000,00 Penerimaan Pajak

Non-Tax
Penerimaan Bukan Pajak
6.000.000,00
Revenue
Hibah
4.000.000,00
 Problems in tax
collection
2.000.000,00

Sumber: Indonesia dalam Angka Tahun

 For sustainability;
BPJS revenue depends on Tax (PBI) and financial support for
small (making loss) premium the universal health
coverage is weak.
14.000.000,00

12.000.000,00

10.000.000,00 GDP
GDP Nasional (harga
berlaku)
Tax Revenue
Miliar Rupiah

8.000.000,00 Penerimaan Pajak

Non-Tax
Penerimaan Bukan Pajak
6.000.000,00
Revenue
Hibah
4.000.000,00
 Dominated by
Corporate Tax
2.000.000,00
 Income Tax is not
progressive
-

Sumber: Indonesia dalam Angka Tahun

 Strategic issue
• It is difficult to raise
Miliar Rupiah

health revenue through

taxation
• Should find ways to tap
more resources from
20…
GDP.
2007
2008
2009
2010
2011
2012
2013
2014
2015

Opportunity, using Thailand Benchmark.

There is 1,5% GDP is available for health (GDP for health in
Indonesia is around 3%, In Thailand 4.5%).
It worths 180 trillion

18
 Not promising

Tax Non-tax The Future of Health

Income Income
Revenues
Foreign
Donors PPU (Salaried workers)
BPJS Non-PBI
Promising
APBN
Rp
PBPU (Informal workers)
PBI PBIRp
Rp
Non-PBI Promising
MoH Private Commercial
Insurance
Other Ministries
Primary Referral Care
Care
LG

Local Gov Income Out of pocket 19

Depends Promising
Financing condition happened in
current situation:

two-tier health
care system
Upper Class
Different demand and
supply of health care
Middle Class

1 2 3

Poor peopke

21
Upper Class
Different demand and
supply of health care
Middle Class

1 2 3

Poor peopke

22
Upper Class
Tier: 1. Non-BPJS
Hospital and Non-
Middle Class BPJS class

Tier: 2. BPJS
1 2 Hospitals/Wards
3

Poor peopke

23
 • Based on Single Pool
problem, incl. the use of
poor subsidy by the
Future Policy relatively richer BPJS
members
• Two-tier system and
health consumer
preference
• The Opportunity for
tapping health revenue
from GDP

24
 Not promising Policy Option 1:
- BPJS remains single pool
Tax Non-tax - The middle and upper premium of PBPU increased based
Income Income on actuarial setting
- Tight compartment to prevent PBI budget used by the
non-PBI members
Foreign
Donors PPU (Salaried workers)
BPJS Non-PBI

APBN
Rp
PBPU (Informal workers)
PBI PBIRp
Rp
Non-PBI
MoH Private Commercial
Insurance
Other Ministries
Primary Referral Care
Care
LG

Local Gov Income Out of pocket 25

 Not promising Policy Option 1:

Miliar Rupiah
Tax Non-tax
- Exploit the
Income Income
opportunity in GDP
using BPJS as single pool
Foreign
Donors PPU (Salaried workers)
BPJS Non-PBI

APBN
Rp
PBPU (Informal workers)
PBI PBIRp
Non-PBI
Rp
MoH
Private Commercial
Other Ministries Insurance
Primary Referral Care
Care
LG

Local Gov Income Out of pocket 26

The big question:
Is BPJS capable for
attracting middle-
class to join the
scheme?

27
 Not promising Policy Option 2:
- Not a single pool system
Tax Non-tax - BPJS concentrates in Social Health Insurance only. The
Income Income middle and upper premium of PBPU is spin-off from BPJS
- Commercial insurance group opens business for the
middle-class and affluent ones
Foreign
- Becomes safety valve for BPJS
Donors PPU (Salaried workers)
BPJS Non-PBI

APBN
Rp
PBPU (Informal workers)
PBI PBIRp
Non-PBI
MoH
Private Commercial
Other Ministries Insurance
Primary Referral Care
Care
LG

Local Gov Income Out of pocket 28

 Not promising Policy Option 2:

Miliar Rupiah
Tax Non-tax
- Exploit the
Income Income
opportunity in GDP
not using BPJS
Foreign
Donors PPU (Salaried workers)
BPJS Non-PBI

APBN
Rp
PBPU (Informal workers)
PBI PBIRp
Non-PBI
MoH
Private Commercial
Other Ministries Insurance
Primary Referral Care
Care
LG

Local Gov Income Out of pocket 29

Challenge for commercial health
insurance companies:
• Whether commercial health insurance
company can attract middle-class?
• How their risk-taker and healthy life-
style can be assessed and put in the
health insurance scheme?
• Is it possible to mix medical insurance
scheme with gym-club or other
healthy lifestyle?

30
End-Note: We need behavioral economics
research on the middle class in using
their income in health care and
insurance in various regions

31
Thank-you

32