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Indonesian Health Reform in a decentralized system. Laksono Trisnantoro Center for Health Service Management Gadjah Mada University [email protected] Preface. This paper is concerned with critical questions: Is there a reform in Indonesian health sector?

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Indonesian Health Reform in a decentralized system

Laksono Trisnantoro

Center for Health Service Management

Gadjah Mada University

[email protected]


This paper is concerned with critical questions:

  • Is there a reform in Indonesian health sector?

  • Whether decentralization policy supports health care reform?


Definition of Reform in Health Care


  • 1. Health Care Reform at national level under decentralized policy ( 1999 – 2007)

  • 2. Health Care Reform in 7 Provinces (2006),


    What next?

Reform Definition

  • sustained, purposeful change to improve the efficiency, equity, and effectiveness of the health sector

What Do We Mean by “Health System Reform”?(Bossert, 2007)

Health system reform:

  • Not everything that changes, or causes change, is a health system reform

  • Purposeful efforts to change the system to improve its performance

    Using an interesting understanding of:

  • “little r” reforms; Small changes to one or a few features of the system

  • “Big R” reforms; Large changes to more than one feature of the system

What is the meaning of health system features?

  • Depends on the definition:

  • WHO: stewardship, provision, resources generation, etc

  • Kovner: the role of government in: regulation, provision of services, and financing the system

  • Harvard and WBI: use the “knobs” metaphora

The “Control Knobs” from Harvard and WBI

  • Financing

  • Payment

  • Organization

  • Regulation

  • Persuasion and Behaviour Change


  • reform

  • Reform

  • “little r” reforms; Small changes to one or a few features of the system

  • “Big R” reforms; Large changes to more than one feature of the system

Will be used for analyzing Indonesian Health Sector through 2 observations:

  • National level

  • Provincial level

Observation 1: National Level

  • Reform in Finance

  • Reform in Organizing and Paying Human Resources

  • Reform in Regulation

  • Reform in health Promotion

  • ....

Critical Question:

Is there any reform in

  • health finance?

  • Human Resources?

    Is there any effort for linking these features of health reform?

Reform in Health Finance

  • Historical context of Indonesian Health Finance

  • Major milestones in the 2000s

  • What happened?

Historical Perspective

  • Colonial Period

  • Independence and the “Old Order”

  • “New Order”

  • Decentralized era

Before 1945

1945 - 1965

1965 - 1999

1999 - at present

Colonial Period

  • The Dutch Indie was not administered as a welfare state

  • Health services were provided for government employees, military personnel, and big company employees.

  • Missionary hospitals and health services worked with limited coverage

1945 - 1965

  • The period of market forces suppression

  • There was no clear national health financing policy.

  • There was an Act on poor family health services in early 1950s, but poorly implemented.

  • Health insurance and social security is limited for government employees, military personnel, and big company employees.


  • The market economy was introduced

  • The private sector growth rapidly, incl, for profit hospitals.

  • There is a corporatization of medical services based on market forces

  • There was no clear regulation of health market

  • 1997: Economic crisis induced the Social Safety Net incl. Health.

1999 - current

  • Decentralization era since the stepdown of Suharto in 1998

  • Direct Presidential and Governor/Major election

  • More populist policies at national,provincial, and district level

  • Poor family has free health and hospital services

  • Poor family scheme becomes political issue

Historical Facts

  • Indonesia is not a welfare state since the colonial era

  • Indonesia has market based economy

  • Indonesian health system refers to American model using Safety Net, not the British one.

  • Hospitals operate within market ideology

  • Medical Doctors (esp. specialists) operates based on the fundamental demand and supply principles.

Indonesian health finance situation in 2001

Study by Equitap Group

The market forces domination in Indonesia

Health Finance“Reform”

in 2004

Objective: to achieveUniversal Health Coverageby National Social Security Law (UU SJSN)

5 years











Indonesia’s Transition to Universal Coverage

(National Social Security Law No.40/2004)


Organization and Management

Nat Soc Sec Council
















































SS Carrier














SS Carrier


















Soc Security


  • Nat Soc Security Council directs main policy

  • Nat Soc Security Carriers implement the program, not for profit

  • Synchronization of multiple schemes

  • Each single existing carrier

  • follows its own regulation

  • - For profit entities

Source: MOH: Ida Bagus Indra Gotama, Donald Pardede

The program in 2005

  • Ministry of Health introduced Askeskin (Health Insurance for the Poor)

  • The budget was calculated based on 5 thousand rupiah per month per individu.

    (commercial health insurance: from 25.000 - 250.000, to US dollar for overseas scheme)

  • There was a poor registration system for poor people at the beginning of the program

The Contract to PT Askes Indonesia(2005-2007)

Ministry of Health under the new Minister contracted PT Askes Indonesia for managing the Askeskin scheme for poor family.

This was a radical change from the previous policy, which channel the central budget directly to the hospitals and encourage local government health office to develop health insurance scheme.

There was no pilot study





Government as Payer

Government as payer

The Change in 2005

Contract to PT Askes Indonesia

Subsidy to Providers (based on utilization)

PT Askes I

Health Insurance situation (2005-2007)

Source: Health PER, World Bank 2008

In 2008

2006-2007: Many disputes between Ministry of Health and PT Askes Indonesia

A new change in 2008: Askeskin program was renamed to Jamkesmas.

The coverage is not only the poor but also near poor (more coverage).

The budget is channelled directly to Hospital and Health Centers using managed care concept (incl. DRG)

Increasing budget.

The national health security program increased government budget

How Pay for Health Care

Is this an indicator of success in reforming Indonesian health finance?

Since 2001, - the health program for the poor had improved the utilization of public hospital by the poor - Kakwani Index is improving


  • There is still a geographical inequity

Due to the access to

  • Medical specialists

  • Hospitals

    Across Indonesia

Specialist distribution (KKI, 2008)

  • Jakarta: 24% of specialists, serves around 4% community in a relatively small area

  • Provinces in Java: 49% of specialists, serves around 53% community

  • Rest of Indonesia: 27% of specialists, serves around 43% community in a very large area

Average Number of Public Hospital at a district

Average number of Private Hospital at a district


  • Health Finance provided by Jamkesmas will be used more by poor and near poor people in and around big cities

  • Most in Java Island

  • Left the poor and near poor people in remote area or in the places where there is no medical service and specialists

This hipothesis may explain why Indonesian Insurance Coverage Status in 2007 (based on social economy survey) looks not good.

Source: SUSENAS 2007


  • Health finance reform should be linked (at least) with Human Resources Reform

  • How is the condition of health care reform in human resources?

Reform in Human Resources

  • This discussion focuses on specialist

Indonesia is experiencing critical shortage of doctors, midwives and nurses

Sumber: WHR 2006

How many are really needed?  Perception of 32 districts*

*) Bappenas Study in 2005

Doctor Distribution in 2003-2004

As an illustration:Specialists Distribution (Pediatrics)

Data: IDAI (Pediatrician Association, 2006)

Obstetric and Gynecologist

Typical graphic description of medical specialist distribution

National Plan for “Reform” in Health Human Resource

RPJP (Long Term Plan)

  • Reduce disparity on health status and health care

  • Increase the number and improve distribution of health workers

  • Improve access to health facility

  • Reduce double burden of diseases

  • Reduce misuse of narcotics and prohibited substances

RPJM (Medium Term Plan)

  • Increase the number, network and quality of health centers;

  • Increase the quality and the number of health personnel;

  • Develop health insurance system especially for the poor;

  • Increase dissemination of environmental health and healthy life style;

  • Increase health education to the community since early age; and

  • Distribute and increase the quality of primary health care.

Health Resource Program 2004-2009

RPJM (Medium Term Plan)

Objectives : increase number, improve quality & distribution of health personnel, as well as improve health insurance for the poor

Main Activities:

1.Setup Plans for health personnel need;

2.Improve skill and profesionalismthrough education and training

3.Deploy of health personnel especially for health centers (and their networks) and hospitals;

4.Carrier development

5.Improve sustainable health insurance for the poor.

RKP 2008 (Annual Plan)

  • Improvement of equity, accessibility, and quality of health services especially for the poor, through provision of free of charge access of the poor to health center and hospitals

  • Improving availability of medical and paramedical personnel, especially in remote and less developed areas

The Facts in 2008

Specialist distribution (KKI, 2008)

Number of private hospitals is increasing more than government ones.

  • Number of For-Profit Private-Hospital almost doubled in the last five years

  • Number of Non-For-Profit-Private Hospital almost remained the same

The increase of for-profit private hospital:

  • Most happened in Java

  • Indicates the increasing role of private sector which can attract more medical specialists to Java

  • Some owned by medical specialists

  • Doctor culture is more influenced by private health service organization

  • Without good payment and better work conidtion is more difficult for out of Java hospitals to attract doctors

Medical Specialis Culture Facts in 2008(done by various cultural studies in medical specialists)

  • There is not any significant change in medical specialist behavior.

  • Market influence in specialist is increasing.

  • Jamkesmas (health insurance) program is difficult to compete with fee for service system for doctor and medical specialists

  • No managed care culture

Current Medical Practices:

Specialists prefer to provide services in the middle and upper class using fee-for-service

Try to set own fees

No standard income

Link between Health Finance “Reform” and Human Resources

  • Health finance “reform” does not consider medical doctor and specialist condition

  • No attention in reforming the doctor payment. The fee for medical doctor from Jamkesmas is too low or not clear.

  • Human resources “reform” is not clear and weak in practice.

Does not meet the criteria of Health System Reform

What Do We Mean by “Health System Reform”?(Bossert, 2007)

Does not meet the criteria of Health System Reform

  • Not everything that changes, or causes change, is a health system reform

  • Purposeful efforts to change the system to improve its performance

  • “little r” reforms; Small changes to one or a few features of the system

  • “Big R” reforms; Large changes to more than one feature of the system

Note: the National Reform in Health Finance

  • Health finance reform is not will designed and executed

  • The SJSN Law is not yet effective due to the lack of Government Regulation for implementation

  • Until 2009 there is no GR

  • The current implementation of SJSN Law is more political rhetoric, not technical.

Observation 2

  • Reform at Provincial Level

Based on DHS1 Project at 7 Provinces

  • Riau

  • Riau Island

  • Bengkulu

  • Bali

  • North Sulawesi

  • South East Sulawesi

  • Central Sulawesi

The Question:

  • Is there any reform with big R at provincial level?

  • A close observation into 54 DHS1 projects which are called as reform activties in 7 provinces


  • All reformed-program was not designed as a big “R” reform

  • Each reformed-program is independent each other

  • The most popular topic: Health service Provision

  • No reform in public and private partnership

Why there was no big “R” of health reform at provincial level?

There was no clear definition of health care reform

  • Provincial Government followed the change of national program and it is called reform.

  • Technical change in the program is also called reform.

  • No clear design of health care reform from the central government

Decentralization policy is not effective to initiate reform

  • Conclusion

1. Health Reform is not well prepared at national and provincial level.

  • Reform is associated with political issue during the Suharto (ex president) stepdown period (1999).

  • Ministry of Health did not have intention to reform the health sector after decentralization policy (2000 – 2007)

  • There is no formal health reform document

2. Health reform with small “r”only: not interrelated as prescribed by experts.

At national health finance reform was designed without any intention to link to the reform in:

  • Paying medical specialists

  • Improving the organization of health service (developing health service network across country)

  • Changing the behavior of people (e.g smoking prevalence increases among the poor people)

3. Decentralization policy has little effect on the reform at provincial and district level


  • The Government RegulationNo. 25/2000 (based on Act 22/99) on government function at different level was unclear in its concepts and implementation until replaced by PP 38/2007 (based on Act 32/04).

  • The period of 2000 – 2007 is still in the transition of decentralization policy

  • It is not the right time for making reform (as it is still in a transitional phase).

Notes: in the Decentralization Policy:

The pendulum is swinging

Act 22/99

Act 32/04



Change without significant change

Change in the Laws and Regulation but not significant change in the process and the improvement of health status indicators.

Indonesian health sector is a decentralized sector but experiencing:

a more “centralized” financing system (06-07).

Not coordinated change.

2000-2007: The era of confusion and “strange” situation

Will be discussed in Nossal Institute, University of Melbourne, Thursday 20th of May 2009

  • After the stipulation of GR no 38 in 2007 (following Acts no 32/04):

  • the legal basis for designing and implementing health reform gets new momentum

Act 22/99

Act 32/04



Closing remark: What next?

Is there any future of Indonesian Health Reform

  • at National Level?

  • at Provincial?

  • at District?


Pesimistic? No health reform

Optimistic? There will be health reform at national, provincial and district level

Moving Forward

  • Current activities in Indonesian Health Reform

Activities at central level

  • Ministry of Health established a small group on how to initiate health reform (started 2008)

  • But, this small group is not fully supported by top officers in the MoH

Activities at provincial and district level (small scale)

  • Gadjah Mada University in collaboration with MoH, local governments, supported by:

  • the World Bank Institute,

  • Harvard School of Public Health, and

  • Ausaid,

    develops the capacity of planning and executing health care reform through the Flagship Program in Health Care Reform and Sustainable Financing (started in 2008)

  • The experiment is implemented in 5 Provinces and 5 districts/cities

In-campus training (I)

In-campus training (II)


Consultation and Workshop

Preparation- FGD at each Prov/


- Acquiring data set

Off campus II: work assignment and consultation

Off campus I: work assignment and consultation

The Flagship Program combined training and consultation

In-campus training (I)

In-campus training (II)

Preparation- FGD at each Prov/


- Acquiring data set


Consultation and Workshop

Off campus II: work assignment

Off campus I: work assignment

Health Sector Reform Cycle




Problem identification



Political Decision

Policy Development

Program Schedule

Whether the activities will be effective to initiate and implement health reform?

The Supports

  • There are sufficient experiences during the transition period of decentralization (2000-2007)

  • The legal basis is available

  • The support of Ministry of Home Affair for health reform based in decentralization policy is big.

  • The knowledge of health reform is supported by international experts


  • The success depends on the leadership of Ministry of Health and Provincial/District/ City Health Leaders.


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