Debt Vs Health Budget

KOMPAS/DIDIE SW

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The speech by People’s Consultative Assembly (MPR) Speaker Zulkifli Hasan at the MPR Annual Session at the House of Representatives Building, Aug. 16, saw a response from Finance Minister Sri Mulyani Indrawati. The topic of Zulkifli\'s speech that Sri Mulyani was responding to was the problem of Indonesia\'s debt ratio, which was considered unsafe compared to village funds and health budget.

Sri Mulyani\'s response was specifically revealed through her official Facebook account. In her explanation, Sri Mulyani disclosed that the total payment of Indonesia\'s principal debt in 2009 was Rp 117.1 trillion (US$7.86 billion), while the health budget was Rp 25.6 trillion. Therefore, the ratio of the payment of the principal debt and health budget is 4.57 times. In 2018, the payment of principal debt was Rp 396 trillion, while the health budget was Rp 107.4 trillion, or a fall in ratio by 3.68 times. It means that the new ratio has declined 19.4 percent in nine years.

In fact, in 2019 the health budget will increase to Rp 122 trillion, or 4.77 times the 2009 budget, and its ratio experiences a much larger decline, namely 26.7 percent. Here, the health budget is not only allocated to the Health Ministry, but also to other public health improvement programs, including the Special Allocation Fund (DAK) for Health and Family Planning.

In the political year, the statement of the MPR speaker with the above criticism is considered normal as a contestation political narrative ahead of the 2019 presidential election. However, comparing debt payments with the health budget can lead to bias and tends to be misleading if not seen in a wider perspective, referring to best practices in other countries in order to realize the constitutional mandate.

Comparing debt payments with the health budget is misleading in two dimensions, namely it seems as if we are in debt only to finance the health budget and our debt increases beyond the increase in the health budget.

When compared to other countries, the ratio of debt to gross domestic product (GDP) and per capita level in 2016, Indonesia is the country with the lowest value. The government debt is indeed increasing. However, if we look at the comparison with GDP, Indonesia\'s debt remains under control. Indonesia\'s debt to GDP ratio in 2016 was recorded at 28 percent, Thailand 42 percent, the Philippines 29 percent, Malaysia 56 percent, Vietnam 62 percent, Japan 239 percent and the United States 107 percent. For per capita debt in the same year, Indonesia was US$1,004, Thailand ($2,460), the Philippines ($984), Malaysia ($5,272), Vietnam ($2,459), Japan ($93,095) and the US ($61,658). GDP per capita in 2016 for each country: Indonesia $3,604, Thailand ($5,899), Philippines ($2,924), Malaysia ($9,360), Vietnam ($2,173), Japan ($38,917) and the US ($57,436).

Indonesia, with a low fiscal deficit, is among the countries with the highest economic growth. In other words, additional debt becomes smaller compared to the additional benefits obtained. Currently five international credit rating agencies (Fitch, Moody\'s, R & I, JCRA and Standard & Poor\'s) have classified Indonesia as investment grade. This means that Indonesia is considered to have high repayment capacity with a very low risk of default.

Paradox of poverty

Prof. Rhenald Kasali wrote on kompas.com (31/8/2018, "The Rich People who Confess their Life is more Difficult") about how the super rich interpret the meaning of poverty, just like Indonesia\'s wealthy politicians who sell poverty and "people\'s suffering" during campaigns. Citing the book Homo Deus written by Professor Yuval Noah Harari, we are reminded that when countries focus to tackle poverty, we find the greatest killer of humanity. The killer is no longer malnourishment, contagious diseases or terrorism, but sugar.

There is a paradox between a lack of food that results in malnutrition and overeating that results in diabetes and obesity. In Indonesia, with the village fund program, we witness that there are more than 100,000 kilometers of village roads. Infectious diseases are quickly eradicated. However, the three biggest killers of Indonesians, according to a Health Ministry\'s Research and Development Agency survey, are diabetes, stroke and heart disease. All three are said to affect rich. Not the poor.

On the other hand, the reality is that the big complaints about Health Care and Social Security Agency (BPJS Kesehatan) services are not from the poor, but from the middle class, who are lazy to pay dues. They prioritize rights rather than their obligations.

Data from 2014 to 2016 from the BPJS Kesehatan shows that inpatient cases of non-PBI (contribution aid) participants are much higher than PBI participants. This has an impact on the non-PBI participant\'s health service expenditure, which is also much higher than the PBI. Expenditures for catastrophic disease costs also show the same pattern, namely non-PBI participants use catastrophic costs far more than PBI participants.

Data shows that the category of non-PBPU (non-wage) participants constitutes the largest portion of BPJS Kesehatan participants (90 percent), especially those from PBI participants of 106,956,525 people as of Jan. 13, 2017, and also contributing the largest contributions (89 percent) per year in 2016. On the other hand, the ratio of claims generated by the PBPU partcipants, namely health insurance costs of Rp 16.67 trillion compared to contributions of Rp 5.91 trillion (281.5 percent) or resulting in a deficit of Rp 10.75 trillion. This is far greater than the claim ratio in non-PBPU, namely health insurance costs of Rp 40.40 trillion compared to non-PBPU contributions of Rp 48.10 trillion (83.9 percent) or generating a surplus of Rp 7.70 trillion.

The problem that is characteristic of PBPU participants or independent participants is the tendency that participants only register to become national health insurance (JKN) participants when they feel ill and need services from the JKN program, both for hospitalization, childbirth or catastrophic diseases. This condition is classified as adverse selection, which is a form of moral hazard in the participation of the JKN program from the PBPU-participant category.

High-ranking state officials have additional health insurance with a much larger contribution. In 2014, the presidential regulation governing the issue of health insurance for high-ranking officials — which was then funded with a contribution of Rp 1.7 million per official per month — was revoked by the President because of public protests. However, guarantees are still continued with the finance minister\'s regulations. Compare this with the contribution for the poor population in the form of PBI amounting to Rp 23,000 per person per month for 92.4 million people.

In other countries there is cost sharing from participants in the form of additional contribution schemes besides the mandatory contributions. The additional contributions must be paid by the community if they make a visit to the doctor, hospitalization and pay for medicine. In Germany, additional fees are applied at 10 euros ($11.57) per quarter for doctor visits, 10 euros per hospitalization per day with a maximum of 280 euros per year and a maximum of 10 euros for prescriptions (Hasbullah Thabrany, 2015).

Health fund commitment

Data shows JKN financing for catastrophic diseases in 2014 totaled 7,055,226 cases with financing of Rp 10.63 trillion (37.32 percent) of the total cost of referral health services. In 2015 there was a total of 10,304,232 cases with financing of Rp 13.88 trillion. In 2016 there were 9,861,378 cases with Rp 12.75 trillion (24.81 percent) of the total cost of referral health services. The large number of cases of catastrophic disease borne by the JKN-Indonesian Health Card (KIS) program contributes not insignificantly to the prevention of new poverty.

The development of the coverage of UHC (Universal Health Coverage) membership of BPJS Kesehatan shows a figure of 133.4 million people in 2014, 156.7 million in 2015, 171.9 million in 2016 and the last position based on BPJS data as of Sept. 1 shows that the number of participants is 201.6 million.

The coverage of such a number of participants is achieved within four years from the start of the operation of the BPJS Kesehatan in order to reach the 2014 to 2019 UHC for the entire Indonesian population, which is now 254.9 million people (National Economic Census of Statistics Indonesia, 2015). Germany, with a population of 80.6 million, reaches 85 percent UHC in 127 years, Belgium with a population of 11.4 million reaching 100 percent of UHC in 118 years, Austria 8.7 million reaching 99 percent of UHC in 79 years, Luxembourg reaching UHC in 72 years, Costa Rica 48 years, Japan 36 years, and South Korea reaching UHC in 26 years for 97.25 percent of the population of 50.9 million.

To understand the UHC commitment, World Bank 2018 data can provide an objective picture. The government commitment can be measured by the percentage of health funds from the public. In 2015, Indonesia\'s public funds contributed only 3.35 percent of GDP. China was 5.32 percent, Malaysia 4 percent, Thailand 3.77 percent and India 3.89 percent.

The most important measure is the proportion of health expenditures that is out-of-pocket expenditure on the overall health costs. In 2015, the burden of Indonesian households ranked second (48.30 percent) after India (65.66 percent), Vietnam (43.48 percent), Malaysia (36.67 percent), China (32.39 percent) and lowest Thailand (11.77 percent).

The government is committed to increasing the 5 percent health budget according to the mandate of the law to improve access and quality of health services and strengthen the handling of stunting.

Improvements being made include improving the quality and availability of health workers, increasing the effectiveness of health operational assistance and operational assistance for Family Planning, strengthening health promotion and preventive programs. Improving access is in the form of PBI expansion to 96.8 million people by 2019, followed by improvement of target accuracy, improvement of services at first level health facilities, and strengthening stunting handling efforts.

Overcoming the increasingly large JKN deficit can be done with a policy mix. Among them is to make JKN-KIS contributions in the non-PBI category with actuarial calculations and are progressive in order to fit the economics of health service costs (Article 19 of Law No. 40/2004 on the national social security system, or SJSN), as well as cost sharing with participants, especially catastrophic diseases, on the wealthier community groups or PBPU. The amount of the cost is not applied to PBI, which has the characteristics of a low-claim ratio. The cost contribution can reduce the moral hazard at PBPU. The amount of the cost contribution serves as an additional contribution to the participants (Article 22 Paragraph 2 of Law No. 40/2004 on SJSN).

Moreover, the distribution of the burden of the cost of health services is in line with the Workers Social Security Agency (BPJS Ketenagakerjaan) program (due to work accidents), with PT Jasa Raharja (due to public transport accidents) and with Jasindo Insurance (for the fisheries insurance program of the Maritime Affairs and Fisheries Ministry). What is no less important is the improvement in education and legal enforcement on the discipline to pay the contribution as regulated by Presidential Regulation No. 28/2016 on the third amendment to Presidential Regulation No. 12/2013 on health insurance. From this proposal, the benefit costs of JKN participants\' health services will be in accordance with Article 19 to Article 23 of Law No. 40/2004 on SJSN, and decrease by at least Rp 5 trillion a year.

The idea of closing the deficit from cigarette excise and increasing the contribution of local governments also need to be considered, as well as efforts to encourage imperative measures in the short term so that 30 million employees belonging to Wage Recipients (PPU) register and become active participants so that the quality of the JKN-KIS participant mix becomes better.

Irvan Rahardjo, Observer of Insurance and Social Security Policies