Health Insurance for Rich People
The role of the private health insurance should be left to the market mechanism and there is no need to make this additional private-health insurance a new special JKN scheme.
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The Health Minister, at a working meeting with House of Representatives Commission IX, on 24 November 2022, explained the concept of the National Health Insurance program, which was intended for the rich.
This program will integrate the private-health insurance with the state-run National Health Insurance (JKN) program managed by BPJS Kesehatan in the hopes that the rich will no longer burden the state by using the benefits coverage from the JKN program.
The Health Minister pointed out that so far JKN has been used by the rich more often than the poor, meaning the government has actually in essencce provided subsidies for the rich.
Social health insurance
Health services are the basic rights of every citizen, guaranteed by the constitution, which means that every resident who needs them must have access to health services to maintain optimal-health status.
The biggest obstacle in using health services is the relatively expensive cost of health services. The cost of health services in general will not be affordable to individuals with average income. If someone is sick and needs health services, there will be a financial disaster for two reasons: (i) the high cost of health services, and (ii) the need for health services, namely the condition of a person's illness is uncertain and cannot be planned.
In order to protect the population from the risk of financial catastrophe resulting from using health services, it is imperative that the state develop a health-financing system, in which the use of health services is based on need and not on ability to pay.
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In general, there are two forms of health-financing systems implemented by a number of countries with the basic principles of social justice, namely a tax-based financing system (general tax) and social health insurance (social health insurance). Both systems separate the financial contribution of the population from the need to use health services.
Financial contributions from residents in the form of taxes or health-insurance premiums are applied progressively, meaning that the richer the people, the larger the financial contribution.
Meanwhile, the use of health services is based on need, so that those who are poor can still use the health services they need, even though they cannot afford to pay. This reflects social solidarity in society, which is shown by "the rich help the poor and the healthy help the sick", or known in Indonesia as the principle of gotong royong.
JKN is a form of social-health insurance that is selected and developed by Indonesia as a health-financing system.
JKN was developed with the concept of single payer and single scheme, which was realized by combining the pre-existing social health insurances (Askes for civil servant [PNS], Asabri for Indonesian Military [TNI], as well as Social Security and Askeskin) and the merger of the management bodies for each of these schemes to form BPJS Kesehatan.
The concept of single scheme allows all community contributions from various economic strata to be collected in one pool (single pooling) so that there is an even redistribution of financial risk to all of society, as an application of the principle of mutual cooperation.
In addition, a single scheme will increase the sustainability of the financing system because the contribution from the rich population is greater; it will subsidize the contribution that is smaller from the poor. In addition, in general, rich people have better health status (are less likely to get sick), so they will use health services less than the poor.
JKN scheme specifically for the rich
The emergence of the special JKN concept for the rich is based on the signal that many rich people use JKN to finance health services, especially health services, which are very expensive (dialysis, cancer chemotherapy, cardiac catheterization).
This resulted in the health funds collected being used more by the rich,, and there was an inappropriate allocation of subsidies and a potential deficit in financing from JKN.
In principle, what these rich people do cannot be said to be wrong or unethical (moral hazard). Social health insurance provides benefits to all participants, both the rich and poor, when they need it and as long as appropriate financial contributions have been made.
Legally, JKN membership is mandatory for all Indonesian residents so that anyone who has become a participant has the right to receive health services according to the scope of benefits from JKN. The problem of using health services that are dominated by the rich is not strong enough to justify the formation of a new JKN scheme specifically for the rich.
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The JKN scheme specifically for the rich has the potential to threaten the sustainability of the existing JKN program because it will exacerbate the distribution of financial risk in the existing single pool of revenue.
Empirical evidence from a number of countries shows that rich people have better health conditions and use health services less. Financially, with a progressive system, the contribution of the rich as a source of JKN financing will be very meaningful. Empirical evidence also shows that poor people have worse health status and have the potential to use more health services (the poorest is the sickest).
Separation of the JKN scheme for the rich and the poor has the potential to hinder the cross-subsidy process in the long term because of the imbalance in the distribution of financial risks between the schemes for the poor and the rich. The separation of the JKN scheme also does not reflect the value of gotong royong, which is the main principle of administering JKN as social health insurance.
Improvements of the JKN scheme
JKN, with 241.8 million participants (as of June 2022), or around 87.8 percent of Indonesia's population, is the largest social-health insurance in the world. The problem of the financing deficit and the potential for misallocation of subsidies must be carefully examined.
The greater utilization of health services by the rich as compared to the poor does not reflect the real health-service needs of that (rich) group. The status as the JKN participants that gets rid of financial barriers for using health services does not necessarily encourage the use of equal health services between the rich and the poor.
The availability of health services, especially advanced health services, is still uneven and is generally only available in urban areas, so it is advantageous for the rich because they have more access to these services.
Higher health literacy also means that more-expensive advanced-health services are used by the rich. The potential for a financing deficit is more due to the suboptimal collection of JKN contribution, which is because: (i) the formulation of contributions is not uniform/standardized (some are in the form of percentages, some are in nominal terms), and (ii) the coverage of the JKN program for the very rich is still low.
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For this reason, the government needs to make a geographical distribution of the availability and affordability of health services so that the poor do not experience non-financial barriers when they need to use these health services. This will help reduce the disparity in the use of health services between the rich and the poor, and reflect the real need for health services in the community.
It is necessary to standardize the formulation of JKN contributions based on the percentage of income so that it reflects the principle of gotong royong and at the same time increases the amount of contributions collected. Efforts to penetrate JKN membership for very wealthy groups of people using the principle of progressive-financial contributions need to be continuously optimized.
The standard-class program to replace the (medical) treatment class that is currently being initiated needs to be continued to increase cost efficiency as well as improve service quality. Private health insurance can act as supplementary insurance aimed at the wealthy segment, which wants more comfortable facilities, for example a bedroom that has more privacy.
The role of this private health insurance should be left to the market mechanism and there is no need to make this additional private-health insurance a new special JKN scheme.
Joko Mulyanto
Joko Mulyanto, Lecturer at Medical Faculty, Jenderal Soedirman University; visiting researcher at Amsterdam University Medical Center in the Netherlands
This article was translated by Kurniawan Siswo.
