Amid rising public awareness and demand for health insurance,\nIndonesia\u2019s health insurance sector is teetering on the edge.\nUncontrolled medical inflation is eroding the resilience of the health\ninsurance system, raising concerns about the sustainability of current\nbusiness models.<\/p>\n
The latest report from Sustainable Private Health Insurance in Asia,\ntitled \u201cFacing Inflation and Affordability Concerns as We Reduce\nProtection Gaps,\u201d published by the Global Asia Insurance Partnership\n(GAIP), reveals that medical cost inflation now poses the greatest\nthreat to health financing systems in Asia, with Indonesia among the\nmost affected.<\/p>\n
Data indicates that medical cost inflation in Indonesia will reach\naround 13.6% in 2025 (above general inflation). This figure places\nIndonesia at the top in the Asian region. Thailand ranks second with\n13.1% medical inflation, followed by Malaysia at 12.5%, and Singapore at\n11.5%.<\/p>\n
However, unlike other countries, Indonesia faces additional pressures\nfrom low insurance penetration and high direct out-of-pocket costs,\naround 33%. The high out-of-pocket expenses, which according to the\nFinancial Services Authority (OJK) amount to Rp175 trillion, signify\nthat rising direct health costs are felt by the public.<\/p>\n
The surge in medical costs directly impacts the profitability of the\ninsurance industry. Indonesia\u2019s health insurance claim ratio stands at\nabout 86%, with the combined ratio exceeding 100%. This condition\nindicates that collected premiums are nearly depleted by claims. In some\ncases, companies have incurred losses and decided to shut down their\nhealth insurance businesses.<\/p>\n
If this trend continues, industry players may aggressively raise\npremiums, reduce benefits, or even exit the health insurance business.\nUltimately, the public suffers as access to healthcare services becomes\nlimited.<\/p>\n
One factor highlighted in the report is the unhealthy product design.\nThe market has long been dominated by products without co-payments,\nwithout deductibles, and with overly broad benefits. This model\nencourages excessive consumption behaviour (overutilisation), which\nultimately accelerates claim increases.<\/p>\n
In the Asian region, several countries have anticipated this issue\nearlier. Singapore, for example, has strictly implemented co-pays and\ndeductibles and maintains a hybrid system between public and\nprivate.<\/p>\n
Thailand relies on a universal health coverage system and has reduced\ndirect public costs to below 10%.<\/p>\n
Meanwhile, Indonesia is still in a transitional phase, with health\nexpenditure at only about 2.7% of GDP and the role of private insurance\nlimited to around 14%.<\/p>\n
Facing the Crisis<\/p>\n
Furthermore, the report warns that without reforms, health financing\nsystems in several Asian countries, including Indonesia, could face a\ncrisis in the next 2 to 5 years. With current medical inflation rates\nand industry pressures, Indonesia is seen as accelerating towards that\ncrisis point.<\/p>\n
Through POJK Number 36\/2025 on Strengthening the Health Insurance\nEcosystem, the OJK is attempting to reform the health insurance\necosystem, among other things by implementing a 5% co-payment or\nco-sharing, establishing a Medical Advisory Board, and applying KAPJ\n(Coordination Among Health Insurance Providers).<\/p>\n
Regarding the reforms underway in Indonesia, GAIP provides several\nnotes. First, the policy-making process needs to involve stakeholders,\nincluding legislators. Second, refining the initial position can yield\nbeneficial progress.<\/p>\n
Third, providing options will allow directing many customers to\nchoices that avoid no co-pay options due to cost. Fourth, the\ndistribution and renewal processes for insurance may provide significant\nsteps in reforms that affirm the insurance process can leverage\nbenefits.<\/p>\n
GAIP assesses that incentives are key, and co-pay is part of that\nenvironment. In an environment without co-pay, high medical inflation is\nunavoidable, making the health insurance business unsustainable.<\/p>\n
In Indonesia\u2019s case, the decision lies with insurance companies to\nprice products either without co-pay or with a 5% co-pay.<\/p>\n
If insurance companies focus on providing no co-pay products, for\nexample, targeting high-income groups as the market, the companies will\nlikely continue to see problematic results in the sustainability of\ntheir health insurance portfolios.<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/medical-inflation-surges-indonesias-health-insurance-on-the-brink-1777017124", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }