National healthcare bill: Just what the doctor ordered?

Todd Callahan, Senior Technical Advisor, PT Jasa Cita, Jakarta

Legislation by political fiat is how one observer in the know described the government's national healthcare bill. Alarmingly, many seem to know little about the proposed legislation under consideration in parliament or even the extent to which it will replace or overlap existing provisions under the new labor law, state-run Jamsostek pension scheme and ASKES health insurance for civil servants, veterans and their dependents.

When interviewed, even health care providers like David Elwanda, a 20-year veteran working in a community health center in Tanah Abang, Central Jakarta, knew nothing about the bill. This is wrong and the bill should be subject to the scrutiny of the public and the private sector that would fund it before any law is enacted.

The question is not whether the Indonesian people deserve better health care. They do. The question is whether the current bill is the best way to deliver the goods. Doubts abound. For this reason, there needs to be a more thoughtful debate on the matter before the legislature, which should guard the people's interest, embarks on what amounts to a socialized healthcare system.

On the face of it, the bill seems like an attractive idea to many: Free health care coverage for all Indonesians paid for by the wealthy. It is just what the doctor ordered, right? Alas, a little skepticism is in order. The legislation's political sponsors are principally motivated by its populist appeal ahead of next year's parliamentary and presidential elections. Meanwhile, other proponents of the scheme seem to be seduced by its good intentions even if its efficacy is dubious. But who has decided this is priority over Indonesia's myriad other needs?

The important provisions of the bill are that it will be mandatory for all citizens and foreign nationals resident in the country for more than 180 days. Furthermore, all employers will be required to enroll in the scheme, beginning with large ones in the formal sector. According to one report, the law will even criminalize employer non-compliance with penalties of up to one year in jail as well as punitive fines. Using regional minimum wages as a benchmark, the government will pick up the tab for the poor and unemployed.

To help finance the multi-billion dollar a year plan, employers and employees will be asked to pay a combined payroll deduction of 6 percent with the balance presumably coming from the public budget. In practice, employers will likely be asked to swallow the entire sum, increasing to nearly 20 percent the contribution they will need to pay to support Jamsostek pensions and the new healthcare plan. There will be no opt-outs or salary caps for senior managers, expatriates and others who are unlikely to use the healthcare.

On implementation, a mechanism exists but details are ominously vague. What is clear is that an implementing body appointed by and reporting to the president will manage the scheme. A council consisting of various stakeholders will handle supervision and a trust fund will be established to manage the money. With the huge amount of funds involved, what is less clear is how the overseers of the healthcare plan will be able to resist political intervention along the lines of what has allegedly occurred at Jamsostek and numerous state-owned enterprises. This is a valid concern given the fact that the implementing body will consist of appointees.

Beyond oversight, the healthcare bill's viability is questionable because the country simply cannot afford national coverage. Of the estimated US$6.5 billion needed each year to finance the program, some $3 billion is supposed to come from the government's purse. And we all know the government's purse is not the Louis Vuitton pedigree of pre-crisis Indonesia. The private sector is also unable to fund the program. At a time when companies are struggling to get back on their feet, mandatory payroll deductions will only serve to erode competitiveness and harm employee welfare by making retrenchments inevitable. Clearly the financing for a national program is not there.

On top of the money being absent, the proposed legislation will not hit its mark of providing good healthcare to all Indonesians. In fact, if the bill is passed into law it will have the opposite effect. Some employers may feel obliged to shoulder the cost of two healthcare programs to ensure decent care for their workers.

However, others out of economic necessity will be forced to abandon their private programs for inferior government coverage. As an illustration, many modern treatments and medications will not be offered by the national healthcare plan. Finally, any experiment with a national scheme is bound to be a disincentive to private operators. It will discourage sorely needed investment and hamper the modernization of the country's healthcare infrastructure.

Government authorities would do better to focus on improving basic services. The Ministry of Health has a sensible program called Healthy Indonesia Vision 2010 which is devoted to bettering 16 health indicators listed in the following table. To achieve its targets, Indonesia should work through its network of Puskesmas community health centers.

In 2001 there were approximately 28,800 centers nationwide. Instead of attempting to pass national healthcare legislation, the way forward is to build more centers and equip them with the resources necessary to provide the country's people with the basic healthcare they deserve.

HEALTHY INDONESIA VISION 2010

Health Indicators2010 Target

Life Expectancy at Birth 70

Infant Deaths per 1,000 Live Births 40

Childhood Deaths per 1,000 Live Births 58

Childhood Pneumonia Deaths per 1,000 Children 2

Childhood Diarrhea Deaths per 1,000 Children 1

Maternal Deaths during Childbirth per 100,000 Live Births 150

Dengue Fever Infections per 100,000 People <1

Malaria Infections per 1,000 People 0.5

Recovery Percentage from Tuberculosis of the Lungs >85

Percentage of HIV/AIDS Carriers to Risk Population <1

Acute Flaccid Paralysis (AFP), Children Under 15 years per

100,000 People <1

Percentage of Infants with Low Birth Weights 5

Percentage of Children with Sufficient Nutrition 80

Percentage of Pregnant Women with Nutrition-induced Anemia 45

Prevalence of Disorders due to Iodine Deficiency 6

Percentage of Women of Child Bearing Age with Chronic Energy Deficiency Syndrome 10

Source: Department of Health (2002)