National healthcare bill: Just what the doctor ordered?

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 Births40

Childhood Deaths per 1,000 Live Births58

Childhood Pneumonia Deaths per 1,000 Children2

Childhood Diarrhea Deaths per 1,000 Children1

Maternal Deaths during Childbirth per 100,000 Live Births150

Dengue Fever Infections per 100,000 People