JKN PRINCIPLES AND EARLY OPERATIONS

JKN is intended to address these growing disparities in health care in Indonesia. Its main objective is to create a well-integrated, sustainable, accessible, and equitable health system that provides comprehensive, high-quality care to all Indonesians.

During the years between passage of Law 40 in 2004 and the launch of the consolidated National Health Insurance Scheme on 1 January 2014, many steps were taken toward fulfillment of the national commitment to have a health care system for all Indonesians. When the law was adopted in 2004, only civil servants, the military, and the police were covered by health insurance, each in a separate program. Attention was first directed to develop new coverage for the health needs of the poor. In 2005, a new Social Health Insurance for the Poor program was launched for that purpose (called Asuransi Kesehatan untuk Yang Miskin or Askeskin). In 2008, Askeskin evolved into a broader program of health insurance (known as Jamkesmas)10 with wider coverage and incorporating lessons learned from Askeskin.

In 2010, a new program was added to reduce maternal and child mortality, providing coverage for all pregnant women (Jaminan Persalinan or Jampersal). The final years of preparation for the launch of JKN focused on designing how to consolidate the multiple programs under one national administrative, management, and service system while at the same time identifying and moving to ”fill gaps” in coverage (improving equity) and raising the quality of services. This period included the development of a “road map” for continuing expansion of the system from its launch in 2014 to the achievement of UHC by 2019.

The development of JKN was based on five core principles:

1. The spirit and practice of gotong royong, meaning mutual support.
2. Mandatory membership for all Indonesians by 2019.
3. “Portability” of the right to service: members of JKN are entitled to service anywhere in Indonesia.
4. Principles and best practice of social health insurance to guide the management of JKN.
5. Medical service is equal for all JKN members; however, members paying all or a portion of their own membership can choose to pay for a higher level of in-patient service.

An early challenge in the implementation of JNK was integrating into one system the separate insurance programs that had covered the poor and near poor (PBId), civil servants, the military, the police, pensioners, and some staff of state enterprises (BUMNe). Except for PBI, these insurance programs all involved financial contributions by both the employer and the employee. Under JKN all of these systems became part of the unified National Social Health Insurance Scheme with a single management system as well as a single system of rights and benefits for members. On 1 January 2014, membership in JKN was opened to others, defined as independent members, who would pay their own premiums. Some provincial and district governments also chose to enroll the near poor from their local programs in JKN, thereby bringing the total number of poor and near-poor subsidized by government to 93.9 million by 31 August 2014.f

Under JKN, the Ministry of Health is responsible for setting clinical guidelines and technical norms. On the other hand, health care delivery depends on a mix of public and private providers. The financial affairs of JKN are run by an independent management agency for the health wing of the Social Security System, called BPJS Health. This agency manages the new health insurance system, including recruitment of members, payment to service providers, and collection of fees.
Another major goal of JKN, which was important to policy makers, was improving the quality of care. In order to move forward on this objective, and based on the principle that what could be measured would be well managed, we did a full assessment of our system's quality of care both from the providers’ technical perspective as well as from the patients’ satisfaction standpoint. We then sought to strengthen our medical education system, to assure the availability of qualified staff at primary health centers (PHCs) and hospitals through the rotation and field assignments of doctors and specialists and to encourage service by qualified doctors in the most challenging island, border, and isolated posts through the introduction of incentives (financial and educational opportunities).

Key Challenges of Building JKN
The Ministry of Health established six working groups to address key challenges in implementing the JKN:

• Regulatory infrastructure for both service delivery and management
• Finance, transformation, and integration of programs and institutions (from former programs)
• Health facilities, referral, and infrastructure
• Human resources and capacity building
• Pharmaceutical and medical devices
• Socialization and advocacy

Indonesia launches universal healthcare

Indonesia has taken a significant step in its efforts to roll out universal healthcare, but funding will remain tight. Indonesia launched its universal health care programme, known locally as Jaminan Kesehatan Nasional (JKN). Its laudable goal is to provide health insurance to the country's estimated 250m people in five years, or by January 2019. But faced with the immense challenge of implementing such a scheme in the world’s fourth most populous country, the government is phasing the introduction carefully.

In the first stage of the programme’s implementation this year, the JKN will cover 121.6m Indonesians. This amounts to around half of the population already, but is less of an achievement than it looks. The figure includes 86.4m people already enrolled in the Jamkesmas, the fully state-funded health insurance for Indonesians categorised as poor and near-poor, or those living on less than Rp233,000 (US$24) a month. Another 11m of the tally are those already qualified for the Jamkesda programme, a scheme run by local governments. In addition, there are 16m civil servants and their families already covered by PT Askes, 7m covered by Jamsostek, the health insurance for private sector workers, and 1.2m members of Asabri, the social insurance for the military and their dependants.

The JKN's achievement, therefore, is to integrate the various state-owned health insurance schemes into a single payer, quasi-government organisation, dubbed BPJS-Health, which will administer the JKN. Its head, Fahmi Idris, confirmed in late December 2013 the government has transferred of assets and insurance plans of the five health insurance bodies to BPJS and that BPJS-Health has prepared the online infrastructure for JKN, which involves consolidating the programme’s database of members. Under a similar scheme for other benefits, another super administrator, BPJS-Employment, will provide pension, occupational injury benefits, provident funds and death benefits by 2015 at the latest.

The government has also worked out how to finance the JKN. The government will shoulder the premiums of the 86.4m erstwhile Jamkesmas members and has allocated Rp19.3trn (US$1.6bn) for this purpose in the 2014 budget. Those earning wages from formal employment, either state- or private-sector, will pay a premium equivalent to 5% of their salary (4% payable by employers and 1% by employees). All other members, including informal workers, the self-employed and investors, will pay monthly premiums of between Rp 25,500 and Rp59,500 each.

The JKN covers comprehensive benefits, from infectious diseases such as influenza to expensive medical intervention such as open-heart surgery, dialysis and cancer therapies. The members of the former Jamkesmas, whose premiums are paid for entirely by the government, are entitled to third-class room and board at either state or private hospitals. Those who pay higher premiums are entitled to first-class and second-class room and board. Yet many critics doubt whether the budget will really stretch as far as this coverage implies. While the government's allocation of Rp19.3trn for Jamesmas is more than double 2013's Rp8.29trn, it still amounts to just Rp19,225 per person (US$1.57) per month. The premium payments of wage-earners and non-salaried members are also likely to be inadequate.

Narrow opportunities

Keen to avoid the system becoming insolvent, the Health Ministry has set low reimbursements levels for hospitals. Although a large number of hospitals (1,720 out of Indonesia's total of 2,300) have signed up for JKN, the low reimbursements are eventually likely to dampen the interest of private clinics and hospitals, leading to overcrowding in state facilities. They will also limit the quality of health care and force those who can afford to do so to seek higher-quality care elsewhere, most likely from private insurance providers.

So far, the role of private insurers in Indonesia's ground-breaking reforms is unclear. The government has not provided transitional arrangements for employers that have obtained private health insurance for their workers, leaving them to pay double. But private insurers are expected to benefit from a general shift towards insurance coverage in a market where 75% of private health spending was out of pocket in 2010, according to the World Health Organisation. This will be particularly true if Indonesia's economy grows robustly, boosting the growth of the middle class.

For pharmaceutical companies and medical devices providers, the implementation of the JKN appears to bring plenty of opportunities. However, the most likely beneficiaries are local pharmaceutical companies producing generic drugs, which already have a 70% share of the local drug by volume. According to Health Minister Nafsiah Mboi, in order to lower costs, doctors participating in the JKN will have to adhere to a government formulary, which consists of 92% generics and 2.5% innovator drugs. The rest is accounted for by dental materials and diagnostics.

The implementation of JKN will also leave the current regulatory restrictions on foreign pharmaceutical companies unchanged. Market barriers to growth remain, including a cumbersome approval process for medicines and a long-standing requirement for foreign drug companies to have a manufacturing facility in Indonesia before they can distribute their products. Like private insurance companies, therefore, most foreign pharma and medical device companies will have to rely on Indonesia's growing economy – rather than its healthcare reforms – for any market opportunities.