Sub-national health care financing reforms in Indonesia.

Indonesia has seen an emergence of local health care financing schemes over the last decade, implemented and operated by district governments. Often motivated by the local political context and characterized by a large degree of heterogeneity in scope and design, the common objective of the district schemes is to address the coverage gaps for the informal sector left by national social health insurance programs. This paper investigates the effect of these local health care financing schemes on access to health care and financial protection. Using data from a unique survey among District Health Offices, combined with data from the annual National Socioeconomic Surveys, the study is based on a fixed effects analysis for a panel of 262 districts over the period 2004-10, exploiting variation in local health financing reforms across districts in terms of type of reform and timing of implementation. Although the schemes had a modest impact on average, they do seem to have provided some contribution to closing the coverage gap, by increasing outpatient utilization for households in the middle quintiles that tend to fall just outside the target population of the national subsidized programs. However, there seems to be little effect on hospitalization or financial protection, indicating the limitations of local health care financing policies. In addition, we see effect heterogeneity across districts due to differences in design features.

Coping with the economic consequences of ill health in Indonesia.

We assess the economic risk of ill health for households in Indonesia and the role of informal coping strategies. Using household panel data from the Indonesian socio-economic household survey (Susenas) for 2003 and 2004, and applying fixed effects Poisson models, we find evidence of economic risk from illness through medical expenses. For the poor and the informal sector, ill health events impact negatively on income from wage labour, whereas for the non-poor and formal sector, it is income from self-employed business activities which is negatively affected. However, only for the rural population and the poor does this lead to a decrease in consumption, whereas the non-poor seem to be able to protect current household spending. Borrowing and drawing on family network and buffers, such as savings and assets, seem to be key informal coping strategies for the poor, which may have negative long-term effects. While these results suggest scope for public intervention, the economic risk from income loss for the rural poor is beyond public health care financing reforms. Rather, formal sector employment seems to be a key instrument for financial protection from illness, by also reducing income risk.