health care and democratization in indon

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Health care and democratization

in Indonesia

Edward Aspinalla

a Department of Political and Social Change, School of

International, Political and Strategic Studies, College

of Asia and the Pacific, Australian National University,

Canberra, Australia

Published online: 26 Feb 2014.

To cite this article: Edward Aspinall (2014): Health care and democratization in

Indonesia, Democratization, DOI: 10.1080/13510347.2013.873791

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Health care and democratization in Indonesia

Edward Aspinall∗

Department of Political and Social Change, School of International, Political and StrategicStudies, College of Asia and the Pacific, Australian National University, Canberra,

Australia

( Received 18 August 2013; final version received 30 November 2013)

Analyses of Indonesian democracy often emphasize elite capture of democratic institutions, continuity in oligarchic power relations, andexclusion of popular interests. Defying such analyses, over the last decade,Indonesia has experienced a proliferation of social welfare programmes,some with a redistributive element. This article analyses the expansion of social welfare protection by focusing on health care. At the national level,Indonesia has introduced programmes providing free health care to the poor and approved a plan for universal social insurance. At the subnational level,in the context of far-reaching decentralization reforms, politicians havecompeted with each other to introduce generous local health care schemes.

Taking its cue from analyses of social welfare expansion in other East Asianstates, the article finds the origins of policy shift in the incentives that democracy creates for elites to design policies that appeal to broad socialconstituencies, and in the widening scope for engagement in policymakingthat democracy allows. The article ends with a cautionary note, pointing toways in which oligarchic power relations and the corruption they spawn stillundermine health care quality, despite expansion of coverage.

Keywords: Indonesian politics; social welfare; health care; oligarchy;corruption; policymaking

Introduction

Since the fall of the authoritarian Suharto regime in 1998 and gathering pace over

the last decade, Indonesia has experienced a dramatic increase in the scale and

reach of state-run social welfare programmes. Beginning with a series of social

safety network programmes that were designed to blunt the impact of the 1997

Asian financial crisis on the poor, policy expansion has since moved in a range

of directions. A new provision of the constitution (article 28H(3)) provides all citi-

zens the “right to social security to enable their full development as dignified

human beings”. Another mandates that 20% of the state budget be spent on

# 2014 Taylor & Francis

∗Email: [email protected]

Democratization, 2014http://dx.doi.org/10.1080/13510347.2013.873791

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mailto:[email protected]:[email protected]


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education. A policy of free, universal education for 12 years of schooling has been

introduced. In the area that this article focuses on – health care – increasingly

expansive schemes provide free services for the poor and near poor. Laws estab-

lishing a national social security system that will provide health care, pensions,

and workplace death and injury compensation insurance for all Indonesian citizens,

were passed by the national legislature in 2004 and 2011 and have begun to go into

effect in 2014. The Economist magazine writes that this new system will see Indo-

nesia “building the biggest ‘single-payer’ national health scheme – where one gov-

ernment outfit collects the contributions and foots the bills – in the world”.1 At the

subnational level, too, local governments have used the expanded political and

fiscal authority they enjoy as a result of decentralization to expand social

welfare spending, with a rash of free health care and other welfare policies supple-

menting the national schemes. These changes, the scale and implications of which

have barely been appreciated by observers of Indonesian politics, have expandedstate involvement in social welfare provision, and have the potential to remake the

relationship between the Indonesian state and its citizens by making government

far more responsive to the needs of the poor.

From the perspective of the literature on Indonesian democratization, this

policy shift is surprising, even puzzling. A recurrent and arguably dominant

theme in studies of Indonesia’s new democracy is elite capture. In this view,

the institutions of Indonesian democracy are still dominated by the oligarchs,

bureaucrats, and other elite actors who ruled under Suharto, the main logic

governing political power is predation, and the social coalition underpinning Indo-nesian democracy is largely unchanged from that which propped up authoritarian-

ism. In particular, so this analysis goes, groups representing workers, farmers, or

other subordinate groups remain politically marginalized, and are largely unable

to assert their interests in the policymaking process.2 This view has recently

been challenged by scholars who suggest that it understates the plurality of inter-

ests represented in government bodies and policymaking. For example, Mietzner

has argued that activists from civil society groups have begun to penetrate legis-

lative and other bodies, having some influence on policy.3 The analysis presented

in this article provides further ammunition to this challenge. It argues that theemergence of new social welfare policies indicates that the state is becoming

more responsive to the interests of poor citizens, and that policymaking processes

are providing at least some avenues for input by groups representing their

interests.4

From a comparative perspective, moreover, the expansion of social welfare

policies in Indonesia is less surprising than the elite capture perspective would

suggest. The third wave of democratization since the 1970s has been associated

with radical revisions of social welfare systems inherited from predecessor author-

itarian regimes. In some cases, such as the formerly socialist countries of EasternEurope, these changes have involved scaling back the state’s role in social protec-

tion; elsewhere, that role has expanded. Among the best studied examples are the

countries of Northeast Asia, especially South Korea and Taiwan. Stephan Haggard

2 E. Aspinall

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has argued that democratization in these countries has been associated with “a more

expansive approach to social welfare”, whereby democracy has “generated new

pressure on governments to provide social protection”.5 In his analysis of health

care in Taiwan and South Korea, Joseph Wong likewise finds that “reform trajec-

tories [ . . .

] moved in tandem and in a similar direction, from limited health insur-

ance schemes before democratic transition to universal and redistributive medical

insurance programmes during the period of democratization”.6 Accordingly, East

Asian countries are witnessing the replacement of what were once labelled “pro-

ductivist” social welfare regimes, with systems that emphasize universal coverage

and redistribution.7 Closer to Indonesia, in the Southeast Asian region, similar

though less dramatic changes have been visible. For example, in Thailand, the

1997 election of Prime Minister Thaksin Shinawatra signalled the birth of “a

new social contract that replaced the developmental social compact that had oper-

ated since the late 1950s”,8 and involved, among other things, the introduction of a popular universal health scheme. The analysis in this article suggests Indonesia is

moving in the same direction.

This article has three main goals: to sketch the nature and extent of social

welfare policy expansion in post-authoritarian Indonesia; to explain these policy

changes, especially their connection to democratization; and, to review their impli-

cations for our understanding of Indonesian democracy. To achieve the first of

these goals, the article focuses on health care as a case study. The first three sections

sketch health care policies prior to the democratic transition, and then summarize

their expansion over the last 15 years of democratic change, focusing on the pie-cemeal expansion of health care coverage at national and local levels and the con-

struction of a universal social insurance framework.

The fourth section of the article considers exactly how democratization has led

to health care policy expansion. It identifies two causal mechanisms, both closely

paralleling Northeast Asian experiences. First, democratization opened the policy-

making process to more actors, including new political parties, social movements,

and organized labour, some of which, as we shall see, have played an important

role in lobbying and mobilizing for policy change. Second, democratization

changed the incentive structures under which both new and old policy actors oper-ated, especially by increasing pressures on political leaders to respond to voter pre-

ferences for greater welfare provision. Accordingly, some of the most expansive

local health care schemes have been introduced, not by new political forces

unleashed by democratization, but by old-style oligarchic politicians chasing

votes and seeking new popular legitimacy.

The final section reviews the implications for our understanding of Indonesian

democracy and the social coalitions that underpin it. The policy shifts analysed in

the article suggest greater government responsiveness to popular preferences than

has hitherto been widely accepted in studies of Indonesian democracy. Even so,analyses stressing the continuing dominance of oligarchic forces remain relevant.

Despite policy reform, health care services delivered to poor citizens are seriously

underfunded and are still severely hampered by the modes of predatory behaviour

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as training and provision of equipment and pharmaceuticals within the public

system left much to be desired. The standard of care provided even for recipients

of the civil service and armed forces schemes was often poor, with the result that

those who could afford it took out private health insurance, and visited private

doctors’ surgeries and hospitals. Moreover, although the public system was reason-

ably effective at providing very basic health care, treatment was limited for poor

people suffering from serious conditions. As a result, access to health care

remained highly unequal, with one study showing that in 1995, “the chances

that the poorest 10% of the population would be hospitalized was only one-tenth

of the probability for the richest 10%”.13

The turning point for expansion of social welfare policies, including health care,

was the Asian economic crisis of 1997 that precipitated widespread unrest leading to

the collapse of the Suharto regime in 1998. This crisis pushed an additional 36

million Indonesians into absolute poverty by the end of 1998.14 Several socialsafety net programmes ( Jaringan Pengaman Sosial , JPS) were introduced, includ-

ing programmes for education, health, and food security. The health component

covered “subsidies for medicines and imported medical equipment, operational

support funds for community health centres, free medical and family planning ser-

vices, and supplemental food for pregnant women and children under three years

old”.15 Sumarto, Suryahadi, and Bazzi state that the “scope and magnitude of this

social protection initiative was simply unprecedented in Indonesian history”.16

While the programme was widely criticized, especially for poor targeting, these

authors maintain that JPS “generated clear welfare improvements at the householdand aggregate level”.17 After the crisis, successive national governments sought to

maintain, substitute, and complement the JPS programmes. Over the following

decade the government also reduced fuel subsidies and redirected the savings

into social programmes, including cash transfer schemes and health care.

Health care for the poor: national and local initiatives

A major free health care initiative was introduced under President Megawati Soe-

karnoputri (2001–2003) in 2003, building on the health care component of theemergency safety net programmes. Initially, the programme was called JPK

Gaskin and was managed at the district level, allowing local governments to

design programmes that accorded with local needs. This approach was revised,

extended, and centralized under President Susilo Bambang Yudhoyono (2004–

2014), first as the Askeskin ( Asuransi Kesehatan untuk Masyarakat Miskin,

Health Insurance for the Poor) programme in 2004 and then as Jamkesmas

( Jaminan Kesehatan Masyarakat , Community Health Insurance) in 2008. In

their various guises, these programmes all aimed to provide free health care to

poor citizens. They were based on the insurance schemes run for private and public sector employees, “[b]ut whereas the formal sector schemes are based on

mandatory earnings-related contributions, the premiums for Ask eskin [and for

Jamkesmas] were fully subsidized by a government health fund”.18 Both Askeskin

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and Jamkesmas offered free basic health care in the Puskesmas community health

centres and third class hospital treatment, with exclusions for some expensive diag-

nostic treatments and instruments.19

Various assessments have been made of the quality and effectiveness of these

programmes. One issue is targeting, with a series of studies revealing considerable

misallocation of health care cards. For example, in the first crisis-era programme,

“despite pro-poor targeting, a considerable number of health cards went to house-

holds in the richer quintiles”.20 Nevertheless, these programmes dramatically

increased health care coverage, with Jamkesmas covering about 86 million

persons out of a total population of 245 million in 2013, at a total cost of 8.29 tril-

lion rupiah, about US$861 million.21

The development of a centrally funded and administered health scheme

occurred alongside a proliferation of policymaking at the subnational level, in

the context of far-reaching decentralization of political and budgeting powers tothe districts. Initially, this trend began with a few well-publicized programmes in

districts run by reforming politicians or endowed with natural resource revenues.

The best known politician in the former category was Gede Winasa, the district

head in Jembrana, Bali (1999–2009), who became famous for introducing in

2002 a Jembrana Health Insurance ( Jaminan Kesehatan Jembrana, JKJ) scheme

that offered “coverage for all registered residents of Jembrana, including general

care, some dental treatment and specified types of specialist treatment for all resi-

dents, while the poor are also covered for periods of hospital stay care”.22 A pro-

minent example in the second category was Alex Noerdin, the head of MusiBanyuasin district in South Sumatra, a region that is rich in oil and gas, who in

2003 introduced a local health insurance scheme modelled on the scheme in Jem-

brana. An old-style patronage politician from the Golkar Party, Noerdin built on

this success to win the governorship of South Sumatra province in elections in

2008, pledging to resign if he did not introduce free education and health insurance

schemes within a year.23 He succeeded, and with a budgetary allocation of about

US$27 million per year, the scheme covered 55% of residents which, when

added to the 38% covered by Jamkesmas and the remainder covered by other pro-

grammes, meant that South Sumatra achieved 100% healt h insurance coverage by2011, one of only four provinces to do so by this time.24

By the end of the first decade of the 2000s, such local schemes (collectively

known as Jamkesda, Jaminan Kesehatan Daerah, Regional Health Insurance)

were being replicated in great numbers across the country: a survey conducted

by the SMERU Research Institute in 2012 found that 245 of 262 districts that pro-

vided information had some sort of local health financing scheme.25 However, the

design of these schemes varied considerably. Most were intended to supplement

the Jamkesmas programme, extending coverage to people who were not categor-

ized as poor or near poor under the national scheme. There was variation in thefunding models applied and the methods by which health centres and hospitals

were paid. While all involved transfers from local budgets, a few required pay-

ments from beneficiaries or limited benefits according to income. For example, a

6 E. Aspinall

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scheme in Purbalingga provided government-funded coverage for poor residents

and covered half the cost of insurance premiums for middle-income residents,

while the wealthy had to pay for their own premiums. Some schemes were very

generous, and provided life-saving treatments to patients who would not otherwise

have been able to access them; the scheme in South Sumatra covered expensive

cancer treatments, a scheme in Aceh province even covered travel to Jakarta for

patients requiring specialist treatment.

Within a decade and a half of Indonesia experiencing the Asian financial crisis

and undergoing democratization, national and local schemes already offered free

health care to millions of citizens. But Indonesia still fell short of offering universal

coverage. According to National Health Ministry data, by 2011 the Jamkesmas

programme covered 76 million people, or about 32% of the total population,

while local Jamkesda programmes covered an additional 33 million or 14%. The

Jamsostek scheme for formal sector workers, inherited from the Suharto period,covered only 5.6 million, or about 2% of the total population. There was thus

still a major gap in coverage. With about 9% of the population covered by

private insurance, and 7% by the public service schemes, around 35% or 83

million were without health insurance.26 Most of these people, while not officially

classified as poor, eked out an often precarious existence in the informal sector.

Moves to universalize health coverage as part of a new national social security

system were intended to plug this considerable gap.

Towards a national social security system

The piecemeal expansion of national and local health care schemes discussed

above occurred in a context where policymakers were also discussing the creation

of a national social security system. This goal was embodied in two laws: Law No.

40 of 2004 on the National Social Security System and Law No. 24 of 2011 on

Social Security Administering Bodies. The construction of this new system was

very protracted, with 12 years passing between when reform was proposed and

the passage of Law No. 24 of 2011. Even that law leaves many critical details

unclear. Even so, the reform marks a major step forward in the provision of univer-sal social protection, especially health care.

Proposals for the creation of a national security system were first put to the

government in 1999 during the presidency of B.J. Habibie (1998– 1999), Suharto’s

successor, and they later found an enthusiastic sponsor in Vice President (1999–

2001) and later President (2001–2004) Megawati Soekarnoputri. A National

Social Security System Working Committee was formed in March 2001, consist-

ing mostly of leading social welfare academics and bureaucrats, and it proposed a

sweeping reform in which a national system covering health, pensions, and other

benefits would be run by a single trust fund responsible to the president, allowingmaximum pooling of funds and risk.27 Other principles included compulsory par-

ticipation, not-for-profit management, joint contributions by employers and

employees, a trust fund management system, and portability of benefits.28

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The first product of this process was Law No. 40 of 2004. This law does little

more than establish the basic principles for the new system. The law guarantees

health care, workplace accident, old age, and death benefits for all Indonesian citi-

zens, to be provided by compulsory insurance, with the government obliged to pay

premiums for those who cannot afford it.29 However, according to Wisnu, many of

the critical reform ideas that had been advanced by the working committee were

“stripped away” during drafting. In particular, instead of creating a single social

security trust fund, allowing for maximum pooling of risk and burden sharing,

the law preserved the existing four social security carrier s (PT (Limited

Company) Jamostek, PT Taspen, PT Asabri, and PT Askes).30 These bodies

were state-owned enterprises that provided a steady flow of revenues to the govern-

ment. According to Wisnu’s analysis, state officials feared a “disruption of the flow

of funds to the state budget and other projects of state leaders (either for political

party or personal goals)”.31

After President Yudhoyono came to power in late 2004, despite the introduc-

tion of Askeskin and Jamkesmas programmes under his watch, reform virtually

stalled for several years, despite Law No. 40 mandating another law to establish

a BPJS (Social Security Administering Agency) to run the new national system.

The president himself was reportedly unenthusiastic, and there was much foot-

dragging in the existing social security agencies, and in the ministries connected

to them. In this regard, the Indonesian case supports Haggard and Kaufman’s con-

tention that social welfare policy reform is constrained by institutional and inter-

est group legacies of previous systems.32

Those resisting reform were not somuch the beneficiaries of the existing system (for example, despite some early

reservations from organized labour that formal sector workers would end up sub-

sidizing protection for the poor, most labour unions eventually supported reform),

but the bureaucratic actors who either controlled, or benefited from, the licit and

illicit flows of funds generated by the existing agencies, a point we return to

below.

The impasse eventually prompted members of Indonesia’s national parliament,

the DPR ( Dewan Perwakilan Rakyat , People’s Representative Council), notably

several individuals from Megawati’s PDI-P ( Partai Demokrasi Indonesia – Per- juangan; Indonesian Democracy Party – Struggle), to propose a draft bill as a

DPR “initiative” in 2009. The DPR bill revised some of the bolder reform ideas

from a few years earlier, proposing the merger of the four existing social security

providers into a single body within two years. The government’s position,

however, largely reflected the views of the four existing suppliers, which resisted

the merger and each of which wanted to “maintain control of its assets, pro-

grammes and membership”.33 An additional source of friction was the govern-

ment’s reluctance to transform these agencies into non-profit entities, which

would mean they would no longer pay dividends to the government. Consequently,negotiations over the bill became protracted, involving fiery debates, abandoned

compromises, colourful insults directed at the government by legislators, and dem-

onstrations both against and in favour of the bill.

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Law No. 24 of 2011, eventually passed by the DPR in October 2011, rep-

resented a compromise between the reformist goals of the parliamentarians and

their labour and civil society allies, and the more conservative positions that had

been articulated within government. It determined that two BPJS would be

formed and run according to non-profit principles (however, these agencies are

not described as trust funds, as was advocated by reform advocates). A BPJS

Health would be created by expanding PT Askes (the body previously running

the state employee funds), which would take over running of the local Jamkesda

schemes, the Jamkesmas programme for the poor and the formal sector Jamsostek

scheme. This transformation began to come into effect on 1 January 2014, when

the new BPJS scheme came into force, subsuming the other schemes, with the

goal being to achieve universal health coverage by 2019. A BPJS Employment

will run pension, workplace death, and accident insurance schemes, coming into

effect on 1 July 2015; the civil service and military pension funds have until2029 to merge into this body.34 The law, like its 2004 predecessor, envisages

phased introduction of these programmes and critical details are still to be

worked out at the time of writing.

It is clear, however, that the new system represents a major expansion of health

care coverage, with the goal being to provide universal coverage. As in the past,

formal sector workers will be covered by joint employer/employee contributions;

the government will also continue to pay contributions for the poor and near poor,

as under Jamkesmas. A critical innovation is that informal sector workers and the

self-employed will be expected to pay their own contributions, injecting a newinfusion of funds into the system. However, the costs of universal health care cov-

erage are potentially immense, and health policy experts and senior officials alike

have publically questioned whether the government will be able to afford the

burden. PT Askes has already criticized the amount to be paid by the government

for the poor (15,500 rupiah – approximately US$1.50 per month per person) as

being too low, and advocated a rate of 25,000 rupiah instead.35

Democratization and policy change

So what role did democratization play in facilitating health care expansion in post-

Suharto Indonesia? We can find guidance from comparable cases in the region. In

his analysis of the expansion of health care coverage in South Korea and Taiwan,

Joseph Wong argues that the critical first steps towards universalization were taken

pre-emptively by authoritarian incumbents early in the democratization period in

the 1980s, as “a strategic response to the new logic of political competition”.36

It was only a decade later, from the late 1990s, that “previously marginalized

actors in Taiwan and South Korea – such as civil society groups, legislators and

professional bureaucrats – emerged as important partners in the policy process”.37 This widened policymaking participation promoted even greater

policy expansion. In Wong’s view, then, two different mechanisms operated:

first, the advent of democratic elections changed the incentive structures within

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which old political actors operated; second, the democratization of policymaking

institutions such as the national legislature, plus the institutionalization of civil lib-

erties and of organized social movements, opened the policymaking process to new

players.

This combination of changed incentive structures for established actors and the

opening of policymaking to emerging ones was also critical in Indonesia. Compli-

cating the picture in Indonesia is the fact that the boundary between incumbents

and reformers was never as clear in Indonesia as in South Korea or Taiwan, as a

result of the “promiscuous coalitions” that have characterized Indonesian democ-

racy.38 Even so, reaching out to poor voters via expanded social welfare policies

has been a consistent strategy of former New Order politicians trying to reinvent

themselves in order to compete in elections. This was visible during the first

phase of policy expansion during the Habibie administration (1998 –1999) but

has continued in, for example, the support for local schemes by local government heads who were nurtured in New Order circuits of power (for example, rising to

prominence through Suharto’s Golkar Party) or in the behaviour of president Yud-

hoyono himself, a former military man. As time has passed, policymaking has

increasingly involved new actors, both as legislative bodies have been remade

by elections, and as labour unions, social movements, and other groups have

become increasingly effective in their lobbying efforts. Both factors have contrib-

uted to the expansion of social welfare programmes in Indonesia.

Before elaborating, we should acknowledge that factors outside politics also

contributed. The impetus for initial policy expansion was the Asian economiccrisis, with some literature depicting Indonesia’s new social protection policies

as an outgrowth of tempor ary safety net programmes which “have become a

more permanent feature”.39 Deep social and demographic changes also drive

policy change, as in other parts of Asia40; policymakers especially stress that Indo-

nesia’s rapidly ageing population is a critical consideration. Changing attitudes

towards social protection on the part of international financial agencies like t he

World Bank and the International Monetary Fund also fed into the policy debate.41

However, these factors cannot be separated from the political context through

which they influenced policy. Thus, though the JPS social safety net programmewas a response to the economic crisis – and was planned in conjunction with,

and initially largely funded by, the World Bank – it was from the start highly pol-

itical, being seen by both supporters and opponents of President Habibie as a key

plank in the attempt by him and his Golkar Party to survive politically in the midst

of the political storm triggered by the crisis, at a time when the first post-Suharto

elections were looming. In the same period, the role played by critical players in the

early establishment of this system such as Adi Sasono, the Minister of Coopera-

tives and Medium and Small Enterprises, reflected an opening up of the policy

process to new players (Sasono was formerly a non-governmental organization(NGO) activist, and a proponent of welfarist and nationalist economic pro-

grammes, who had been asked by Habibie to join his government in an attempt

to broaden its popular appeal).

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Once the policies were introduced, it became difficult for leaders who were

subject to regular re-election to repeal or wind them back, both in the face of

public opinion, and in the face of a fractious parliament where the tenor of policy-

making was generally welfarist and statist on economic matters. Accordingly, both

Presidents Megawati (2001–2004) and Yudhoyono (2004–2014) viewed the

social safety net policies they inherited as important to maintaining their own popu-

larity. Yudhoyono reportedly had little personal investment in the details of social

security; even so, some analysts see the expansion of welfare policies, especially

direct cash transfers to the poor, during his first term as critical to his successful

re-election bid in 2009.42 Megawati, by contrast, took a personal interest in the

national social security system. Her background in the populist traditions of Indo-

nesian nationalism established by her father, Indonesia’s founding president,

Sukarno, made her sympathetic to policies addressing the needs of the “little

people”, while her PDI-P party was developing a profile that stressed socialwelfare.

The development of the new national social security system provides a reveal-

ing window onto the gradual opening of the policymaking process. According to

the forensic account provided by Dinna Wisnu, the initial proposal for a universal

system came from a group of insiders who had been closely involved in t he man-

agement of the various social security funds during the Suharto years.43 Reform

was first mooted within the Supreme Advisory Council, a government body that

had been regarded as virtually irrelevant under the Suharto regime. A key architect

of the plan was Sulastomo, a longtime director of PT Askes (1986–2000), theagency that runs the civil service and army pension and health funds. In Wisnu’s

account, Sulastomo and a group of likeminded reformers were concerned about

what they saw as long-term dangers to the sustainability of existing schemes,

and believed that Indonesia could buffer itself from external economic shocks

and spur national development if it built a well-funded national social security

system. This group found an enthusiastic sponsor in Vice-President and later Pre-

sident Megawati. Once their proposals were mooted in cabinet, other policy actors

were drawn into discussions on design of the new programme, some of whom

found their interests challenged by aspects of the plan and struggled to stymie it.In the initial phases leading to the 2004 social security law, consultation beyond

government circles was relatively limited. In particular, labour unions were

barely involved, and those that were consulted tended to be hostile, believing

that “the assets and funds of Jamsostek, which they had so far participated in,

and which were available in large amounts, would be used to fund the poor”.44

However, in the period preceding passage of the BPJS law in 2011, the policy

debate widened dramatically. Not only did several parliamentarians, as noted

above, strongly support the law, but there was significant, even decisive, civil

society mobilization as well. A Social Security Action Committee (KAJS, Komite Aksi Jaringan Sosial ) was formed, eventually involving 67 organizations,

mostly labour unions and NGOs. Working closely with a number of sympathetic

members of parliament (notably Rieke Diah Pitaloka and Surya Chandra Surapaty

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of PDI-P), KAJS’s basic goal was to push the government to introduce the new

system, especially since the deadline imposed by the 2004 law to establish a

new system had passed in 2009.45 As summarized by Said Iqbal, a prominent

union leader and secretary general of KAJS, their basic goals included achieving

“lifelong health insurance for the whole population, guaranteed pensions for

formal sector workers and Badan Penyelenggara Jaminan Sosial (BPJS) as trust

funds with the people as the stakeholders, rather than as private companies (PT)

or state enterprises”.46 KAJS organized a series of large demonstrations in

favour of reform, some involving tens of thousands of participants, participated

in the parliamentary debates, and otherwise pressured the government to take

action.47 Protestors stormed the parliament premises on the day the bill was due

for final debate, prompting legislators to hurriedly approve it.

In fact, labour unions continued to be divided on reform, with some rejecting

the BPJS law and, in particular, the merging of Jamsostek into a super agency,fearing that this could place workers’ contributions at risk. Most labour and activist

groups who rejected the law, however, did so from the left, pushing for a system

that would be f ully funded by the government, without requiring contributions

by beneficiaries.48 The KAJS itself and its union allies, however, aimed at a cam-

paign with cross-sectoral appeal, partly because they wanted this movement to

achieve a public impact that previous union campaigns had lacked. KAJS

adopted a deliberate strategy to this end:

When they began campaigning for a universal system they repositioned themselves asrepresenting all Indonesians. They consistently referred to themselves as a “civilsociety alliance of unions, farmers, fisher people, and students” that was campaigningfor the rights of the “Indonesian people”. This inclusive approach broadened their appeal and attracted the support of other civil society organisations, the media andthe general public, and ultimately underpinned the success of the campaign.49

The opening up of policymaking has also been visible at the local level, where

it is all but impossible to separate out the introduction and spread of local health

care schemes from the logic of electoral politics. The mushrooming of Jamkesda

schemes occurred in a politicized environment characterized by the introduction,in 2005, of direct elections of local government heads. Initially, some of the

most far-reaching schemes were introduced by reformist local politicians, particu-

larly those such as the PDI-P politician Gede Winasa who strove to “develop a

popular base among the poor”.50 However, once other local politicians saw how

such policies could help them win political support, they became modularized.51

By the time the second round of local government head elections began in 2010,

virtually all serious contenders for political power offered some sort of health

care scheme as part of their election offerings. District heads or governors who

had introduced particularly generous or successful schemes promoted them ascentral to their re-election campaigns; contenders often tried to outbid them by

offering even more expansive programmes. The best known such bidding war

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occurred in the 2012 Jakarta gubernatorial election when two of the contenders,

Joko Widodo and Alex Noerdin, had already run successful health schemes in

their places of origins (Widodo was the mayor of Solo, Noerdin the governor of

South Sumatra) and promised to import these schemes to the capital, while the

incumbent, Fauzi Bowo, had a health programme of his own.

Public discussion of this proliferation of local policies is suggestive of disdain

on the part of health care bureaucrats and professionals at the centre towards the

politicization of health care in the regions. In one example, Dinnie Latief, an

expert in health decentralization at the Health Ministry, explained in a public

seminar that: “Many of the elected heads of provinces and regencies as well as

legislators lacked knowledge and understanding about health issues . . . many gov-

ernors and regent s r outinely resorted to populist notions of free healthcare as a vote

buying strategy.”52 In another typical statement, this time in reference to the 2012

Jakarta gubernatorial election, Firman Lubis, a University of Indonesia professor of community health, said that: “Promising to make healthcare services free is

only to fool the people [ . . . ] No matter how much funding [is allocated for

health care], it will never be enough.”53 Though such experts raise legitimate con-

cerns about the sustainability of new commitments, it is also possible to read into

their comments a lament at the vulgarization of policymaking that has come with

democratization. Since 1998, health care policy has ceased to be an exclusive pre-

serve of technocrats, as it largely was under Suharto, and has instead been opened

up to a much wider array of actors, including vote-chasing politicians.

In terms of policymaking dynamics, the Indonesian experience is thus reminis-cent of the pattern of health care policy expansion identified by Wong in Korea. In

Indonesia, we see a gradual process of broadening of participation in policymaking

over the first 15 years of democracy. If initial steps in expanding social protection

and reforming social security originated deep within the bureaucracy in 1998–

1999, over the subsequent decade a wider range of policy actors came into play,

including national legislators, elected local government leaders, union and NGO

activists, as well as health academics, commentators, and other interest groups.

To be sure, as in South Korea and Taiwan, we do not see evidence for power

resource theories that see welfare states as arising as the result of the structuralstrength of the working class and social democratic or leftist parties. Organized

labour became an important player in the policy debate relatively late in the

game; indeed, a striking feature of the Indonesian reform has been the extension

of coverage to the vast reservoir of persons outside the formal labour market,

who are by definition non-unionized. Yet the Indonesian experience also does

point to what Haggard and Kaufman describe as the “significance of distributional

coalitions and economic interests” 54 in welfare policy reform, with a marked

broadening of the interests represented in policymaking. At least, elements

within the new political elite have become increasingly motivated to build politicalconstituencies by responding to the interests of urban labour, the informal sector,

and rural poor.

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Toward an Indonesian welfare state?

Despite the dramatic policy changes, Indonesia is not on the verge of making a

transition to a system in which high quality health care is guaranteed by the

state for all citizens. Many who should be covered, are not: a 2013 state audit of the Jamkesmas and Jamkesda programmes found many weaknesses, including,

“absence of accurate data on beneficiaries and a lack of current data on poor

people” with t he result that “many poor people did not have access to free health-

care services”.55 Beyond issues of access, it is universally acknowledged that the

quality of health care in Indonesia’s public system is poor. Misdiagnosis and mis-

treatment is rife, patients are often turned away from health centres or hospitals, or

have to be transferred to better equipped facilities in different locations, sometimes

dying of their illnesses or injuries on the way. Many of the best treatments accessed

by patients in rich countries are not available; indeed, even the basic treatments that

are supposed to be provided in the public system are often missing. One recent

survey found that only 60% of puskesmas (community health centres) had even

60–79% availability of 83 essential drugs; only around 15% had 80% of the

drugs.56 The authors of the World Bank report summarizing these findings con-

clude that “It is almost impossible for those living in remote and rural areas of

the country to receive appropriate first management of care at emergency units

and to access basic specialized services at hospitals.”57

There is little wonder that the health care system has been characterized by one

observer as being full of “distortions, inefficiencies, rent-seeking and outright cor-

ruption in government offices, private hospitals, pharmaceutical company ware-houses and medical schools alike”.58 Accordingly, almost everybody who can

afford to use private providers does so. The rich go to Malaysia, Singapore, Aus-

tralia, or further afield for treatment of serious conditions, though a high-end

market for health services is also growing in the country. Private expenditure on

health has consistently outstripped government expenditure on a 2:1 ratio for the

last 20 years.59

Dysfunction in the health system has multiple sources. One is that Indonesia is

a relatively poor country; gross domestic product (GDP) per capita is far lower than

in Taiwan or South Korea when those countries were universalizing health care.This condition places serious constraints on the ambitions of policy reformers.

The media is full of reports of the financial difficulties afflicting local health care

schemes, some of which are in chronic deficit and often run short of medicines

and other facilities for patients. The same goes for the government’s national

scheme for the poor, Jamkesmas: the World Bank report mentioned above,

having summarized the poor facilities, staffing, medicine, and equipment in the

public system, rather dryly concludes that: “Supply-side constraints and supply-

side subsidies have given the false impression that financing of Jamkesmas is suf-

ficient [ . . .

] the programme does not provide strong incentives to the providers todeliver high quality services.”60 In order to both dramatically increase the scope of

public health care coverage and to improve the quality of the services being

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provided, it is obvious that the government will ultimately need to greatly increase

expenditure on health. If this happens, the resulting increase in the tax burden on

members of the middle class might seriously erode elite support for universal cov-

erage, potentially bringing into play more intense social struggles than have

hitherto been witnessed.

Equally important, however, is the broader political economy within which the

new schemes operate. In this regard, the literature on elite capture and predatory

power relations in Indonesia’s political system remains relevant for understanding

health care reform. One manifestation of such relations in the health care system is

the ubiquity of illegal fees levied on poor patients. Such fees are extracted through

a variety of methods, summarized by Rosser as including “denying poor patients

access to hospital beds unless they pay a fee, preventing poor patients from

leaving hospital unless they pay a fee, providing poor patients with poor quality

service if they are served free of charge, referring poor patients unnecessarily to private medical practices [ . . . ] and simply denying poor people health care

unless they first pay for it”.61 Rosser argues that the source of this problem is

that patients confront a coalition of interests uniting “politico-bureaucrats and

their corporate allies” in the health care system. Illegal fees persist because this

coalition continues “to treat public health facilities as mechanisms for generating

rents” and ensures “that pr ogrammes aimed at providing free health care to the

poor remain underfunded”.62

Accordingly, the health care system is a site of major corruption in Indonesia.

The media is full of reports about corruption scandals in public hospitals, involvingeverything from skimming off funds in construction projects, equipment pur-

chases, and pharmaceutical orders, to manipulation of patient or staffing data

and outright theft of equipment. As elsewhere in the public sector, such corruption

is integral to the system, and is critical to the manner by which staff are recruited,

promoted, and assigned tasks within it.63 The links to the political system are also

clear, with local health bureaucrats being political appointees who are expected to

furnish their superiors with kickbacks and support them in election campaigns.

More generally, the social security system is an important source of the slush

funds that lubricate Indonesia’s political system, not only enriching bureaucratsand polit icians who can access them, but also being used to fund political

machines.64 This phenomenon was visible from early in the reform period,

when there was widespread abuse of the JPS funds allocated by the government

during the 1997–1999 financial crisis; at one point the government’s National

Development Planning Agency announced that 8 trillion of 17.9 trillion rupiah

allocated to the programme had been misdirected.65 NGOs reported dozens of

cases of abuse of JPS funds to support political campaigning by Golkar and the

Partai Daulat Rakyat (People’s Sovereignty Party) of Adi Sasono.66 More criti-

cally, the massive pension and health insurance funds already accumulated inthe system are a valuable source of slush funds, previously for Suharto cronies

and more recently for leading figures in parliament and the political parties.

Dinna Wisnu lists a dozen major corruption scandals involving a total of 3 trillion

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rupiah in Jamsostek funds since 2000, involving companies owned by some of

Indonesia’s notorious crony capitalists and by ma jor political figures such as

Golkar party leaders Aburizal Bakrie and Jusuf Kalla.67 Little wonder that the man-

agement and board of PT Jamsostek is stacked with political appointees and the top

position is “strongly desired by the largest party”.68

It is indicative of the strength of vested interests in the health care system that

the major controversies that occurred during the debates leading to the 2004 and

2011 social security laws did not focus on basic principles such as universality

of coverage or even funding mechanisms, but on the management structure of

the new system, especially the fate of the existing social insurance providers (PT

Jamsostek, PT Askes, PT Taspen, and PT Asabri). These agencies fought hard to

maintain their positions, and they had powerful allies in the bureaucracy,

cabinet, and parliament to defend them. Their replacement by a single trust

fund, as was desired by many reform advocates, was especially resisted by the Min-istry of State Enterprises, which was reluctant to throw open the accounts of these

agencies because “it will become apparent that the funds of those institutions

would not necessarily match what they have claimed to be their assets and

resources in the past, because of various financial irregularities”.69 Additional

delays were caused by internecine wars between key bureaucratic actors, especially

the Ministry of State Enterprises and the Ministry of Manpower, each of which was

positioning itself to exercise maximum control over Jamsostek and the massive

funds at its disposal.70

Conclusion

Many revealing accounts of regime change and its aftermath in Indonesia have

emphasized the continued authority of the oligarchic power structures that were

nurtured during the Suharto years, and the exclusion of interests representing

workers, farmers, and other ordinary folk. The analysis in this article suggests

that these perspectives need to be revised, but perhaps not yet radically. The dra-

matic expansion of social welfare policy in post-Suharto Indonesia, in particular

the trend towards universalization of health care, indicates a political system that is not only more responsive to the interests of poorer citizens than is conventionally

believed, but also a policymaking process that provides multiple avenues for input

by groups representing them.

We should not exaggerate this trend and assume that we see in it an entirely new

social coalition representing lower-class interests underpinning Indonesian democ-

racy. Indeed, one of the striking features of the policy lobbying around the 2011

National Social Security Law was the ad hoc and conditional nature of the

coalitions that formed to promote policy change; in the regions, local health care

schemes typically emerged with very limited input from social movements, NGOs, or other groups representing lower-class interests. The chief actors in

expansion of health care access have instead been elite politicians; in this

regard, the Indonesian experience is reminiscent of the experiences of Northeast

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Asian countries where “the expansion of entitlements was a result of the fact that

centrist and even conservative parties also used social policy for political ends”.71

Even this qualified assessment shows that regime change has been consequen-

tial for health care expansion: it was partly electoral competition itself that has

motivated policy change, as elite parties and politicians have competed with

each other to win elections. The poor quality of the health care that is being univer-

salized, and the continuing problems of elite capture and corruption that afflict the

social welfare system as a whole, however, point to a much longer-term incremen-

tal struggle to address social inequality in which the political organization of social

interests will be key.

Acknowledgement

My thanks for comments on earlier versions of this article by participants at the workshop on“Challenging Inequalities: Contestation and Regime Change in East and Southeast Asia”,Murdoch University, especially Aurel Croissant, Meredith Weiss, Eva Hansson, andKevin Hewison, as well as for comments by Dinna Wisnu and anonymous reviewers for this journal. I also benefited from input by Robert Sparrow, and am very thankful to EveWarburton for expert research assistance and to the Australian Research Council for funding part of the research on which the article is based.

Notes

1. “Rethinking the Welfare State: Asia’s Next Revolution,” The Economist , 8 September 2012.

2. See especially, Robison and Hadiz, Reorganising Power ; Hadiz, Localising Power ;and Winters, Oligarchy.

3. Mietzner, “Fighting the Hellhounds.”4. For a further elaboration of these arguments see Aspinall, “Popular Agency”; and

other articles in issue 96 of Indonesia, where the oligarchy perspective is debated by its proponents and critics.

5. Haggard, “Political Economy of the Asian Welfare State,” 148, 169.6. Wong, Healthy Democracies, 10.7. Holliday, “East Asian Social Policy,” 145, cited in Hwang, “New Global Challenges,” 2.

8. Hewison, “Crafting Thailand’s New Social Contract,” 513. Note, however, that thedynamics in Thailand were distinctive from those in Indonesia described in thisarticle. Thaksin was a populist leader who appealed over the heads of politicalelites and organizations directly to the people; policymaking was more exclusionarythan in the Indonesian case described here. My thanks to one of the reviewers for making this point.

9. Thabrany, “Social Security for All,” 1.10. ILO, Social Security in Indonesia, 21. This number was equivalent to only about 47%

of the formal labour force of 36 million persons.11. Kristiansen and Santoso, “Surviving Decentralisation?,” 248.12. Ibid., 248– 9.

13. Ibid., 249.14. Sumarto, Suryahadi. and Bazzi, “Indonesia’s Social Protection,” 121.15. Sumarto, Suryahadi, and Widyanti, “Design and Implementation,” 117.16. Sumarto, Suryahadi, and Bazzi “Indonesia’s Social Protection,” 123.

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17. Ibid., 123.18. Sparrow, Suryahadi, and Widyanti, Social Health Insurance for the Poor , i.19. See for example, Pedoman Pelaksanaan Jaminan Kesehatan Masyarakat (Jamkes-

mas) 2008, 15– 18.

20. Sparrow, “Targeting the Poor,” 197; see also Suharyo et al., Social Protection Pro- grams, 52–7.21. Elly Burhaini Faizal, “Jamkesmas in 2013 Expanded with 10 Million More Entitled,”

The Jakarta Post , 21 January 2013.22. Rosser, Wilson, and Sulistiyanto, “Leaders, Elites and Coalitions,” 22.23. Hasegawa, “Decentralization,” 13.24. Ibid., 17.25. SMERU, District Health Care Financing Study: Descriptive Statistics and Initial

Results (PowerPoint Presentation, 2012).26. Profil Data Kesehatan Indonesia Tahun 2011, 198.27. Wisnu, Governing Social Security, 169.

28. Ibid., 169 – 70; see also GTZ, Social Security System Reform, 12– 13.29. Ibid., 155.30. Ibid., 179, 183.31. Ibid., 196.32. Haggard and Kaufman, Development, Democracy and Welfare States, 12.33. World Bank, Indonesia Economic Quarterly, 24.34. Wisnu, Politik Sistem Jaminan Sosial , 163. Early reports showed that the integration

of the BPJS and the local and state employee health schemes was far from smooth. Seefor example, “Criticism Grows Over Lack of Awareness of Health Scheme.”

35. “Premi Rendah, “BPJS Kekurangan Dana,” Kompas, 18 March 2013.36. Wong, “Healthy Democracies,” 15.

37. Ibid., 16.38. Slater, “Indonesia’s Accountability Trap”; see also Aspinall, “Irony of Success.”39. Barrientos and Hulme, “Social Protection,” 445; see also Sumarto, Suryahadi, and

Bazzi, “Indonesia’s Social Protection.”40. Croissant, “Changing Welfare Regimes,” 520.41. Barrientos and Hulme, “Social Protection.”42. Mietzner, “Indonesia’s 2009 Elections,” 4.43. Wisnu, “Governing Social Security”; Wisnu, Politik Sistem Jaminan Sosial .44. Wisnu, Politik Sistem Jaminan Sosial , 125.45. See Cole, “Coalescing for Change”; and Cole, “A New Tactical Toolkit”, for useful

summaries of the KAJS campaigns.46. “Buruh dan Politik,” 26.47. See for example, “KAJS Fields 100,000 to Stage Rallies on May Day”; “Minta RUU

BPJS Disahkan, 50 Ribu Orang Demo di Depan DPR.”48. See for example: “Ribuan Buruh Tolak BPJS dan SJSN di Depan Istana.”49. Cole, “A New Tactical Toolkit.”50. Rosser, Wilson, and Sulistiyanto, “Leaders, Elites and Coalitions,” 3.51. Aspinall, “Popular Agency and Interests.”52. “Decentralization Poses Threats to Public Healthcare.”53. “Free Healthcare, Education not Essential”; see also Damanik, “Wajar, Sektor Kese-

hatan Jadi Komoditas Politik.”54. Haggard and Kaufman, Development, Democracy and Welfare States, 2.55. “Jamkesmas has Deficiencies, BPK says,” The Jakarta Post , 3 April 2013.56. Harimurti et al., “Nuts and Bolts,” 19.57. Ibid., 20.58. Pisani, “Medicine for a Sick System.”

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59. According to the World Health Organization’s National Health Accounts, government expenditure accounted for 35.7% of total health expenditure in 1995, a figure that hadfallen somewhat to 34.1% in 2011.

60. Harimurti et al., “Nuts and Bolts,” 21.

61. Rosser, “Realising Free Health Care for the Poor,” 259.62. Ibid., 267.63. Aspinall and van Klinken, The State and Illegality.64. Dick and Mulholland, “The State as Marketplace.”65. “Rp 8 Trilyun Dana JPS Salah Alamat,” Kompas, 23 April 1999.66. See for example, “Golkar dan PDRD Bantah Salah Gunakan JPS,” Kompas, 28 May

1999.67. Wisnu, “Governing Social Security,” 203– 7.68. Ibid., 200.69. Wisnu, Politik Sistem Jaminan Sosial , 160.70. Wisnu, “Governing Social Security,” 185 – 93.

71. Haggard and Kaufman, Development, Democracy and Welfare States, 360.

Notes on contributor

Edward Aspinall is a specialist on the politics of Indonesia. He is the author of two books,Opposing Suharto: Compromise, Resistance and Regime Change in Indonesia (2005) and

Islam and Nation: Separatist Rebellion in Aceh, Indonesia (2009) as well as many scholarlyarticles, chapters, and papers on aspects of Indonesian politics.

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