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Health care and democratizationin IndonesiaEdward Aspinallaa Department of Political and Social Change, School ofInternational, Political and Strategic Studies, Collegeof Asia and the Pacific, Australian National University,Canberra, AustraliaPublished online: 26 Feb 2014.

To cite this article: Edward Aspinall (2014): Health care and democratization inIndonesia, 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 ofdemocratic 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 ofsocial welfare protection by focusing on health care. At the national level,Indonesia has introduced programmes providing free health care to the poorand 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 thatdemocracy 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 overthe last decade, Indonesia has experienced a dramatic increase in the scale andreach of state-run social welfare programmes. Beginning with a series of socialsafety network programmes that were designed to blunt the impact of the 1997Asian financial crisis on the poor, policy expansion has since moved in a rangeof 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 dignifiedhuman beings”. Another mandates that 20% of the state budget be spent on

# 2014 Taylor & Francis

∗Email: edward.aspinall@anu.edu.au

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

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education. A policy of free, universal education for 12 years of schooling has beenintroduced. In the area that this article focuses on – health care – increasinglyexpansive 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 intoeffect 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 thesubnational level, too, local governments have used the expanded political andfiscal authority they enjoy as a result of decentralization to expand socialwelfare spending, with a rash of free health care and other welfare policies supple-menting the national schemes. These changes, the scale and implications of whichhave barely been appreciated by observers of Indonesian politics, have expandedstate involvement in social welfare provision, and have the potential to remake therelationship between the Indonesian state and its citizens by making governmentfar more responsive to the needs of the poor.

From the perspective of the literature on Indonesian democratization, thispolicy shift is surprising, even puzzling. A recurrent and arguably dominanttheme 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 logicgoverning 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, orother subordinate groups remain politically marginalized, and are largely unableto assert their interests in the policymaking process.2 This view has recentlybeen challenged by scholars who suggest that it understates the plurality of inter-ests represented in government bodies and policymaking. For example, Mietznerhas argued that activists from civil society groups have begun to penetrate legis-lative and other bodies, having some influence on policy.3 The analysis presentedin this article provides further ammunition to this challenge. It argues that theemergence of new social welfare policies indicates that the state is becomingmore responsive to the interests of poor citizens, and that policymaking processesare providing at least some avenues for input by groups representing theirinterests.4

From a comparative perspective, moreover, the expansion of social welfarepolicies in Indonesia is less surprising than the elite capture perspective wouldsuggest. The third wave of democratization since the 1970s has been associatedwith 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 thecountries of Northeast Asia, especially South Korea and Taiwan. Stephan Haggard

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has argued that democratization in these countries has been associated with “a moreexpansive approach to social welfare”, whereby democracy has “generated newpressure on governments to provide social protection”.5 In his analysis of healthcare 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 medicalinsurance programmes during the period of democratization”.6 Accordingly, EastAsian countries are witnessing the replacement of what were once labelled “pro-ductivist” social welfare regimes, with systems that emphasize universal coverageand redistribution.7 Closer to Indonesia, in the Southeast Asian region, similarthough less dramatic changes have been visible. For example, in Thailand, the1997 election of Prime Minister Thaksin Shinawatra signalled the birth of “anew 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 apopular universal health scheme. The analysis in this article suggests Indonesia ismoving in the same direction.

This article has three main goals: to sketch the nature and extent of socialwelfare policy expansion in post-authoritarian Indonesia; to explain these policychanges, especially their connection to democratization; and, to review their impli-cations for our understanding of Indonesian democracy. To achieve the first ofthese goals, the article focuses on health care as a case study. The first three sectionssketch health care policies prior to the democratic transition, and then summarizetheir 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 ledto health care policy expansion. It identifies two causal mechanisms, both closelyparalleling 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 importantrole in lobbying and mobilizing for policy change. Second, democratizationchanged 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 expansivelocal health care schemes have been introduced, not by new political forcesunleashed by democratization, but by old-style oligarchic politicians chasingvotes and seeking new popular legitimacy.

The final section reviews the implications for our understanding of Indonesiandemocracy and the social coalitions that underpin it. The policy shifts analysed inthe article suggest greater government responsiveness to popular preferences thanhas 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 seriouslyunderfunded and are still severely hampered by the modes of predatory behaviour

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that pervade Indonesia’s political system. As a result, though health care coverageis expanding dramatically, the quality of that health care is often very low.

A brief history of social welfare in Indonesia

The origins of Indonesia’s social security and welfare system lie, as in mostcountries, with early introduction of health insurance and pension schemes forcivil servants and soldiers, followed by gradual expansion to, first, workers inthe formal sector and, eventually, all citizens. By the end of the Suharto period(1966–1998), however, only the politically strategic groups of civil servants, sol-diers, and formal sector workers were covered by compulsory health insurance andpension schemes; the vast majority of the population had access only to rudimen-tary state health care.

The origins of the current social welfare system are almost as old as the Indo-nesian state itself. A pension scheme for civil servants was introduced in 1949, asIndonesia became independent; a health insurance scheme for civil servants wasintroduced in 1963. Coverage for formal sector workers began at a minimallevel in the late 1960s, was reorganized in 1977–1978, and then consolidatedinto its present form in 1992 as the Jamsostek (Jaminan Sosial Tenaga Kerja,Labour Social Insurance) scheme. Jamsostek, like the public service equivalents,provides a defined contribution provident fund model for pensions in which retir-ing workers are paid a lump sum, as well as coverage for workplace injuries anddeath benefits. The scheme also provides health insurance, funded by co-paymentsby employers and employees, but with an opt-out provision if companies can showthey are providing superior coverage privately. There are major problems with cor-ruption and noncompliance: many companies fail to enrol their employees in Jam-sostek, under-report staffing levels to the agency, or fail to pass on collected dues.Partly as a result, coverage by Jamsostek is limited; in 2003, only 12 million out of31 million workers in the formal sector participated in the scheme.9 Jamsostek hasnever aimed to cover the far larger number of workers in the informal sector. TheInternational Labour Organization (ILO) estimated in 2007 that, out of 108 millionpersons in the labour force, only about 16.8 million workers were contributing tothe Jamsostek, Taspen (civil servant) and Asabri (military) schemes.10

These formal sector and civil service insurance schemes were only one part ofthe government’s social welfare policy. After the rise to power of Suharto in 1965–1966, and accelerating after the oil boom of the 1970s, the government adopted adevelopmentalist model that included provision of basic education and health careservices at low cost for users as a “means to legitimise the centralized and author-itarian regime”.11 Programmes such as family planning that were government pri-orities were relatively well funded and successful. A system of community levelhealth centres (puskesmas) was introduced in 1968, with full national coverageestablished 20 years later, with one centre per approximately 30,000 persons,and user fees set at a low level.12 Despite improvements in infant mortality, lifeexpectancy, and other indicators during the Suharto years, funding levels as well

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as training and provision of equipment and pharmaceuticals within the publicsystem left much to be desired. The standard of care provided even for recipientsof the civil service and armed forces schemes was often poor, with the result thatthose who could afford it took out private health insurance, and visited privatedoctors’ surgeries and hospitals. Moreover, although the public system was reason-ably effective at providing very basic health care, treatment was limited for poorpeople suffering from serious conditions. As a result, access to health careremained highly unequal, with one study showing that in 1995, “the chancesthat the poorest 10% of the population would be hospitalized was only one-tenthof 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 tothe collapse of the Suharto regime in 1998. This crisis pushed an additional 36million 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 componentcovered “subsidies for medicines and imported medical equipment, operationalsupport funds for community health centres, free medical and family planning ser-vices, and supplemental food for pregnant women and children under three yearsold”.15 Sumarto, Suryahadi, and Bazzi state that the “scope and magnitude of thissocial protection initiative was simply unprecedented in Indonesian history”.16

While the programme was widely criticized, especially for poor targeting, theseauthors maintain that JPS “generated clear welfare improvements at the householdand aggregate level”.17 After the crisis, successive national governments sought tomaintain, substitute, and complement the JPS programmes. Over the followingdecade the government also reduced fuel subsidies and redirected the savingsinto 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 JPKGaskin and was managed at the district level, allowing local governments todesign 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. Intheir various guises, these programmes all aimed to provide free health care topoor citizens. They were based on the insurance schemes run for private andpublic sector employees, “[b]ut whereas the formal sector schemes are based onmandatory earnings-related contributions, the premiums for Askeskin [and forJamkesmas] 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 healthcentres 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 theseprogrammes. One issue is targeting, with a series of studies revealing considerablemisallocation 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 dramaticallyincreased health care coverage, with Jamkesmas covering about 86 millionpersons 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 schemeoccurred alongside a proliferation of policymaking at the subnational level, inthe context of far-reaching decentralization of political and budgeting powers tothe districts. Initially, this trend began with a few well-publicized programmes indistricts run by reforming politicians or endowed with natural resource revenues.The best known politician in the former category was Gede Winasa, the districthead in Jembrana, Bali (1999–2009), who became famous for introducing in2002 a Jembrana Health Insurance (Jaminan Kesehatan Jembrana, JKJ) schemethat offered “coverage for all registered residents of Jembrana, including generalcare, 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 in2003 introduced a local health insurance scheme modelled on the scheme in Jem-brana. An old-style patronage politician from the Golkar Party, Noerdin built onthis success to win the governorship of South Sumatra province in elections in2008, pledging to resign if he did not introduce free education and health insuranceschemes within a year.23 He succeeded, and with a budgetary allocation of aboutUS$27 million per year, the scheme covered 55% of residents which, whenadded to the 38% covered by Jamkesmas and the remainder covered by other pro-grammes, meant that South Sumatra achieved 100% health 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 (collectivelyknown as Jamkesda, Jaminan Kesehatan Daerah, Regional Health Insurance)were being replicated in great numbers across the country: a survey conductedby 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, thedesign of these schemes varied considerably. Most were intended to supplementthe 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 hospitalswere paid. While all involved transfers from local budgets, a few required pay-ments from beneficiaries or limited benefits according to income. For example, a

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scheme in Purbalingga provided government-funded coverage for poor residentsand covered half the cost of insurance premiums for middle-income residents,while the wealthy had to pay for their own premiums. Some schemes were verygenerous, and provided life-saving treatments to patients who would not otherwisehave been able to access them; the scheme in South Sumatra covered expensivecancer treatments, a scheme in Aceh province even covered travel to Jakarta forpatients requiring specialist treatment.

Within a decade and a half of Indonesia experiencing the Asian financial crisisand undergoing democratization, national and local schemes already offered freehealth care to millions of citizens. But Indonesia still fell short of offering universalcoverage. According to National Health Ministry data, by 2011 the Jamkesmasprogramme covered 76 million people, or about 32% of the total population,while local Jamkesda programmes covered an additional 33 million or 14%. TheJamsostek scheme for formal sector workers, inherited from the Suharto period,covered only 5.6 million, or about 2% of the total population. There was thusstill a major gap in coverage. With about 9% of the population covered byprivate insurance, and 7% by the public service schemes, around 35% or 83million were without health insurance.26 Most of these people, while not officiallyclassified as poor, eked out an often precarious existence in the informal sector.Moves to universalize health coverage as part of a new national social securitysystem were intended to plug this considerable gap.

Towards a national social security system

The piecemeal expansion of national and local health care schemes discussedabove occurred in a context where policymakers were also discussing the creationof 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 onSocial Security Administering Bodies. The construction of this new system wasvery protracted, with 12 years passing between when reform was proposed andthe passage of Law No. 24 of 2011. Even that law leaves many critical detailsunclear. 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 thegovernment in 1999 during the presidency of B.J. Habibie (1998–1999), Suharto’ssuccessor, and they later found an enthusiastic sponsor in Vice President (1999–2001) and later President (2001–2004) Megawati Soekarnoputri. A NationalSocial Security System Working Committee was formed in March 2001, consist-ing mostly of leading social welfare academics and bureaucrats, and it proposed asweeping reform in which a national system covering health, pensions, and otherbenefits 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 andemployees, 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 littlemore than establish the basic principles for the new system. The law guaranteeshealth care, workplace accident, old age, and death benefits for all Indonesian citi-zens, to be provided by compulsory insurance, with the government obliged to paypremiums for those who cannot afford it.29 However, according to Wisnu, many ofthe critical reform ideas that had been advanced by the working committee were“stripped away” during drafting. In particular, instead of creating a single socialsecurity trust fund, allowing for maximum pooling of risk and burden sharing,the law preserved the existing four social security carriers (PT (LimitedCompany) Jamostek, PT Taspen, PT Asabri, and PT Askes).30 These bodieswere 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 flowof funds to the state budget and other projects of state leaders (either for politicalparty 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 virtuallystalled for several years, despite Law No. 40 mandating another law to establisha 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 connectedto 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 earlyreservations 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 andillicit flows of funds generated by the existing agencies, a point we return tobelow.

The impasse eventually prompted members of Indonesia’s national parliament,the DPR (Dewan Perwakilan Rakyat, People’s Representative Council), notablyseveral individuals from Megawati’s PDI-P (Partai Demokrasi Indonesia – Per-juangan; Indonesian Democracy Party – Struggle), to propose a draft bill as aDPR “initiative” in 2009. The DPR bill revised some of the bolder reform ideasfrom a few years earlier, proposing the merger of the four existing social securityproviders into a single body within two years. The government’s position,however, largely reflected the views of the four existing suppliers, which resistedthe 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, whichwould mean they would no longer pay dividends to the government. Consequently,negotiations over the bill became protracted, involving fiery debates, abandonedcompromises, 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 andtheir labour and civil society allies, and the more conservative positions that hadbeen articulated within government. It determined that two BPJS would beformed and run according to non-profit principles (however, these agencies arenot described as trust funds, as was advocated by reform advocates). A BPJSHealth would be created by expanding PT Askes (the body previously runningthe state employee funds), which would take over running of the local Jamkesdaschemes, the Jamkesmas programme for the poor and the formal sector Jamsostekscheme. This transformation began to come into effect on 1 January 2014, whenthe new BPJS scheme came into force, subsuming the other schemes, with thegoal being to achieve universal health coverage by 2019. A BPJS Employmentwill run pension, workplace death, and accident insurance schemes, coming intoeffect 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, envisagesphased introduction of these programmes and critical details are still to beworked out at the time of writing.

It is clear, however, that the new system represents a major expansion of healthcare 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 theself-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 alikehave publically questioned whether the government will be able to afford theburden. PT Askes has already criticized the amount to be paid by the governmentfor the poor (15,500 rupiah – approximately US$1.50 per month per person) asbeing 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. Inhis analysis of the expansion of health care coverage in South Korea and Taiwan,Joseph Wong argues that the critical first steps towards universalization were takenpre-emptively by authoritarian incumbents early in the democratization period inthe 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 marginalizedactors in Taiwan and South Korea – such as civil society groups, legislators andprofessional bureaucrats – emerged as important partners in the policyprocess”.37 This widened policymaking participation promoted even greaterpolicy 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 policymakinginstitutions such as the national legislature, plus the institutionalization of civil lib-erties and of organized social movements, opened the policymaking process to newplayers.

This combination of changed incentive structures for established actors and theopening of policymaking to emerging ones was also critical in Indonesia. Compli-cating the picture in Indonesia is the fact that the boundary between incumbentsand reformers was never as clear in Indonesia as in South Korea or Taiwan, as aresult of the “promiscuous coalitions” that have characterized Indonesian democ-racy.38 Even so, reaching out to poor voters via expanded social welfare policieshas been a consistent strategy of former New Order politicians trying to reinventthemselves in order to compete in elections. This was visible during the firstphase of policy expansion during the Habibie administration (1998–1999) buthas continued in, for example, the support for local schemes by local governmentheads who were nurtured in New Order circuits of power (for example, rising toprominence through Suharto’s Golkar Party) or in the behaviour of president Yud-hoyono himself, a former military man. As time has passed, policymaking hasincreasingly involved new actors, both as legislative bodies have been remadeby elections, and as labour unions, social movements, and other groups havebecome 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 alsocontributed. The impetus for initial policy expansion was the Asian economiccrisis, with some literature depicting Indonesia’s new social protection policiesas an outgrowth of temporary safety net programmes which “have become amore permanent feature”.39 Deep social and demographic changes also drivepolicy change, as in other parts of Asia40; policymakers especially stress that Indo-nesia’s rapidly ageing population is a critical consideration. Changing attitudestowards social protection on the part of international financial agencies like theWorld Bank and the International Monetary Fund also fed into the policy debate.41

However, these factors cannot be separated from the political context throughwhich 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 keyplank in the attempt by him and his Golkar Party to survive politically in the midstof the political storm triggered by the crisis, at a time when the first post-Suhartoelections were looming. In the same period, the role played by critical players in theearly establishment of this system such as Adi Sasono, the Minister of Coopera-tives and Medium and Small Enterprises, reflected an opening up of the policyprocess 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 attemptto broaden its popular appeal).

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Once the policies were introduced, it became difficult for leaders who weresubject to regular re-election to repeal or wind them back, both in the face ofpublic opinion, and in the face of a fractious parliament where the tenor of policy-making was generally welfarist and statist on economic matters. Accordingly, bothPresidents Megawati (2001–2004) and Yudhoyono (2004–2014) viewed thesocial safety net policies they inherited as important to maintaining their own popu-larity. Yudhoyono reportedly had little personal investment in the details of socialsecurity; even so, some analysts see the expansion of welfare policies, especiallydirect cash transfers to the poor, during his first term as critical to his successfulre-election bid in 2009.42 Megawati, by contrast, took a personal interest in thenational 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 “littlepeople”, 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 tothe forensic account provided by Dinna Wisnu, the initial proposal for a universalsystem came from a group of insiders who had been closely involved in the man-agement of the various social security funds during the Suharto years.43 Reformwas first mooted within the Supreme Advisory Council, a government body thathad been regarded as virtually irrelevant under the Suharto regime. A key architectof 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’saccount, Sulastomo and a group of likeminded reformers were concerned aboutwhat they saw as long-term dangers to the sustainability of existing schemes,and believed that Indonesia could buffer itself from external economic shocksand spur national development if it built a well-funded national social securitysystem. This group found an enthusiastic sponsor in Vice-President and later Pre-sident Megawati. Once their proposals were mooted in cabinet, other policy actorswere drawn into discussions on design of the new programme, some of whomfound 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 beyondgovernment circles was relatively limited. In particular, labour unions werebarely involved, and those that were consulted tended to be hostile, believingthat “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 policydebate widened dramatically. Not only did several parliamentarians, as notedabove, strongly support the law, but there was significant, even decisive, civilsociety 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 sympatheticmembers 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 newsystem, especially since the deadline imposed by the 2004 law to establish anew system had passed in 2009.45 As summarized by Said Iqbal, a prominentunion leader and secretary general of KAJS, their basic goals included achieving“lifelong health insurance for the whole population, guaranteed pensions forformal sector workers and Badan Penyelenggara Jaminan Sosial (BPJS) as trustfunds with the people as the stakeholders, rather than as private companies (PT)or state enterprises”.46 KAJS organized a series of large demonstrations infavour of reform, some involving tens of thousands of participants, participatedin the parliamentary debates, and otherwise pressured the government to takeaction.47 Protestors stormed the parliament premises on the day the bill was duefor final debate, prompting legislators to hurriedly approve it.

In fact, labour unions continued to be divided on reform, with some rejectingthe 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 activistgroups who rejected the law, however, did so from the left, pushing for a systemthat would be fully funded by the government, without requiring contributionsby 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 toachieve a public impact that previous union campaigns had lacked. KAJSadopted 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 theirappeal 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, whereit is all but impossible to separate out the introduction and spread of local healthcare schemes from the logic of electoral politics. The mushrooming of Jamkesdaschemes occurred in a politicized environment characterized by the introduction,in 2005, of direct elections of local government heads. Initially, some of themost far-reaching schemes were introduced by reformist local politicians, particu-larly those such as the PDI-P politician Gede Winasa who strove to “develop apopular base among the poor”.50 However, once other local politicians saw howsuch 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 healthcare scheme as part of their election offerings. District heads or governors whohad introduced particularly generous or successful schemes promoted them ascentral to their re-election campaigns; contenders often tried to outbid them byoffering 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 intheir places of origins (Widodo was the mayor of Solo, Noerdin the governor ofSouth Sumatra) and promised to import these schemes to the capital, while theincumbent, Fauzi Bowo, had a health programme of his own.

Public discussion of this proliferation of local policies is suggestive of disdainon the part of health care bureaucrats and professionals at the centre towards thepoliticization of health care in the regions. In one example, Dinnie Latief, anexpert in health decentralization at the Health Ministry, explained in a publicseminar that: “Many of the elected heads of provinces and regencies as well aslegislators lacked knowledge and understanding about health issues . . . many gov-ernors and regents routinely resorted to populist notions of free healthcare as a votebuying strategy.”52 In another typical statement, this time in reference to the 2012Jakarta gubernatorial election, Firman Lubis, a University of Indonesia professorof community health, said that: “Promising to make healthcare services free isonly to fool the people [ . . . ] No matter how much funding [is allocated forhealth 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 intotheir comments a lament at the vulgarization of policymaking that has come withdemocratization. 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 openedup 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. InIndonesia, we see a gradual process of broadening of participation in policymakingover the first 15 years of democracy. If initial steps in expanding social protectionand 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 NGOactivists, 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 powerresource theories that see welfare states as arising as the result of the structuralstrength of the working class and social democratic or leftist parties. Organizedlabour became an important player in the policy debate relatively late in thegame; indeed, a striking feature of the Indonesian reform has been the extensionof coverage to the vast reservoir of persons outside the formal labour market,who are by definition non-unionized. Yet the Indonesian experience also doespoint to what Haggard and Kaufman describe as the “significance of distributionalcoalitions and economic interests” 54 in welfare policy reform, with a markedbroadening of the interests represented in policymaking. At least, elementswithin 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 atransition to a system in which high quality health care is guaranteed by thestate for all citizens. Many who should be covered, are not: a 2013 state audit ofthe Jamkesmas and Jamkesda programmes found many weaknesses, including,“absence of accurate data on beneficiaries and a lack of current data on poorpeople” with the result that “many poor people did not have access to free health-care services”.55 Beyond issues of access, it is universally acknowledged that thequality 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, orhave to be transferred to better equipped facilities in different locations, sometimesdying of their illnesses or injuries on the way. Many of the best treatments accessedby patients in rich countries are not available; indeed, even the basic treatments thatare supposed to be provided in the public system are often missing. One recentsurvey found that only 60% of puskesmas (community health centres) had even60–79% availability of 83 essential drugs; only around 15% had 80% of thedrugs.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 ofthe country to receive appropriate first management of care at emergency unitsand to access basic specialized services at hospitals.”57

There is little wonder that the health care system has been characterized by oneobserver 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 canafford 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-endmarket for health services is also growing in the country. Private expenditure onhealth has consistently outstripped government expenditure on a 2:1 ratio for thelast 20 years.59

Dysfunction in the health system has multiple sources. One is that Indonesia isa relatively poor country; gross domestic product (GDP) per capita is far lower thanin 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 careschemes, some of which are in chronic deficit and often run short of medicinesand other facilities for patients. The same goes for the government’s nationalscheme for the poor, Jamkesmas: the World Bank report mentioned above,having summarized the poor facilities, staffing, medicine, and equipment in thepublic 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 ofpublic 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 increaseexpenditure on health. If this happens, the resulting increase in the tax burden onmembers of the middle class might seriously erode elite support for universal cov-erage, potentially bringing into play more intense social struggles than havehitherto been witnessed.

Equally important, however, is the broader political economy within which thenew schemes operate. In this regard, the literature on elite capture and predatorypower relations in Indonesia’s political system remains relevant for understandinghealth care reform. One manifestation of such relations in the health care system isthe ubiquity of illegal fees levied on poor patients. Such fees are extracted througha variety of methods, summarized by Rosser as including “denying poor patientsaccess to hospital beds unless they pay a fee, preventing poor patients fromleaving hospital unless they pay a fee, providing poor patients with poor qualityservice if they are served free of charge, referring poor patients unnecessarily toprivate medical practices [ . . . ] and simply denying poor people health careunless they first pay for it”.61 Rosser argues that the source of this problem isthat patients confront a coalition of interests uniting “politico-bureaucrats andtheir corporate allies” in the health care system. Illegal fees persist because thiscoalition continues “to treat public health facilities as mechanisms for generatingrents” and ensures “that programmes aimed at providing free health care to thepoor 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 dataand outright theft of equipment. As elsewhere in the public sector, such corruptionis 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 alsoclear, with local health bureaucrats being political appointees who are expected tofurnish their superiors with kickbacks and support them in election campaigns.

More generally, the social security system is an important source of the slushfunds that lubricate Indonesia’s political system, not only enriching bureaucratsand politicians who can access them, but also being used to fund politicalmachines.64 This phenomenon was visible from early in the reform period,when there was widespread abuse of the JPS funds allocated by the governmentduring the 1997–1999 financial crisis; at one point the government’s NationalDevelopment Planning Agency announced that 8 trillion of 17.9 trillion rupiahallocated to the programme had been misdirected.65 NGOs reported dozens ofcases of abuse of JPS funds to support political campaigning by Golkar and thePartai 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 croniesand 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 ofIndonesia’s notorious crony capitalists and by major political figures such asGolkar 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 topposition is “strongly desired by the largest party”.68

It is indicative of the strength of vested interests in the health care system thatthe major controversies that occurred during the debates leading to the 2004 and2011 social security laws did not focus on basic principles such as universalityof coverage or even funding mechanisms, but on the management structure ofthe new system, especially the fate of the existing social insurance providers (PTJamsostek, PT Askes, PT Taspen, and PT Asabri). These agencies fought hard tomaintain their positions, and they had powerful allies in the bureaucracy,cabinet, and parliament to defend them. Their replacement by a single trustfund, 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 theseagencies because “it will become apparent that the funds of those institutionswould not necessarily match what they have claimed to be their assets andresources in the past, because of various financial irregularities”.69 Additionaldelays were caused by internecine wars between key bureaucratic actors, especiallythe Ministry of State Enterprises and the Ministry of Manpower, each of which waspositioning itself to exercise maximum control over Jamsostek and the massivefunds at its disposal.70

Conclusion

Many revealing accounts of regime change and its aftermath in Indonesia haveemphasized the continued authority of the oligarchic power structures that werenurtured during the Suharto years, and the exclusion of interests representingworkers, farmers, and other ordinary folk. The analysis in this article suggeststhat these perspectives need to be revised, but perhaps not yet radically. The dra-matic expansion of social welfare policy in post-Suharto Indonesia, in particularthe trend towards universalization of health care, indicates a political system thatis not only more responsive to the interests of poorer citizens than is conventionallybelieved, but also a policymaking process that provides multiple avenues for inputby groups representing them.

We should not exaggerate this trend and assume that we see in it an entirely newsocial coalition representing lower-class interests underpinning Indonesian democ-racy. Indeed, one of the striking features of the policy lobbying around the 2011National Social Security Law was the ad hoc and conditional nature of thecoalitions that formed to promote policy change; in the regions, local health careschemes typically emerged with very limited input from social movements,NGOs, or other groups representing lower-class interests. The chief actors inexpansion of health care access have instead been elite politicians; in thisregard, 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 thatcentrist 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 hasmotivated policy change, as elite parties and politicians have competed witheach 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 thesocial 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 socialinterests will be key.

AcknowledgementMy 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 forthis 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 forfunding part of the research on which the article is based.

Notes1. “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 debatedby 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 the

dynamics 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 formaking 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, governmentexpenditure 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 contributorEdward 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) andIslam 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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