After an almost 10-year delay, the law on the national social security system will be implemented on Jan. 1. This Law No. 40/2004 is equivalent to the Old Age, Survivor, Disability and Health Insurance Act or the Social Security Law of the US. Both laws were enacted after severe financial crises that alerted the countries to the crucial need for a social security system to overcome financial catastrophes.
While the US law covers four programs, Indonesia’s national social security covers five programs, namely health insurance, occupational injuries, provident funds, pension and death benefits.
There are some differences between the laws of the two countries. The US Social Security Law, without health insurance, was passed just three years after the 1932 Great Depression.
Indonesia’s law was enacted six years after the 1998 financial crisis and two years after the amendment of the 1945 Constitution. Further, the health insurance part of the US law was added later in 1965, creating its Medicare program.
But Indonesia’s health insurance covers only the elderly using a pay-as-you-go funding mechanism. In Indonesia on Jan. 1, the health insurance part will for the first time cover Indonesian citizens and foreigners residing in Indonesia for more than six months. Another difference is that the entire US social security system is administered under a single agency, the Social Security Administration under the federal government.
Meanwhile, the administration of Indonesia social security is under two different quasi government agencies under Social Security Providers (BPJS), one catering to health coverage and the other in charge of the other four programs. The Indonesian model follows the similar separation of short-term and long-term programs of social security in Taiwan, the Philippines and South Korea.
Indonesia’s national health insurance (JKN) program is administered separately by BPJS Kesehatan, previously PT Askes Indonesia, in a program similar to that in the US, Canada, Taiwan and Australia. It represents a single payer health care to meet basic healthcare needs, meaning all medically necessary treatment, of the entire Indonesian population.
The JKN covers comprehensive benefits, from influenza to expensive medical intervention such as open-heart surgery, dialysis and cancer therapies.
The program covers medical necessities and hotel-type services. JKN funding comes from mandatory contributions from all workers and a government subsidy for the poor and near poor. Hotel-type services are limited to a first- or second-class room and board for those who pay 4.5 to 5 percent of their monthly wages. The poor and the near poor needing hospitalization, covered by the government subsidy, are entitled to a third-class room and board.
An additional 10 million to 20 million people may enroll during 2014, most likely those suffering from chronic diseases or catastrophic diseases such as renal failure and cancer.
The BPJS Law No. 24/ 2011 prescribes that on Jan. 1, the JKN will start by integrating the administrations of four current public health insurance plans. To undertake the JKN, the world’s largest national health insurance plan, PT Askes (currently a parastatal company) has been transformed into a public, non-government entity named BPJS. While PT Askes was tasked to make money or profit from the sick for the government, the BPJS must ensure that every contributor gets necessary medical care. From the New Year, public health insurance will first cover about 120 million people.
Firstly, around 86.4 million people will be considered eligible for premium payment assistance of Rp19,225 (US$1.57) per individual per month. The government has deducted a total of Rp19.3 trillion from the State budget to do this.
The premium for informal workers and retirees ranges from Rp25,500 per month for third-class medical services to Rp59,500 for first-class medical services, with at least three-month payment in advance.
For formal workers in the private sector, the premium is 5.0 per cent of their monthly income. The government decided that from 2015, employers will pay 4.0 per cent of the premium and the rest will be paid by employees.
The Jakarta Post (2013/01/02)
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Dr. Nanny Nusalim