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Democratization
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Health care and democratization

in Indonesia
Edward Aspinall

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

Health care and democratization in Indonesia

Downloaded by [Australian National University] at 22:59 03 March 2014

Edward Aspinall

Department of Political and Social Change, School of International, Political and Strategic
Studies, College of Asia and the Pacic, Australian National University, Canberra,
Australia
(Received 18 August 2013; nal version received 30 November 2013)
Analyses of Indonesian democracy often emphasize elite capture of
democratic institutions, continuity in oligarchic power relations, and
exclusion 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 have
competed with each other to introduce generous local health care schemes.
Taking its cue from analyses of social welfare expansion in other East Asian
states, the article nds the origins of policy shift in the incentives that
democracy creates for elites to design policies that appeal to broad social
constituencies, and in the widening scope for engagement in policymaking
that democracy allows. The article ends with a cautionary note, pointing to
ways in which oligarchic power relations and the corruption they spawn still
undermine 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 nancial 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 citizens the right to social security to enable their full development as dignied
human beings. Another mandates that 20% of the state budget be spent on

Email: edward.aspinall@anu.edu.au

# 2014 Taylor & Francis

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E. Aspinall

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 establishing 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 Indonesia building the biggest single-payer national health scheme where one government outt collects the contributions and foots the bills in the world.1 At the
subnational level, too, local governments have used the expanded political and
scal authority they enjoy as a result of decentralization to expand social
welfare spending, with a rash of free health care and other welfare policies supplementing the national schemes. These changes, the scale and implications of which
have barely been appreciated by observers of Indonesian politics, have expanded
state 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 Indonesias 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 Indonesian democracy is largely unchanged from that which propped up authoritarianism. 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 interests represented in government bodies and policymaking. For example, Mietzner
has argued that activists from civil society groups have begun to penetrate legislative and other bodies, having some inuence on policy.3 The analysis presented
in this article provides further ammunition to this challenge. It argues that the
emergence 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 authoritarian regimes. In some cases, such as the formerly socialist countries of Eastern
Europe, these changes have involved scaling back the states role in social protection; elsewhere, that role has expanded. Among the best studied examples are the
countries 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 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 nds that reform trajectories [ . . . ] moved in tandem and in a similar direction, from limited health insurance 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 productivist 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 operated 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 implications for our understanding of Indonesian democracy. To achieve the rst of
these goals, the article focuses on health care as a case study. The rst 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 piecemeal expansion of health care coverage at national and local levels and the construction of a universal social insurance framework.
The fourth section of the article considers exactly how democratization has led
to health care policy expansion. It identies two causal mechanisms, both closely
paralleling Northeast Asian experiences. First, democratization opened the policymaking 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 operated, especially by increasing pressures on political leaders to respond to voter preferences 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 nal 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

E. Aspinall

that pervade Indonesias political system. As a result, though health care coverage
is expanding dramatically, the quality of that health care is often very low.

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A brief history of social welfare in Indonesia

The origins of Indonesias social security and welfare system lie, as in most
countries, with early introduction of health insurance and pension schemes for
civil servants and soldiers, followed by gradual expansion to, rst, workers in
the formal sector and, eventually, all citizens. By the end of the Suharto period
(1966 1998), however, only the politically strategic groups of civil servants, soldiers, and formal sector workers were covered by compulsory health insurance and
pension schemes; the vast majority of the population had access only to rudimentary state health care.
The origins of the current social welfare system are almost as old as the Indonesian state itself. A pension scheme for civil servants was introduced in 1949, as
Indonesia became independent; a health insurance scheme for civil servants was
introduced in 1963. Coverage for formal sector workers began at a minimal
level in the late 1960s, was reorganized in 1977 1978, and then consolidated
into its present form in 1992 as the Jamsostek (Jaminan Sosial Tenaga Kerja,
Labour Social Insurance) scheme. Jamsostek, like the public service equivalents,
provides a dened contribution provident fund model for pensions in which retiring workers are paid a lump sum, as well as coverage for workplace injuries and
death benets. The scheme also provides health insurance, funded by co-payments
by employers and employees, but with an opt-out provision if companies can show
they are providing superior coverage privately. There are major problems with corruption and noncompliance: many companies fail to enrol their employees in Jamsostek, under-report stafng 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 of
31 million workers in the formal sector participated in the scheme.9 Jamsostek has
never aimed to cover the far larger number of workers in the informal sector. The
International Labour Organization (ILO) estimated in 2007 that, out of 108 million
persons in the labour force, only about 16.8 million workers were contributing to
the Jamsostek, Taspen (civil servant) and Asabri (military) schemes.10
These formal sector and civil service insurance schemes were only one part of
the governments 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 a
developmentalist model that included provision of basic education and health care
services at low cost for users as a means to legitimise the centralized and authoritarian regime.11 Programmes such as family planning that were government priorities were relatively well funded and successful. A system of community level
health centres (puskesmas) was introduced in 1968, with full national coverage
established 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, life
expectancy, 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 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 reasonably 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 social
safety net programmes (Jaringan Pengaman Sosial, JPS) were introduced, including 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 services, 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 household
and 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 Soekarnoputri (2001 2003) in 2003, building on the health care component of the
emergency 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), rst 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 Askeskin [and for
Jamkesmas] were fully subsidized by a government health fund.18 Both Askeskin

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E. Aspinall

and Jamkesmas offered free basic health care in the Puskesmas community health
centres and third class hospital treatment, with exclusions for some expensive diagnostic 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 rst crisis-era programme,
despite pro-poor targeting, a considerable number of health cards went to households 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 trillion 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 to
the 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 specied types of specialist treatment for all residents, while the poor are also covered for periods of hospital stay care.22 A prominent example in the second category was Alex Noerdin, the head of Musi
Banyuasin 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 Jembrana. 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 programmes, meant that South Sumatra achieved 100% health insurance coverage by
2011, one of only four provinces to do so by this time.24
By the end of the rst 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 provided information had some sort of local health nancing 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 categorized as poor or near poor under the national scheme. There was variation in the
funding models applied and the methods by which health centres and hospitals
were paid. While all involved transfers from local budgets, a few required payments from beneciaries or limited benets according to income. For example, a

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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 nancial 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 ofcially
classied 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 universal social protection, especially health care.
Proposals for the creation of a national security system were rst put to the
government in 1999 during the presidency of B.J. Habibie (1998 1999), Suhartos
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, consisting mostly of leading social welfare academics and bureaucrats, and it proposed a
sweeping reform in which a national system covering health, pensions, and other
benets would be run by a single trust fund responsible to the president, allowing
maximum pooling of funds and risk.27 Other principles included compulsory participation, not-for-prot management, joint contributions by employers and
employees, a trust fund management system, and portability of benets.28

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E. Aspinall

The rst 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 benets for all Indonesian citizens, 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 carriers (PT (Limited
Company) Jamostek, PT Taspen, PT Asabri, and PT Askes).30 These bodies
were state-owned enterprises that provided a steady ow of revenues to the government. According to Wisnus analysis, state ofcials feared a disruption of the ow
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 introduction 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 footdragging in the existing social security agencies, and in the ministries connected
to them. In this regard, the Indonesian case supports Haggard and Kaufmans contention that social welfare policy reform is constrained by institutional and interest group legacies of previous systems.32 Those resisting reform were not so
much the beneciaries of the existing system (for example, despite some early
reservations from organized labour that formal sector workers would end up subsidizing protection for the poor, most labour unions eventually supported reform),
but the bureaucratic actors who either controlled, or beneted from, the licit and
illicit ows of funds generated by the existing agencies, a point we return to
below.
The impasse eventually prompted members of Indonesias national parliament,
the DPR (Dewan Perwakilan Rakyat, Peoples Representative Council), notably
several individuals from Megawatis PDI-P (Partai Demokrasi Indonesia Perjuangan; 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 governments position,
however, largely reected the views of the four existing suppliers, which resisted
the merger and each of which wanted to maintain control of its assets, programmes and membership.33 An additional source of friction was the governments reluctance to transform these agencies into non-prot entities, which
would mean they would no longer pay dividends to the government. Consequently,
negotiations over the bill became protracted, involving ery debates, abandoned
compromises, colourful insults directed at the government by legislators, and demonstrations 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, represented 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-prot 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 until
2029 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 new
infusion of funds into the system. However, the costs of universal health care coverage are potentially immense, and health policy experts and senior ofcials 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 postSuharto Indonesia? We can nd 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 rst 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 Wongs view, then, two different mechanisms operated:
rst, the advent of democratic elections changed the incentive structures within

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10

E. Aspinall

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

institutions such as the national legislature, plus the institutionalization of civil liberties 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. Complicating 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 democracy.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 rst
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 Suhartos Golkar Party) or in the behaviour of president Yudhoyono 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 contributed 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 economic
crisis, with some literature depicting Indonesias new social protection policies
as an outgrowth of temporary 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 Indonesias rapidly ageing population is a critical consideration. Changing attitudes
towards social protection on the part of international nancial agencies like the
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 inuenced policy. Thus, though the JPS social safety net programme
was 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 political, 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 rst 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 Cooperatives and Medium and Small Enterprises, reected 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 programmes, who had been asked by Habibie to join his government in an attempt
to broaden its popular appeal).

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11

Once the policies were introduced, it became difcult 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 policymaking 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 popularity. 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 rst 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 Indonesian nationalism established by her father, Indonesias founding president,
Sukarno, made her sympathetic to policies addressing the needs of the little
people, while her PDI-P party was developing a prole that stressed social
welfare.
The development of the new national social security system provides a revealing 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 the management of the various social security funds during the Suharto years.43 Reform
was rst 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), the
agency that runs the civil service and army pension and health funds. In Wisnus
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 President 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 signicant, 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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12

E. Aspinall

of PDI-P), KAJSs 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 nal 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 fully funded by the government, without requiring contributions
by beneciaries.48 The KAJS itself and its union allies, however, aimed at a campaign 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 as
representing all Indonesians. They consistently referred to themselves as a civil
society alliance of unions, farmers, sher people, and students that was campaigning
for the rights of the Indonesian people. This inclusive approach broadened their
appeal and attracted the support of other civil society organisations, the media and
the 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, particularly 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 as
central 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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Democratization

13

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 governors and regents routinely 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 concerns 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 preserve 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 reminiscent of the pattern of health care policy expansion identied by Wong in Korea. In
Indonesia, we see a gradual process of broadening of participation in policymaking
over the rst 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 structural
strength 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 denition non-unionized. Yet the Indonesian experience also does
point to what Haggard and Kaufman describe as the signicance 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 political
constituencies 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 beneciaries and a lack of current data on poor
people with the result that many poor people did not have access to free healthcare services.55 Beyond issues of access, it is universally acknowledged that the
quality of health care in Indonesias public system is poor. Misdiagnosis and mistreatment 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 ndings conclude that It is almost impossible for those living in remote and rural areas of
the country to receive appropriate rst 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, inefciencies, rent-seeking and outright corruption in government ofces, private hospitals, pharmaceutical company warehouses and medical schools alike.58 Accordingly, almost everybody who can
afford to use private providers does so. The rich go to Malaysia, Singapore, Australia, or further aeld 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 nancial difculties aficting local health care
schemes, some of which are in chronic decit and often run short of medicines
and other facilities for patients. The same goes for the governments national
scheme for the poor, Jamkesmas: the World Bank report mentioned above,
having summarized the poor facilities, stafng, medicine, and equipment in the
public system, rather dryly concludes that: Supply-side constraints and supplyside subsidies have given the false impression that nancing of Jamkesmas is sufcient [ . . . ] the programme does not provide strong incentives to the providers to
deliver 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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Democratization

15

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 coverage, 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 Indonesias 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 rst 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 programmes 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, involving
everything from skimming off funds in construction projects, equipment purchases, and pharmaceutical orders, to manipulation of patient or stafng 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 Indonesias political system, not only enriching bureaucrats
and politicians 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 nancial crisis; at one point the governments 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 (Peoples Sovereignty Party) of Adi Sasono.66 More critically, the massive pension and health insurance funds already accumulated in
the system are a valuable source of slush funds, previously for Suharto cronies
and more recently for leading gures in parliament and the political parties.
Dinna Wisnu lists a dozen major corruption scandals involving a total of 3 trillion

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16

E. Aspinall

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

Indonesias notorious crony capitalists and by major political gures such as
Golkar party leaders Aburizal Bakrie and Jusuf Kalla.67 Little wonder that the management 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 Ministry 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 nancial 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 dramatic 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 democracy. 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 qualied assessment shows that regime change has been consequential 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 universalized, and the continuing problems of elite capture and corruption that afict the
social welfare system as a whole, however, point to a much longer-term incremental 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, and
Kevin Hewison, as well as for comments by Dinna Wisnu and anonymous reviewers for
this journal. I also beneted from input by Robert Sparrow, and am very thankful to Eve
Warburton for expert research assistance and to the Australian Research Council for
funding part of the research on which the article is based.

Notes
1.
2.
3.
4.
5.
6.
7.
8.

9.
10.
11.
12.
13.
14.
15.
16.

Rethinking the Welfare State: Asias Next Revolution, The Economist, 8 September
2012.
See especially, Robison and Hadiz, Reorganising Power; Hadiz, Localising Power;
and Winters, Oligarchy.
Mietzner, Fighting the Hellhounds.
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.
Haggard, Political Economy of the Asian Welfare State, 148, 169.
Wong, Healthy Democracies, 10.
Holliday, East Asian Social Policy, 145, cited in Hwang, New Global Challenges, 2.
Hewison, Crafting Thailands New Social Contract, 513. Note, however, that the
dynamics in Thailand were distinctive from those in Indonesia described in this
article. Thaksin was a populist leader who appealed over the heads of political
elites and organizations directly to the people; policymaking was more exclusionary
than in the Indonesian case described here. My thanks to one of the reviewers for
making this point.
Thabrany, Social Security for All, 1.
ILO, Social Security in Indonesia, 21. This number was equivalent to only about 47%
of the formal labour force of 36 million persons.
Kristiansen and Santoso, Surviving Decentralisation?, 248.
Ibid., 248 9.
Ibid., 249.
Sumarto, Suryahadi. and Bazzi, Indonesias Social Protection, 121.
Sumarto, Suryahadi, and Widyanti, Design and Implementation, 117.
Sumarto, Suryahadi, and Bazzi Indonesias Social Protection, 123.

18
17.
18.
19.
20.
21.

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22.
23.
24.
25.
26.
27.
28.
29.
30.
31.
32.
33.
34.
35.
36.
37.
38.
39.
40.
41.
42.
43.
44.
45.
46.
47.
48.
49.
50.
51.
52.
53.
54.
55.
56.
57.
58.

E. Aspinall
Ibid., 123.
Sparrow, Suryahadi, and Widyanti, Social Health Insurance for the Poor, i.
See for example, Pedoman Pelaksanaan Jaminan Kesehatan Masyarakat (Jamkesmas) 2008, 15 18.
Sparrow, Targeting the Poor, 197; see also Suharyo et al., Social Protection Programs, 527.
Elly Burhaini Faizal, Jamkesmas in 2013 Expanded with 10 Million More Entitled,
The Jakarta Post, 21 January 2013.
Rosser, Wilson, and Sulistiyanto, Leaders, Elites and Coalitions, 22.
Hasegawa, Decentralization, 13.
Ibid., 17.
SMERU, District Health Care Financing Study: Descriptive Statistics and Initial
Results (PowerPoint Presentation, 2012).
Prol Data Kesehatan Indonesia Tahun 2011, 198.
Wisnu, Governing Social Security, 169.
Ibid., 169 70; see also GTZ, Social Security System Reform, 1213.
Ibid., 155.
Ibid., 179, 183.
Ibid., 196.
Haggard and Kaufman, Development, Democracy and Welfare States, 12.
World Bank, Indonesia Economic Quarterly, 24.
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. See
for example, Criticism Grows Over Lack of Awareness of Health Scheme.
Premi Rendah, BPJS Kekurangan Dana, Kompas, 18 March 2013.
Wong, Healthy Democracies, 15.
Ibid., 16.
Slater, Indonesias Accountability Trap; see also Aspinall, Irony of Success.
Barrientos and Hulme, Social Protection, 445; see also Sumarto, Suryahadi, and
Bazzi, Indonesias Social Protection.
Croissant, Changing Welfare Regimes, 520.
Barrientos and Hulme, Social Protection.
Mietzner, Indonesias 2009 Elections, 4.
Wisnu, Governing Social Security; Wisnu, Politik Sistem Jaminan Sosial.
Wisnu, Politik Sistem Jaminan Sosial, 125.
See Cole, Coalescing for Change; and Cole, A New Tactical Toolkit, for useful
summaries of the KAJS campaigns.
Buruh dan Politik, 26.
See for example, KAJS Fields 100,000 to Stage Rallies on May Day; Minta RUU
BPJS Disahkan, 50 Ribu Orang Demo di Depan DPR.
See for example: Ribuan Buruh Tolak BPJS dan SJSN di Depan Istana.
Cole, A New Tactical Toolkit.
Rosser, Wilson, and Sulistiyanto, Leaders, Elites and Coalitions, 3.
Aspinall, Popular Agency and Interests.
Decentralization Poses Threats to Public Healthcare.
Free Healthcare, Education not Essential; see also Damanik, Wajar, Sektor Kesehatan Jadi Komoditas Politik.
Haggard and Kaufman, Development, Democracy and Welfare States, 2.
Jamkesmas has Deciencies, BPK says, The Jakarta Post, 3 April 2013.
Harimurti et al., Nuts and Bolts, 19.
Ibid., 20.
Pisani, Medicine for a Sick System.

Democratization
59.

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60.
61.
62.
63.
64.
65.
66.
67.
68.
69.
70.
71.

19

According to the World Health Organizations National Health Accounts, government

expenditure accounted for 35.7% of total health expenditure in 1995, a gure that had
fallen somewhat to 34.1% in 2011.
Harimurti et al., Nuts and Bolts, 21.
Rosser, Realising Free Health Care for the Poor, 259.
Ibid., 267.
Aspinall and van Klinken, The State and Illegality.
Dick and Mulholland, The State as Marketplace.
Rp 8 Trilyun Dana JPS Salah Alamat, Kompas, 23 April 1999.
See for example, Golkar dan PDRD Bantah Salah Gunakan JPS, Kompas, 28 May
1999.
Wisnu, Governing Social Security, 203 7.
Ibid., 200.
Wisnu, Politik Sistem Jaminan Sosial, 160.
Wisnu, Governing Social Security, 185 93.
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 scholarly
articles, chapters, and papers on aspects of Indonesian politics.

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