Public Spending for Health Increasing While Indonesia’s Health System Enters a Period of Transition

Contact :
World Bank Office
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Tower 2, 13 Floor,Jl. Jend Sudirman

In Jakarta – Randy Salim
Tel :(62 21) 5299-3259
rsalim1@worldbank.org

JAKARTA, June 11, 2008 – A new World Bank report launched today highlights the achievements of Indonesia’s health sector reform program, but also focuses on remaining challenges and offers ideas for more efficient and effective health spending that would bring Indonesia closer to realizing its vision of universal healthcare.

The Health Public Expenditure Review (PER) 2008 – Investingin Indonesia’s Health: Challenges and Opportunities for Future Public Spending notes that Indonesia has quadrupled its public spending on health from about US$1 billion in 2001 to over US$4 billion in 2007, largely due to the Askeskin health insurance program for the poor. Despite the Askeskin program’s initial problems with targeting, the report indicates its potential of increasing access of health care for the poor. At the same time, inefficiencies behind public spending and the issues that come with decentralization have at times kept the quality of health services low, and prevented Indonesia from achieving the outcomes it could have. Reform efforts are further complicated by the fact that Indonesia, as many middle-income countries, carries a double burden of disease, having to fight communicable diseases (tuberculosis and measles) as well as a rapidly growing number of non-communicable diseases (diabetes, heart disease and cancer).

“By 2015, Indonesia’s population is expected to grow to around 250 million. In addition to this major demographic change, we are also experiencing epidemiological and nutritional transitions. All these changes will require a very different Indonesian health system from the one that exists today,” said Nina Sardjunani, Deputy Minister for Human Resources and Cultural Affairs for the State Ministry of National Development Planning/ National Development Planning Agency (BAPPENAS).

The Health PER finds today’s health system to be characterized by:

• An increasing level of public health spending, measured as a percent of GDP as well as a percent of total government expenditures
• A decreasing level of catastrophic expenditures (household health spending exceeding 40% of total household expenditures) among the poor, most likely due to Askeskin
• A double burden of disease, with traditional, communicable diseases as a remaining challenge, and ‘new’ non-communicable diseases rising rapidly
• A mixed picture in terms of health outcomes with remarkable increases in life expectancy and reductions in child mortality, but lagging progress in areas such as maternal mortality and nutrition.
• Limitations in demand for services due to health illiteracy and significant non-medical costs (opportunity and transportation costs, user fees) across regions and socio-economic groups
• Challenges related to decentralization and local public financial management, such as limited capacity for district health accounting and performance budgeting (applying minimum service standards)
• Relatively low levels of government spending on other determinants of health outcomes (improved water and sanitation, and nutrition)

“Indonesians are living longer and child mortality has fallen dramatically, noteworthy achievements that should inspire the government to make further headway in areas where advances are still needed, such as maternal care, nutrition and HIV/AIDS” said Joachim von Amsberg, Indonesia Country Director, World Bank. “With this Health PER, we hope to provide the Government and its partners with opportunities to maximize the efficiency, effectiveness and equity of health spending.”

To read more about the World Bank’s support for Indonesia visit: www.worldbank.org/id