Why Do Informal Sector Workers Not Pay the Premium Regularly? Evidence from the National Health Insurance System in Indonesia
The challenges of universal health coverage (UHC) in developing countries with a significant proportion of the labor force that works in the informal sector include administrative difficulties in recruiting, registering and collecting regular contributions in a cost-effective way. As most developing countries have a limited fiscal space to support the program in the long run, the fiscal sustainability of UHC, such as that in Indonesia, relies heavily on the contributions of its members. The failure of a large proportion of voluntary enrollees/self-enrolled members/informal sector workers (Peserta Mandiri/Pekerja Bukan Penerima Upah [PBPU] members) to pay their premiums may lead to the National Health Insurance System (NHIS) in Indonesia being unable to effectively deliver its services.
This study aims at exploring the important factors that affect the compliance behavior of informal sector workers (PBPU members) in regularly paying their insurance premium. This analysis may be a basis for designing effective measures to encourage payment sustainability in informal sector workers in the NHIS.
This study utilizes the survey data collected from three regional offices of the Indonesian Social Security Agency for Health (SSAH), which cover approximately 1210 PBPU members, to understand the relationship between members’ characteristics and their compliance behavior regarding the premium payment. We applied an econometric analysis of a logit regression to statistically estimate which factors most affect their compliance behavior in paying the insurance premium.
This study reveals that almost 28% of PBPU members do not pay their insurance premiums in a sustainable way. Our logistic regression statistically confirms that the number of household members, financial hardship, membership in other social protection arrangements, and the utilization of health services are negatively correlated with the compliance rate of informal sector workers in paying their insurance premium. For instance, people who experience financial hardship tend to have a 7.7 percentage point lower probability of routinely paying the premium. In contrast, households that work in agricultural sectors and have income stability, the cost of inpatient care incurred before joining the NHIS, a comprehensive knowledge of the SSAH’s services, and the availability of health professionals are all positively correlated with regular premium payment.
Although there is no single policy that can ensure that informal sector workers (PBPU members) regularly pay their premiums, this study recommends some policy interventions, including (1) flexibility in applying for a government subsidy for premiums (Penerima Bantuan Iuran [PBI]), especially for people who have financial hardship; (2) an intensive promotion of insurance literacy; (3) expanding the quantity and quality of healthcare services; and (4) tailor-made policies for ensuring the sustainability of premium payments for each regional division.
The authors gratefully thank the LPEM FEB UI for allowing us to explore the 2015 survey data that were collected with the support of the Asian Development Bank – Indonesia Resident Mission and BPJS Kesehatan (SSAH) for providing a list of randomly selected PBPU members in each DIVRE during the survey. The authors are indebted to Dr. Rabin Hattari (a former economist at ADB-Indonesia Resident Mission) for constructive comments in designing the study and two anonymous referees for their insightful and valuable comments to improve the quality of the manuscript.
TD conceived the idea for the study. TD, AH, JFR, RN, CHS, HB, U, WP, NKS, EZWY, and RS designed and conducted a field study, and analyzed the field study report. TD prepared the initial draft of this manuscript. JFR re-estimated econometric models, and AH reshaped the flow of analysis in the revised manuscript. CHS, HB, NKS, RN, and RS contributed new data, information, and literature during the revision process. TD finalized the revised manuscript. All authors reviewed the draft manuscript and provided input to the preparation and approval of the final version of the manuscript.
Compliance with Ethical Standards
This study was partially funded by the 2019 Hibah Q1Q2-Universitas Indonesia (NKB-0190/UN2.R3.1/HKP.05.00/2019) via Teguh Dartanto (Research Cluster on Poverty, Social Protection and Human Development at Department of Economics, Faculty of Economics and Business Universitas Indonesia). Data collection for this study was supported by the Asian Development Bank–Indonesia Resident Mission.
Conflict of interest
Teguh Dartanto, Alin Halimatussadiah, Jahen Fachrul Rezki, Renny Nurhasana, Chairina Hanum Siregar, Hamdan Bintara, Usman, Wahyu Pramono, Nia Kurnia Sholihah, Edith Zheng Wen Yuan, and Rooswanti Soeharno have no conflicts of interest to declare that are directly relevant to the content of this article. Jahen F. Rezki received grants from a Humane Studies Fellowship and the Indonesia Endowment Fund for Education, but these were unrelated to the current article.
Ethics approval for this study was obtained from the Ethics Committee, Faculty of Public Health, Universitas Indonesia, Indonesia (ref: 224/H2.F10/PPM.00.02/2015). In addition, a research permission letter was received from the Directorate General of Political and National Unity (Ministry of Home Affairs) at Central Government, and the Agency of Political and National Unity at Provincial and City/Municipal Government, to conduct a field study in the three provinces in Indonesia.
- 1.Sachs J. Viewpoint Achieving universal health coverage in low-income settings [Internet]. Lancet. 2012;380:944–47.Google Scholar
- 2.Cotlear D, Nagpal S, Tandon A, Cortez R, Smith O. Going universal: how 24 developing countries are implementing universal health coverage reforms from the bottom up. Washington DC. The World Bank; 2015. p. 286 [cited 16 Jun 2019]. 28. Available at: https://openknowledge.worldbank.org/bitstream/handle/10986/22011/9781464806100.pdf?sequence=4.
- 4.Dartanto T. Universal Health Coverage in Indonesia: informality, fiscal risks and fiscal space for financing UHC. IMF-JICA Conference Tokyo 2017. Available at: https://www.jica.go.jp/jica-ri/news/topics/20170202_01.html.
- 5.Agustina R, Dartanto T, Sitompul R, Susiloretni KA, Suparmi, Achadi EL, et al. Universal health coverage in Indonesia: concept, progress, and challenges. Lancet. 2019;393(10166):75–102.Google Scholar
- 6.Jowett M, Kutzin J. WHO | Raising revenues for health in support of UHC: strategic issues for policy makers. Geneva: World Health Organization; 2015 [cited 16 Jun 2019]. Available at: https://www.who.int/health_financing/documents/revenue_raising/en/.
- 7.McIntyre D, Obse AG, Barasa EW, Ataguba JE. Challenges in financing Universal Health Coverage in Sub-Saharan Africa. Oxford Research Encyclopedias, Economics and Finance; 2018.Google Scholar
- 8.McCord MJ, Buczkowski G, Sakena P. Premium collection: Minimizing transaction costs and maximizing service. In: Protecting the poor: a microinsurance compendium. In: Churchill C (ed) International Labour Organization; 2006 [cited 16 Jun 2019 Jun 16]. Available at: https://www.munichre-foundation.org/dms/MRS/Documents/ProtectingthepoorAmicroinsurancecompendiumFullBook.pdf.
- 10.Jowett M, Hsiao W. The Philippines: extending coverage beyond the formal sector. In: Hsiao WC, Shaw RP, Fraker A, World Bank (eds) Social health insurance for developing nations. The World Bank; 2007. p. 172 [cited 16 Jun 2019]. Available at: https://elibrary.worldbank.org/doi/abs/10.1596/978-0-8213-6949-4.
- 11.Mills A. Strategies to achieve universal coverage: are there lessons from middle income countries? 2007.Google Scholar
- 14.Mathauer I, Schmidt J-O, Wenyaa M. Extending social health insurance to the informal sector in Kenya. An assessment of factors affecting demand. Int J Health Plan Manag. 2008;23(1):51–68.Google Scholar
- 15.Bonfert AT, Hennig J, Heymann M, Hussein K, Langenbrunner J, Ozaltin A. Closing the gap: health coverage for non-poor informal sector workers. 2015.Google Scholar
- 21.Hongvivatana T, Manopimoke S. A baseline survey of preference for rural health insurance: a research report submitted to the Thai-German Health Card Project, Ministry of Public Health, Thailand. undefined. 1991 [cited 16 Jun 2019]. Available at: https://www.semanticscholar.org/paper/A-baseline-survey-of-preference-for-rural-health-%3A-Hongvivatana-Manopimoke/bf24cfb1d139980d144af7f384f5beefbb184153.
- 23.LPEM-ADB. Why do they not pay regularly? Sustainability of premium payment of JKN’s Self Enrolled Member. Jakarta; 2015.Google Scholar
- 24.La Forgia G, Nagpal S. Government-sponsored health insurance in India: are you covered? (English) | The World Bank. 2012 [cited 16 Jun 2019]. Available at: http://documents.worldbank.org/curated/en/644241468042840697/Government-sponsored-health-insurance-in-India-are-you-covered.
- 25.Lan JY-C. Achieving and sustaining universal health coverage: Fiscal Reform of the National Health Insurance in Taiwan. Appl Health Econ Health Policy. 2017;15(6):717–31.Google Scholar
- 27.Nurhasana R. Motif kepesertaan dan partisipasi pembayaran iuran peserta perorangan dalam Jaminan Kesehatan Nasional: Studi kasus di Kelurahan Lenteng Agung Jakarta Selatan (Enrollment motives and sustainability of premium payment of informal sector workers]. J Kedokt dan Kesehat. 2015;11(1):80–90.Google Scholar
- 28.Center for Health Economics and Policy Studies (CHEPS). Kajian Model Pengumpulan Iuran Program JKN Pada Kelompok Peserta Pekerja Bukan Penerima Upah (PBPU) Tahun 2015 (Study on premium collection of informal sector workers in 2015). CHEPS; 2015.Google Scholar
- 29.Lemeshow S, Hosmer DW, Klar J, Lwanga SK. Adequancy of sample size in health studies. West Sussex: Wiley; 1990 [cited 16 Jun 2019]. Available at: https://apps.who.int/iris/bitstream/handle/10665/41607/0471925179_eng.pdf?sequence=1.
- 30.Rea LM, Parker RA. Designing and conducting survey research: a comprehensive guide. Wiley; 2014 [cited 16 Jun 2019]. p. 360 Available at: https://www.wiley.com/en-gb/Designing+and+Conducting+Survey+Research%3A+A+Comprehensive+Guide%2C+4th+Edition-p-9781118767030.
- 31.Amemiya T. Advanced econometrics. Harvard University Press; 1985. p. 521.Google Scholar
- 32.Wooldridge JM. Econometric analysis of cross section and panel data. MIT Press; 2010. p. 1064.Google Scholar
- 34.Ministry of Health. Riset Kesehatan Dasar (Basic Health Research). 2013 [cited 16 Jun 2019]. Available at: http://www.depkes.go.id/resources/download/general/HasilRiskesdas 2013.pdf.