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Why Do Informal Sector Workers Not Pay the Premium Regularly? Evidence from the National Health Insurance System in Indonesia

Author

Listed:
  • Teguh Dartanto

    (Universitas Indonesia
    Universitas Indonesia)

  • Alin Halimatussadiah

    (Universitas Indonesia
    Universitas Indonesia)

  • Jahen Fachrul Rezki

    (Universitas Indonesia
    University of York)

  • Renny Nurhasana

    (Universitas Indonesia)

  • Chairina Hanum Siregar

    (Universitas Indonesia)

  • Hamdan Bintara

    (Universitas Indonesia)

  • Usman

    (Universitas Indonesia)

  • Wahyu Pramono

    (Universitas Indonesia)

  • Nia Kurnia Sholihah

    (Universitas Indonesia)

  • Edith Zheng Wen Yuan

    (Universitas Indonesia)

  • Rooswanti Soeharno

    (Former Staff of ADB Indonesia Resident Mission, and Health Specialist at UNICEF Indonesia)

Abstract

Background 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. Objective 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. Method 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. Results 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. Conclusion 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.

Suggested Citation

  • Teguh Dartanto & Alin Halimatussadiah & Jahen Fachrul Rezki & Renny Nurhasana & Chairina Hanum Siregar & Hamdan Bintara & Usman & Wahyu Pramono & Nia Kurnia Sholihah & Edith Zheng Wen Yuan & Rooswanti, 2020. "Why Do Informal Sector Workers Not Pay the Premium Regularly? Evidence from the National Health Insurance System in Indonesia," Applied Health Economics and Health Policy, Springer, vol. 18(1), pages 81-96, February.
    • Handle: RePEc:spr:aphecp:v:18:y:2020:i:1:d:10.1007_s40258-019-00518-y
    DOI: 10.1007/s40258-019-00518-y
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    References listed on IDEAS

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