New Directions in Social Policy: Evidence from the Indonesian Health Insurance Programme

This paper discusses the development of Indonesia’s health insurance programme as a lens through which to understand Indonesian social policy development. The Indonesian health insurance programme has experienced considerable development despite fluctuating economic growth and political upheaval. Indonesia initiated its health insurance programme during the Soekarno period (1945-1966) by providing health insurance to formal workers. However, this period of economic austerity saw the programme poorly implemented. As the economy improved under Soeharto (1966-1998), the health insurance programme steadily improved until 1997, when the Asian financial crisis hit Indonesia. The crisis forced the Indonesian government to take a loan from the World Bank, which required the establishment a social safety net for the poor. The safety net programme led to massive development of social protection programmes, which encouraged the government to implement a universal health coverage programme. The paper describes the characteristics of Indonesia’s social policy development, analyses its relationship with economic policy, highlights its key drivers and identifies the interests and alliances that shaped Indonesia’s social policy.

The paper is part of a series of outputs from the research project New Directions in Social Policy: Alternatives from and for the Global South, which examines the emergence, nature and effectiveness of recent developments in social policy in emerging economies and developing countries. The purpose is to understand whether these are fundamentally new approaches to social policy or welfare systems which could offer alternative solutions to the critical development challenges facing low- and middle-income countries in the twenty-first century, in order to shed light on their policy options and choices.

At the time of their collaboration with UNRISD for this project, Mulyadi Sumarto was a faculty member at the Department of Social Development and Welfare, Gadjah Mada University (Indonesia) and Alexandra Kaasch was Junior Professor in Transnational Social Policy at the University of Bielefeld (Germany).