Analysis of Indonesia's Political Economy Towards the Lack of
Health Financing for Promotive and Preventive Efforts
Rosalia Nur Hakim
Faculty of Public Health, Universitas Airlangga, Mulyorejo, Surabaya, Indonesia
Keywords: Health financing, State budget, Health promotion, Prevention of disease.
Abstract: In Indonesia health is one of the most important aspects of state development. This is evidenced by the
government's policy that health budget allocation is almost 5% of the state budget and 10% of the district
budget. However, health financing that has been implemented in Indonesia is widely used for personal
health (curative and rehabilitation efforts) capacity building and support. Meanwhile for prevention and
public health services such as health promotion are still lacking. This study aims to analyse the
considerations or reasons why the government has not maximised health financing for the purpose of
prevention of disease and public health services from the perspective of political economy. This research is
conducted descriptively where data obtained from supporting data such as books and publication
documents. The results of this study indicate that the interests of different parties, inter-ministerial priority
differences, socio-cultural aspects and fiscal limitations has caused the government to not maximise health
financing for the sake of health promotion and the prevention of disease.
1 INTRODUCTION
In Indonesia health is one important aspect of state
development, because health development is the
means of realising that quality human resources is
important. Better health means better human
resources can be achieved. According to the
Presidential Republic of Indonesia Regulation No.
72 of 2012 on the National Health System, health
development is a part of national development that
raises awareness, willingness and the ability for
everyone to live to the highest standard of public
health. This health development is the effort of all of
the Indonesian nation, whether it be the community,
private companies or the government.
National development in the field of health is
carried out through the improvement of health
efforts, better health supplies, medicines and
medical supplies accompanied by increased
supervision, community empowerment, and health
management. One of the health development efforts
is health financing where health funding comes from
the Government, Local Government, private
donators, the community and community
organisations. According to the Presidential
Regulation of the Republic of Indonesia Number 72
of 2012 on the National Health System, planning
and arranging health financing is carried out with the
excavation and settlement of various sources of
funds that can ensure the sustainability of health
development financing, allocating it rationally and
also effectively (The Law of Indonesian Ministry of
Health, 2016).
In the case of excavation and settlement
arrangements and the utilisation of funds originating
from mandatory contributions, the Government and
the Regional Government should make
improvements between the sources of funds from
mandatory contributions, State Revenue,
Expenditure Budget funds, Regional Income and
Expenditures, public funds, and other sources.
According to Law Number 36 Year 2009 on Health,
the Government's Health Budget amounts to at least
5% of the state budget and state expenditure outside
of salaries. District/municipal governments have
allocated at least 10% of their budget.
However, the health financing that has been
implemented in Indonesia both in the state and
provincial or district/city areas is widely used
primarily for individual health efforts or curative and
rehabilitation efforts. For public health efforts such
as health promotion and disease prevention
financing is still low. According to the Performance
Accountability Report (2015), the results of the
District Health Account 8 provincial analysis show
the largest portion 52% of the funds is for capacity
54
Hakim, R.
Analysis of Indonesia’s Political Economy Towards the Lack of Health Financing for Promotive and Preventive Efforts.
In Proceedings of the 4th Annual Meeting of the Indonesian Health Economics Association (INAHEA 2017), pages 54-57
ISBN: 978-989-758-335-3
Copyright © 2018 by SCITEPRESS – Science and Technology Publications, Lda. All rights reserved

building and support, 42% for curative and only 6%
for public health.
There are 6 community health programs in Indonesia
is community nutrition, family health development, health
and work effort development, management support, health
promotion and community empowerment, environmental
health (Anung, 2017).
2 METHODS
This research has used a descriptive research design
which is retrospective to get a description of the
health fund allocation from the State and Regional
Budget. The data used has been the secondary data
on health financing in Indonesia. Secondary data
collection has been done by collecting publication
documents such as the Indonesia Health Profile
2015, Performance Accountability Report 2015 and
2016, and the Health Data and Information from the
Health Profile of 2016. The secondary data has been
taken by reviewing the documents without any
interviews with the parties due to the author’s
limitations in getting the sources.
3 RESULT
Source: Indonesia Health Profile, 2015
Figure 1: Allocation and Realization of The Health
Ministry Budget of The Republic of Indonesia 2009-1015
Picture 1 shows that the allocation and
realisation of the health ministry's budget in the last
seven years has increased. In 2009, the Ministry of
Health of the Republic of Indonesia had a budget
allocation of 20.93 trillion rupiahs with the
realisation of 18.05 trillion rupiahs and the
percentage of realisation was 86.11%. The number
increased from year to year. In 2015. It was 54.3
trillion rupiah with a realisation of 48.9 trillion
rupiah so the percentage of realisation therefore
amounted to 89.91%.
The percentage of allocation of the regional
income and expenditure budget of Health according
to the program in Indonesia in 2011 has been shown
in Table 1
Table 1: Percentage of the allocation of the regional
income and expenditure budget of Health according to the
program in Indonesia in 2011
Province
Allocation
Capacity
building
support
Personal
health
Public
health
All 52 % 42 % 6 %
West Java 51 % 48 % 1 %
Gorontalo 58 % 32 % 10 %
South Kalimantan 55 % 42 % 4 %
Jambi 56 % 40 % 4 %
West Sulawesi 60 % 30 % 9 %
Lampung 29 % 67 % 5 %
Bali 52 % 46 % 3 %
NTT 58 % 30 % 13 %
Source: Performance Accountability Report, Indonesian
Ministry of Health in 2015
Table 2: Public Health expenditure on health by service
program, 2014
Health care by function
% of public
expenditure
on health
% of total
expenditure
on health
Health administration
and health insurance**
5.3% 3.9%
Prevention and public
health services
13.9 % 6.6 %
Medical services 80.8 % 89.5 %
- Inpatient curative
care
44.1 % 37.9 %
- Outpatient curative
care
35.6 % 34.4 %
- Rehabilitative care
services
0.4 % 0.2 %
- Ancillary services to
health care
0.2 % 3.5 %
- Medical goods
dispensed to
outpatient services
0.5 % 13.5%
Total % of current
Health
Expenditure***
100.0 % 100.0 %
Source: MoH (Center for Health Economic Policy
Studies), AIPHSS in The Republic of Indonesia Health
System Review, 2017
Analysis of Indonesia’s Political Economy Towards the Lack of Health Financing for Promotive and Preventive Efforts
55

Table 1 shows that total public health spending for
prevention and public health services reached 6.6% while
85% of health spending for medical services programs
from all spending on health services
4 DISCUSSION
An increased allocation and realisation of
Indonesia's health funds has been occurring on an
annual basis due to the increasing demand for health
financing in various health programs in Indonesia.
However, the increase has not had the same effect in
relation to public health in Indonesia. In the
Presidential Regulation No. 72 of 2012 on the
National Health System, it states that government
funding for health development is directed to finance
health programs that have a high amount of leverage
on improving the public health status (The Law of
Indonesian Ministry of Health, 2016). However, the
percentage of allocation of health funds from the
regional income and expenditure budget still
indicates that the allocation of funds in to public
health programs is still lacking and much directed
towards the capacity building programs and
supporters as well as personal health efforts.
According to the results of the analysis on the
accountability report of the health ministry
performance in 2015, this is related to Indonesia's
commitment to the health sector still being relatively
low compared to other countries with the same per
capita income levels and Gross Domestic Product.
1
Indonesia always has an outlier status in terms of
public health expenditure allocation, i.e. less than
2% of the Gross Domestic Product. The low portion
of public health funds is due to the small fiscal
capacity; only 12% of the Gross Domestic Product
reaching the treasury. In addition to the limited fiscal
capacity, the small portion of public health funds is
also due to the government's lack of priority towards
health compared to other sectors. Indonesia entered
the world's 10% lowest decile in the world that gave
low priority allocation to public funds for health.
According to the results of the analysis on the
accountability report of the health ministry
performance in 2015, the low allocation of public
health funds is further exacerbated by allocative and
technical inefficiencies, namely
1. Indonesia's primary health care allocation is very
small compared to more developed countries. As
a result, the use of advanced services is soaring.
This reflects the dominance of specialist health
services.
2. Drug costs sucks out a significant portion (> 40
percent of health costs). This figure is very high
compared to similar figures in a number of
developed countries that are only around 10-20
percent. The high share of drug expenditure is
caused by an irrational drug prescribing pattern
and patient demand.
Inefficiencies are also caused by disbursement
issues that often occur at the end of the quarter each
year. As a result, the use of funds is not suitable to
fund programs that have an optimal impact on health
outcomes. Delays in disbursement are also the cause
of health facilities depending on a rental pattern so it
is more expensive.
5 CONCLUSION
Increased allocation and realisation of Indonesia's
health funds occurring on an annual basis is due to
the increasing demand for health financing in
various health programs in Indonesia. However, the
percentage of the allocation of health funds from the
regional income and expenditure budget still
indicates that the allocation of funds in public health
programs is lacking and much directed to capacity
building programs and supporters as well as personal
health efforts.
According to the results of the analysis on the
accountability report of the health ministry
performance in 2015, this is related to Indonesia's
commitment to the health sector being relatively
low, limited fiscal capacity, a small portion of public
funds for health, and allocative and technical
inefficiency.
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