The Impact of Health Insurance Programs on Out-of-Pocket Expenditures in Indonesia: An Increase or a Decrease?

We used panel data from the Indonesian Family Life Survey to investigate the impact of health insurance programs on reducing out-of-pocket expenditures. We employed three linear panel data models, two of which accounted for endogeneity: pooled ordinary least squares (OLS), pooled two-stage least squares (2SLS) for instrumental variable (IV), and fixed effects (FE). The study revealed that two health insurance programs had a significantly negative impact on out-of-pocket expenditures by using IV estimates. In the IV model, Askeskin decreased out-of-pocket expenditures by 34% and Askes by 55% compared with non-Askeskin and non-Askes, respectively, while Jamsostek was found to bear a nonsignificant effect on out-of-pocket expenditures. In the FE model, only Askeskin had a significant negative effect with an 11% reduction on out-of-pocket expenditures. This study showed that two large existing health insurance programs in Indonesia, Askeskin and Askes, effectively reduced household out-of-pocket expenditures. The ability of programs to offer financial protection by reducing out-of-pocket expenditures is likely to be a direct function of their benefits package and co-payment policies.