Assessing fiscal space for health in Indonesia

Presenter: Pandu Harimurti, World Bank

Abstract

This paper discusses the issue of fiscal space for health in Indonesia. Fiscal space refers to the ability of a government to increase expenditures for a desired purpose. In all likelihood, Indonesia will need to boost health spending in the near future as it expands access to care by reducing financial barriers for the poor through the expansion of Jamkesmas, the health insurance scheme for the poor and near poor. In addition, projections based on demographic and epidemiological changes indicate there is likely to be a very significant increase in the demand and need for health services and more sophisticated care. We introduce a simple framework within which an assessment of fiscal space for health can be assessed and discuss a number of different options for increasing the availability of public resources for health in Indonesia. In general, fiscal space for health can be realized as a result of: (i) conducive macroeconomic conditions; (ii) reprioritization of health within the overall government budget; (iii) increasing health-specific foreign aid and grants; (iv) an increase in other health-specific resources, for example through earmarked taxation or the introduction of premiums for mandatory health insurance; and (v) an increase in the efficiency of government health outlays. Each of these options has its pros and cons and we highlight these in the Indonesia context in addition to highlighting some examples from international experience.