On Indonesian health reform

From the Jakarta Globe, news that a health bill, first tabulated in 2002, has finally passed. Among its provisions is an item that sounds humane in principle:

In many ways, the new health law is groundbreaking in that it cuts down to size the money-making players in the health industry. For example, hospitals — both state-run and private — are no longer allowed to reject patients who lack the financial means to seek medical care.

This is good news, but how fairly will this be implemented in practice? The cynic in me is imagining that this could be used to bankrupt certain hospitals by directing a throng of too-poor-to-pay patients at their doorsteps, while making sure that well-connected hospitals get mostly paying patients. Would anyone really prosecute the Army Hospital, or Pertamina, for example?

The part that allows for regulation of drug prices is good, to a certain point. Dictating prices by fiat is not likely to be successful — note the failure of California’s electricity liberalization during the tenure of Gov. Gray Davis: bulk prices are allowed to float, while a ceiling cap is placed on retail prices. Unscrupulous energy traders such as Enron were able to come in and artificially drive up the retail price, squeezing the state government and retail electricity providers. Would the government really be able to get pharmaceutical companies to agree on cost? Is it not better to set up a single purchasing agency that is able to coördinate generic drug purchases, and thus negotiate a lower price, than to wish the drug prices themselves to (inevitably) unrealistic numbers? The example of shortages of meat and dairy products in oil-rich Venezuela suggests the same — price decrees do not work in a market economy.

Still, some parts of the bill are unquestionably positive:

While the House deserves credit for passing the revamped health bill, which the government submitted in 2002, it is noteworthy that it took them seven years to do so. A sticky issue that prevented the bill from being passed more quickly is abortion. Not surprisingly, religion-driven political parties balked at even discussing the subject.

But the bill is designed to be accepted in its entirety, and its rejection would have meant the poor would not be able to enjoy the benefits embedded in it.

Thankfully, cooler heads ultimately prevailed, with the new law allowing for abortion in specific situations.

Indonesia, the largest Muslim country in the world, is thus ahead of most Catholic-majority Catholic developing countries (and even some developed ones such as Ireland!) in ensuring reproductive rights. Again, one could imagine the trumped-up backlash that could be fomented to target specific abortion providers — such abhorrent acts happen in the United States, after all — but on paper, at the very least, it is a welcome development.


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