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Indonesia’s cash for health program

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In Brief

Indonesia’s conditional cash transfer program, Program Keluarga Harapan (PKH), provides cash to poor households in exchange for meeting specified health targets. It aims to reduce poverty and improve maternal and child health. But does it work?


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After the success of Mexico’s social assistance program PROGRESA (now Oportunidades), Indonesia followed suit in 2007 with the implementation of a pilot program, PKH. PKH set out to speed up the attainment of the Millennium Development Goals, especially poverty reduction and improved maternal and child health. Indonesia’s PKH targets the poorest households with children or expectant mothers. The requirements typically include prenatal and postnatal checks, vaccinations and school enrolment and attendance.

Under PKH, program participants are required to have four prenatal visits; facility-based delivery (the original requirement was childbirth assisted by a trained health care provider); two postnatal visits; monthly weighing; vaccinations and vitamin A for children under five; and enrolment in primary and junior high school with a minimum of 85 per cent attendance for school-aged children.

To the government’s credit, PKH has been more successful than other social assistance programs in identifying and enrolling poor households. The impact evaluation finds that the program has increased participants’ utilisation of primary health care services, which suggests that the program has improved health care access for the poor. Unfortunately, the program has no effect on education. This is not surprising, however, since primary school enrolment is already high (greater than 80 per cent) and the transition rate to junior high school is fairly high (roughly 75 per cent).

Even though the program is successful in getting participants to ‘show up’ to meet the health requirements, participants’ health-seeking behaviour unfortunately has not translated to improvements in long-term outcomes — such as reductions in the incidence of low birth weight and mortality. The lack of impact here is partly related to the supply side of the health care market.

Conditional cash transfer (CCT) programs operate best when the health care system has adequate supply to absorb the additional demand stemming from the program requirements. In some places, there is insufficient supply or no excess capacity in the health care system, so there is a change in price, quantity or quality from the supply side — which can dampen the effects of the program. In particular, higher prices are expected in the short term, before new health care providers can enter the market to increase supply. This increase in demand may also reduce quality of care as providers see more patients.

Indonesia’s public providers are also allowed to hold private practice part-time, and this potentially impacts on the program. As the CCT increases demand for health care — for providers with both public and private practices — they can respond with higher prices in private practice, thereby increasing average prices.

Also, public providers may opt to pursue their more lucrative private practice. This could strain the public system and quality of care would suffer. The combination of lower quality and higher prices could limit health care access, thereby defeating the purpose of the program. This possibility is a particular concern for households that just miss the CCT cut-off.

PKH is planned to go national this year. It will be interesting to analyse the long-term effects and how the effects change as the program expands. The supply of health care will become an even more important issue with the implementation of the national health insurance system, Jaminan Kesehatan Nasional.

The Indonesian government is continuing to seek better ways of delivering health care services to the public and to the poor. As the government is taking steps to strengthen the health care system — through efforts such as PKH — we can be cautiously optimistic for what the future holds.

Margaret Triyana is a Postdoctoral Fellow in Asia Health Policy at Stanford University.

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