The politics of funding universal healthcare: Diverting local tobacco taxes to subsidise the national health scheme in Indonesia

Abstract

In Indonesia, the national universal health coverage scheme (Jaminan Kesehatan Nasional [JKN]) has consistently overspent against its budget since it was introduced in 2014. In 2017, a new regulation diverted 37.5% of tobacco tax revenue collected at the district and city level to the central government in order to increase government contributions to the JKN. Through a review of policy documents and interviews and focus group discussions with relevant stakeholders, this article explores the history of the JKN and its relationship to local tobacco taxes. Offering an ex‐post assessment of the policy and its implementation, we find it negative on three fronts: funding for local anti‐smoking initiatives and services was cut, the procedures for implementing the policy were complex and time‐consuming, and it did not contribute as much as anticipated to the JKN. These findings underscore potential pitfalls of politically motivated policy that fails to consider implementation and impact. We recommend that the policy be revoked, and local tobacco tax revenue reallocated to its initial purpose, which includes promoting local smoking prevention programs and health service delivery.

Political Economy Analysis of Health Taxes (Tobacco, Alcohol Drink, and Sugar Sweteened Beverage): Case Study of Three Provinces in Indonesia

“…The reliance on the national government may be exacerbated by a limited understanding of the objectives of health taxation and complicated politics implement, particularly among sub-national governments (22, 33). The current practice prioritizes revenue generation over consumption control, especially for sub-national leaders who aim to protect revenues (20). Finally, decentralization continues to face several issues, with one of the most significant being financing despite regulations mandating health tax allocation for this sector(18, 34, 35).…”

“…Indonesia, as one of the largest countries with escalating concerns in the healthcare sector, primarily due to rising the NCDs epidemic (17)(18)(19). The country faces challenges in health policy adoption, primarily attributed to political contestation, industry interference, and a rigid bureaucratic system, exacerbated by decentralization (20)(21)(22)(23).…”

Health taxes in Indonesia: a review of policy debates on the tobacco, alcoholic beverages and sugar-sweetened beverage taxes in the media

“…The media framing for strong opposition from large industries has divided public’s opinion. Politicians and government officials are also constantly in disputes about tobacco tax policy 26. Furthermore, their support for economic interests (than public health) is more profound 27…”

“…Hence, capturing media coverage on health tax would generate valuable input for health tax passage and implementation. While the nature of health tax can be complex, studies have solely focused on tobacco taxation 26 27. This study voids this gap by extending taxable commodities to include alcohol and SSB.…”

In Sickness and in Health: Diagnosing Indonesia, FirmanWitoelar and ArianeUtomo, ISEAS Publishing, 2022, Singapore, Pp. 252 + xviii, ISBN 9789815011876

“…Before the regulation was passed, tobacco excises were used by local governments to fund anti-smoking and other health initiatives. After 2017, these initiatives have been reduced while there is little evidence that the insurance deficit has been reduced (Ahsan et al 2021).…”