Lessons from BPJS: Universal Health Coverage reform, the Indonesian way
In 2014, many Indonesians couldn’t afford healthcare. 45 percent of the country’s health expenditure came directly from individuals’ pockets, with no coverage from insurance. A little over ten years later, Indonesia is home to the biggest single-payer health insurance system in the world, serving over 278 million people (or 98.9 percent of the population).
This change didn’t happen overnight. That same year Indonesia faced a healthcare crisis, the government rolled out the National Health Insurance (Jaminan Kesehatan Nasional, or JKN) under BPJS (Badan Penyelenggara Jaminan Sosial, or the Healthcare and Social Security Agency).
But the story of Indonesia’s health policy reform didn’t start with BPJS—it started way back in the 1960s.
BPJS is an example of how slow but steady change, paired with unwavering commitment, can constitute a reform that truly makes a difference. Perhaps, from decades of BPJS reform journey—the tangible approaches to policy reform it took—we can learn some of the best practices of policy-making moving forward.
In this edition of The Reformist, we are going to dissect:
The history of BPJS, not only the good parts, but also the hiccups it endured, to find the key contributing factors to its eventual success.
Is BPJS successful, actually?
The financial strain BPJS suffers.
What the history of BPJS tells us about a reform that works
A paper by Pisani, Kok, and Nugroho (2016) comprehensively recorded the long history of BPJS. We had a good read and did our best to showcase the lessons of reform making we got from any point of BPJS’ journey – so note that we won’t go through the journey in chronological order hereafter (beside the fact that we’ve been using the word “history” a lot).
1. A reform needs long-term, institutional commitment
Even though BPJS was formed (and launched National Health Insurance or JKN) in 2014, the journey of Indonesia’s universal health coverage did not really begin there. Instead, it began in the 1960s under the Basic Health Law. It stipulated that the state assumed responsibility for ensuring that Indonesians had equal access to health services, with special mention of civil servants and blue-collar workers.
Notably, it referred to the provision of “health funds” which were not expanded upon. This was the foundation of long-running efforts at building a cohesive, state-wide health system.
In 1968, the Suharto administration began to invest significantly into Pusat Kesehatan Masyarakat (Puskesmas, or primary health centers) to provide affordable healthcare. But families remained vulnerable to high OOP costs if they had more serious illnesses.
Health insurance for military and civil servant families was expanded significantly in 1968, eventually becoming a program named Askes. In the mid-1980s, the government began focusing on export-led manufacturing. This led to increased prioritization of worker health and the creation of Jamsostek, which provided health, accident, life, and pension coverage for its members. Companies with 10 or more employees were obliged to join Jamsostek or buy equivalent insurance; but non-compliance was common, and corruption in the institution even more so.
After the Asian Financial Crisis and Suharto’s departure, Habibie offered renewed focus on improving the healthcare system. Using a loan from the Asian Development Bank (ADB), the government began to issue health cards which ensured that low-income families could seek free primary healthcare services. Almost five million Indonesians benefited from the program; this was successful in its limited scale.
The foundation for modern-day BPJS took shape in 2000, under the Habibie administration, through an amendment to the 1945 constitution. The amendment stated that Indonesians had the “right to receive medical services”. In 2002, it was updated to underscore that the state itself was responsible for ensuring health service provisions, as well as for developing a social security system, for all citizens.
Megawati, PDI-P leader and then-VP, began to work on a social security law that sought to combine all four state-owned insurance firms to create a single player, non-profit trust fund. The bill was submitted to parliament in January 2004.
Takeaway: JKN was made possible through decades of institutional groundwork, shaped by evolving state responsibilities, economic priorities, and incremental health policy reforms beginning in the 1960s.
2. Decentralised policy experimentation allows innovation
At the same time, things were looking a little different on the ground. As part of the PDI-P administration, state functions began to look more decentralised, giving local governments the opportunity for policy experimentation.
Some provinces responded by providing capitation funds to primary health service providers, while other provinces aimed for universal coverage in which wealthier citizens paid premiums and low-income citizens had their visits subsidized.
In more rural areas, governments would pay for health-related transport costs. These locally-run schemes were found to be more responsive to citizen needs than the previous centrally-administered “poor card” scheme, leading to a higher uptake of services. Under a program called JPK Gakin, the central government provided top-up funding (partly from savings from reduced fuel subsidies) to selected local governments.
Takeaway: In parallel with large-scale national reforms, Indonesia’s decentralisation in the early 2000s opened the door to innovative local health policies, allowing districts to tailor healthcare delivery and funding models that meet the specific needs of their populations.
3. Centralisation must be balanced with local policy autonomy
This would change when the Social Security Law (UU SJSN) was passed in late 2004. Newly-appointed Minister of Health Siti Fadilah Supari declared that the government would pay for inpatient services for all low-income people, nation-wide. To keep this promise, the Ministry began a nationwide launch of the JPK Gakin pilot program, with PT ASKES as the implementing agency.
The program, named Askeskin, provided capitation payments to primary health centers and fee-for-service reimbursements to hospitals for inpatient care. This program angered districts with successful health schemes, seeing this as a reverse take-over by the central government, and worried that their services would be “reduced” to a nationally-standardized package.
East Java and Rembang went so far as to challenge the law in Constitutional Court and, while the 2004 Law was upheld, it was also ruled that district governments could run supplemental health schemes.
The national scheme managed by ASKES immediately ran into trouble: complaints were made that selection was not accurately based on need, poor administration caused delayed reimbursements, and hospitals were forced to turn away patients.
In 2008, Siti Fadilah restricted ASKES’ role to managing recruitment, and the Ministry of Health took over provider payment; now renamed Jamkesmas. Once again, Jakarta began to actively encourage local governments to provide health insurance schemes for those unreached by the national programs. These district programs, known as Jamkesda, went from 60 in 2008 to 245 in 2012. Some far exceeded the national standards; in Aceh, every citizen was entitled to free inpatient care, with some coverage for overseas treatment.
With the Social Security Law seen largely as PDI-P’s law, Megawati’s successor SBY did comparatively little to expand upon it in his first term. In 2008, he issued a decree which appointed a National Social Security Council (DSJN), but gave it limited operational funds.
Takeaway: Efforts to create a unified national health insurance program in the mid-2000s sparked tensions between central and local governments, but led the way to national-level reforms.
4. Civic participation can push reform implementation
A turning point came in 2009, which also marked the deadline for further implementation of the Social Security Law. The Action Committee on Social Security or KAJS, an umbrella group of labour and citizens organizations, filed a lawsuit against the president and several ministers, accusing them of breaching the Constitution and 2004 Social Security Law by failing to implement mandated reforms. The court sided with KAJS, and ruled in 2011 that the government must act immediately to implement the law.
Despite criticism from all sides about the feasibility of a nation-wide insurance program, action was swift. Later that same year, a new law was passed mandating BPJS. Health insurance corporation ASKES was transformed into BPJS Kesehatan, focusing on general health insurance, and JAMSOSTEK was renamed to BPJS Ketenagakerjaan, focusing on pensions as well as life and workplace insurance.
Takeaway: The eventual implementation of BPJS was not merely a top-down decision, but significantly driven by civil society, with labor unions and citizen coalitions using legal pressure to hold the government accountable for its constitutional and legislative commitments.
So, did BPJS succeed?
Well, yes.
Under BPJS Kesehatan, JKN was launched.
Not only does JKN cover more than 98.9% percent of the population, it transformed Indonesia’s healthcare landscape. By 2023, it had lowered OOP expenses to 27.5 percent of current health expenditures, and catastrophic health expenditure rates dropped from 4.5 percent in 2017 to 2 percent in 2021.
Importantly, the distribution of healthcare benefits through JKN significantly assists low-income households. Studies show that JKN households in the two poorest quintiles (35-35%) have a higher probability not to incur any OOP costs compared to wealthier quintiles (30-32%). In fact, JKN members save more at public primary health care facilities in comparison to private ones and also save significantly more (over 50%) than uninsured households at both public and private hospitals.
Open, trackable monitoring and evaluation tool—a rare win?
An extra cool part of it all is how much tracking one can find on the current DJSN site. As of January 2025, users can access national participation rates broken down based on geographic location, gender, tier subscriptions, and active or non-active statuses.
Additionally, there’s a monthly breakdown of BPJS Kesehatan coverage over the past year. There’s also a map that breaks down the health facilities in each province, and each regency. It breaks down what kind of hospitals (e.g. government, private, military), and the healthcare provided (e.g. dental, clinics).
BPJS (inevitable?) financial strain
Despite its success, the overall health insurance system does (perhaps predictably) face challenges related to corruption. The program has run large deficits every year since 2014, which threatens its continued sustainability.
An audit by the Indonesian Supreme Audit Board (Badan Pemeriksa Keuangan) in 2021 showed that fraud and corruption contribute notably to the deficit, and there are weak guardrails to prevent it from happening. These operational inefficiencies not only drain resources, but also damage public trust — particularly when hospitals face delays in reimbursement, leading them to limit services for BPJS patients.
The main drivers of corruption cases through JKN are low salaries, information asymmetry, and the absence of effective counter-fraud measures.
Financial sustainability also remains a pressing concern. In 2024, BPJS Kesehatan is projected to run a record-high deficit of Rp 18.9 trillion, the largest since the program began. While membership revenue reached Rp 151.4 trillion in 2023 (a 5% increase), claims expenses soared over 40% to Rp 158.8 trillion, widening the funding gap. Although government bailouts and stricter audits have helped close the gap, long-term sustainability will require better cost containment, more effective provider management, and potentially, difficult policy trade-offs.
BPJS is not perfect, but it’s a win that we should recognize
The sheer scale of BPJS, in coverage and participation, is jaw-dropping. What makes it even more impressive is the long-term prioritization from multiple sides, despite widespread criticism. With a combination of strong institutional foundations, decentralized policy experimentation balanced with centralization, and key civic participation.
Perhaps most strikingly, BPJS shows us that reform doesn’t happen all at once. It was based on decades of constitutional change, district-level experimentation, external pressure, and the iterative work of many teams across many administrations. This is not to say all policy reforms require decades of planning, but that enduring change emerges not from sudden overhauls, but from steady layering. In this sense, BPJS should be seen as a foundational blueprint for policy reforms in Indonesia.