Indonesia To Counter Medical Inflation

To counter high medical inflation, the Financial Services Authority (OJK) is planning several initiatives for the health insurance market in Indonesia. Due to rising healthcare costs, health insurance claims are already greater than the premiums received, with the loss ratio exceeding 100%. This means that health insurers pay out more money on customers' medical claims than they receive in insurance premiums from policyholders.

OJK’s proposed measures are to:
1: form a medical advisory board that will provide insurers with input on managing services from the medical aspect and in providing input for partner hospitals

2: continue to encourage the strengthening of digital capabilities in the health insurance ecosystem, such as sharing of data with hospitals; increasing the capabilities of medical personnel to analyse data and provide input to hospitals

3: encourage insurers to review existing products that suit customer needs and ensure adequate risk management.

4: encourage insurers to continue to conduct regular public education through digital channels to promote a healthy lifestyle.

Regulation
The OJK said that a circular on improving health insurance processes will be issued next year. This will set out the standards and limits of health insurance benefits that can be claimed.

OJK had collaborated with the Indonesian Ministry of Health to formulate policies to improve the health insurance ecosystem. The moves are being made to implement the Coordination of Benefit (CoB) mechanism that regulates the total health insurance benefits received by an individual who has health insurance policies with more than one insurer.

Under this mechanism, individuals first receive health insurance benefits provided by the BPJS Kesehatan, the social security agency that manages the National Health Insurance scheme. Additional health insurance can be provided as a supplement to BPJS Kesehatan coverage.

The first stage of health insurance benefits remains at BPJS, then to additional health insurance. That is already underway.