In Europe and North America, the question of what to do about health care (how to pay for it, who is entitled to it, what role should government play) quietly bubbles just below the surface. In developed markets, where there is an expectation of total health care coverage, there is enormous pressure on governments — a combination of consumer (meaning voter) expectations and the need for cost controls.
Europeans, who have long accepted the principle of universal health care, look with some bemusement perhaps at the controversies surrounding “Obamacare” in the United States, where the idea that “we should all pay for the common good” is not easily accepted by the wealthy, who can afford private health care. Amid an ageing population, finding ways to fund health care is problematic.
So what is this problem all about?
At its most basic, people want to feel secure knowing that their health needs are taken care of if they suffer an illness or accident. However, hospital bills for the treatment of such events are often high, sometimes frighteningly so. For most people, the costs of a major health issue such as cancer or heart disease can’t be met out of a normal budget. In Indonesia, for example, treating a heart problem might cost Rp 500 million ($55,000) in medical bills. If that’s lying around spare in your bank account then the problem is affordable, but if it is not, you need alternatives.
Through Jamsostek, the Indonesian government provides basic health care for all, and it is clear that this scheme will be improved and extended in the future. But it does not provide the higher levels of treatment that many require.
Many workers, in Indonesia and elsewhere, receive health care coverage from their employer — in fact, employers are increasingly looking to improve these schemes in order to attract the best employees. They are finding that employees consider these coverage plans closely before making job decisions.
Typically, these schemes will cover in-patient treatment (treatment undertaken in hospital) and out-patient treatments (general medications, visits to doctors), which provide a cost safety net for employees. For the employer, the attraction is that the schemes ensure quality treatment, speedy returns to work and a happier and more loyal workforce. In addition, because the pool of employees is often large, insurance companies usually do not require the individual assessment (underwriting) of all employees. Instead, group rates are typically used, taking in the good with the bad in terms of the health status of employees.
Although group insurance coverage is an attractive and affordable option, not everyone is employed by a large company. Statistics show that the majority of Indonesians work for small businesses or are self-employed. What are their health insurance options?
The good news is that there is a fast growing health care insurance industry in Indonesia, with local and international companies competing to provide private coverage. Like for the corporate customer, in-patient and out-patient service coverage is provided, and benefits paid by such insurance is broadly related to affordability. The insurer will offer a card to policyholders that can be used at participating hospitals (there are hundreds across Indonesia and thousands worldwide) to pay for health treatments. Bills are then sent to the insurance company, which settles them directly with the hospital.
The question is always one of affordability. And given the possibility of high treatment costs, the risk for the insurance company is also high. But overall, it is strongly in the interests of both insurers and consumers that costs are kept at an affordable level. And almost all insurers offer discounts for treatment area limits (excluding treatments in, say, America or Hong Kong), or for claims sharing by the insured customer. Therefore, for most middle-income customers, an affordable solution can be found.
The bigger problem is when to get started with an insurance scheme? The longer you leave it, the bigger the chance that you will be stricken with an illness that may affect your premium. And indeed, higher premiums are paid by older customers, which reflects their higher usage of the health care system.
Whatever the final costs agreed on with your insurer, you can be sure of one thing: You will never meet an insurance customer who complains about having bought their insurance if they have had to make a claim and received the valuable help of the insurer throughout the treatment of their illness.
Peter Phelan is the president director of health insurance provider Indrapura Pacific Cross.