From periphery to centre: Local government and the emergence of universal healthcare in Indonesia.

• Author: Fossati, Diego
• Position: Report

While the debate on universal healthcare coverage (UHC) often focuses on policy prescription and technical issues, the expansion of access to healthcare in developing countries is an eminently political process. This article analyzes the historical background of the adoption of UHC in Indonesia to articulate two intertwined arguments. First, in decentralized young democracies such as Indonesia, local government can play an important role in health policy by experimenting with innovative health insurance schemes. Although such activism may widen subnational inequalities, it can also contribute to the adoption of UHC by increasing the salience of health reform and by allowing policy learning. Second, institutional developments such as decentralization and the introduction of local direct elections can have a substantial impact on incentives for political elites to provide broad-based social services. This article discusses the relevance of these findings for the comparative literature on UHC and social policy in low and middle-income countries.

Keywords: Indonesia, healthcare, democratization, decentralization, policy diffusion.

Access to healthcare has long been a topical issue in developing countries, in which healthcare services are often underprovided, of low quality and too costly for a large proportion of the population. In recent years, as an increasing number of low and middle-income countries have taken significant steps to address this issue, the idea of universal health coverage (UHC) has gained traction among policymakers, advocates and citizens. For its proponents, UHC is a crucial tool to balance inequities in access to healthcare in developing countries, as it ensures the removal of financial barriers and reduces overall healthcare costs by pooling a large base of users. Key international institutions such as the World Health Organization (WHO) and the United Nations (UN) have embraced the UHC reform agenda, repeatedly referring to access to healthcare as a human right, and to UHC as a requisite to fulfill this right in developing countries. (1)

The literature on UHC has long been dominated by policy-oriented approaches and health economics. Studies of UHC reform typically tackle some technical aspect of policy design; for example, how best to finance UHC plans or gradually expand health system capacity, or they assess policy impacts on outcomes such as healthcare utilization, out-of-pocket expenditures and health indicators. (2) The result is that this literature focuses on policy prescription rather than explanation of reform adoption, and that it often presents a view of UHC as a consensual, technical project. (3) Yet reforming health systems to include a large number of previously excluded citizens is, of course, an eminently political and potentially contentious issue, as it is a question of economic redistribution and because it requires substantial fiscal resources.

While most studies of UHC do not delve into the politics of reform adoption, some exceptions, and a larger comparative literature on social policy in developing countries, have identified a few key determinants of social policy expansion. A first group of explanations studies the role of leftist political parties in expanding health coverage. (4) From this perspective, UHC policies are more likely to be adopted when ruling political elites are supportive of economic redistribution because of their partisan and ideological orientations. While this framework was developed from the experience of welfare state expansion in the West, some support has been found for other world regions. (5) A second approach focuses on voter-politician linkages in the developing world, and argues that the clientelistic relationships that often dominate politics in new democracies impede the provision of broad-based social services. (6) In many young democracies, leftist programmatic parties are absent, and clientelistic politics entails the provision of selective benefits conditional on political support rather than universalistic social programmes. Finally, a third perspective analyzes institutional change, and regime change in particular. From this angle, the establishment of democratic institutions is a key determinant of the expansion of social safety nets in low and middle-income countries. (7) Democratization often increases opportunities for political participation and contestation, and increased accountability can lead to the adoption of polices that more closely mirror the preferences of a large share of the electorate. (8)

A common feature of studies on the determinants of UHC emergence in developing countries is that they all focus on national governments. To be sure, this is a sensible research strategy, as the huge resources needed for such transformative social programmes can typically only be mustered by national authorities, especially in developing countries where institutional capacity at the local level is often weak. However, in this article I adopt a different perspective, one that focuses on the role of local government in supporting and facilitating UHC in low and middle-income countries. I study the case of health politics in Indonesia--a country that is currently implementing a road map to reach UHC in 2019--to show that local government can be an important and active player in the reform process, rather than just an implementer of policies designed by national policymakers. In Indonesia, a decentralized and highly diverse young democracy, local governments acquired substantial policy powers with decentralization reforms implemented shortly after the fall of President Suharto's authoritarian New Order regime in 1998. Interestingly, despite the dominance of patronage politics and clientelism in many Indonesian regions, (9) some districts and provinces used these new powers to experiment with various innovative health policies, and some of them reached UHC within their jurisdictions as early as 2009. These developments helped put the issue of UHC on the agenda of national policymakers, and provided a range of policy templates and case histories that informed successive national programmes. This suggests that local governments may be important agents of change in large, decentralized developing countries such as Indonesia.

The remainder of this article proceeds as follows. I first review the literature on health reform in low and middle-income countries, thereby situating the Indonesian case in the comparative literature on social policy in the developing world. I then introduce the empirical setting with a brief history of healthcare reform in Indonesia, a process of gradual extension of health benefits to increasingly large sectors of the population. Following this, I switch the focus to local government, first by tracing the process of its involvement and activism in reforming Indonesia's health systems, and then by analyzing two key factors that allowed such activism. First, decentralization reforms provided the institutional and fiscal foundations for a more assertive role of local government in health policy, and transformed the politics of health into an arena where national and local governments interact to shape policy outcomes. Second, decentralization and democratization changed the incentives for local politicians to provide broad-based social services. I conclude the paper by discussing the limitations and the significance of the findings.

Explaining Healthcare Reform in the Developing World

In many low and middle-income countries, access to healthcare is a highly salient issue. At some point in their history, developing countries in which economic growth underpins sustained socioeconomic development face the crucial issue of reforming their health systems to include large numbers of previously excluded users. The timing of the adoption of such reforms, however, has varied considerably, and so have the health policy outcomes in terms of social groups included in the system, health services covered, financing mechanisms, the role of the private sector and so forth. Such cross-country variation has provided the empirical background for a burgeoning comparative literature exploring various factors related to the adoption and the design of redistributive politics such as healthcare reform.

A first explanation in the literature--informed by the trajectory of welfare state development in the West--points to the role of the political left to explain the emergence of redistributive social policies. (10) Leftist parties with an ideological inclination for pro-poor policies are stronger in some countries than in others, and this could explain the variation in outcomes such as reform adoption and the generosity and inclusiveness of the benefits provided. Class-based mobilization and "left power", or the degree to which leftist political actors are prominent, have been shown to be an important determinant of redistribution and social policy in the developing world, for example in Latin America and South Asia. (11) Related work on Latin American politics has refined this framework by investigating differences across leftist parties, showing that factors such as their ideology, degree of institutionalization and linkages to key stakeholders in society are crucial in explaining social policy outcomes and the emergence of UHC in particular. (12) As for Indonesia, however, explanations based on the power of the left are unable to account for the substantial expansion of social security programmes observed in recent years, as leftist parties have been absent from the political landscape since the brutal repression of the political left in 1965-66, and because labour unions remain weak. (13)

Second, in many low- and middle-income countries, politics is dominated by clientelistic relationships, and such linkages between politicians and voters provide informal social safety nets. (14) From this perspective, the incidence...