Jakarta. Every year, healthcare costs in Indonesia keep on rising as seen in the claims paid by insurance companies. The Indonesian Life Insurance Association (AAJI) reported a rise in health insurance claims which rose 29.4 percent to Rp 5.96 trillion in the first quarter of 2024.

Individual health claims also soared 34 percent year-on-year, reaching Rp 3.89 trillion. Group health claims also jumped 21.9 percent to Rp 2.07 trillion. AAJI attributed the increase to the hospital overutilization, among others.

"It is undeniable that over-utilization can occur. It is common knowledge that hospital treatment and medication for patients with insurance users are often different from those who do not use insurance, so the price of treatment can increase drastically," said AAJI’s head for operational excellence and IT & digital (customer centricity) Edy Tuhirman said.

This overutilization excessive or unnecessary use of health services. One example includes hospitalization without clear indications and the use of expensive medical technology without adequate medical justification. The consequences of this overutilization of medical costs can be very detrimental.

Additional costs from the hospital also have an impact on the swelling of health insurance product claims. Overutilization is also not only limited to health services but also provision of medicines.

Chief of Operation AIA Benny Iskandar stated that AIA had pledged to help its customers maximize the value of quality care and medical costs by receiving the right care, at the right time, and the right cost.

"We are introducing new steps to address the increasing medical costs," he said.

AIA is introducing various efforts in response to this, including conducting strict monitoring. This includes taking firm action to ensure that the medical care costs set by the hospital are in accordance with patient needs and tightening claim limit procedures for several medical conditions.

Following this phenomenon, the insurance industry has received full support from the regulator. The Financial Services Authority (OJK) has inked a memorandum of understanding with the Health Ministry to bolster the country’s health insurance industry. 

"This is done to improve coordination in health service supervision activities related to insurance companies, boost financial literacy and inclusion, and many other supports that are believed to have a positive impact on the life insurance industry," said Edy.

For insurance companies, this over-utilization causes an increase in claim costs, which leads to an increase in insurance premiums. Excessive financial burdens drain health service resources, reduce efficiency, and reduce the quality of service.

"The increase in health insurance claims that occurs continuously will result in the ratio between premium income and claims continuing to increase. In this case, to maintain the stability of the company, it is mandatory to conduct a product evaluation and can potentially increase the premium value of health insurance products," Edy said.

Health insurance is a basic protection product that is widely owned by the community, if the premium is higher, there is the potential for people's purchasing power to decrease. For patients, overutilization can increase unnecessary cost burdens and medical risks, such as nosocomial infections due to unnecessary hospitalization. It is important to recognize medical conditions that require inpatient care, such as heart attack or stroke. In contrast, many chronic or minor conditions should be managed on an outpatient basis.

The difference in care between insured and uninsured patients is also significant. Insured patients are more susceptible to overutilization because providers may maximize the use of services covered by insurance. In contrast, uninsured patients may delay care due to costs, which can worsen their condition.

To address this issue, there needs to be education for patients about the importance of appropriate care, as well as close oversight of healthcare provider practices. Collaboration between the government, providers, and insurance companies is also pivotal. Policies that encourage the use of evidence-based care protocols and value-based payment systems can help reduce overutilization, ensuring efficient and appropriate care for all patients in Indonesia.

The use of information technology can also play an important role in addressing the overutilization of medical costs. An integrated electronic medical record system can help analyze healthcare utilization data, identify patterns of overutilization, and provide feedback to healthcare providers to improve their clinical practices.

Value-based payment models, where providers are paid based on the quality and outcomes of care, rather than the number of services provided, can reduce the incentive for overutilization. This approach places the focus on patients’ health outcomes, ensuring that they receive care that is appropriate to their medical needs.

With these steps, Indonesia is expected to reduce overutilization of medical costs, reduce the financial burden on the health system, and improve the quality of health services. Joint efforts from the government, healthcare providers, insurance companies, and patients themselves are essential to achieving a more efficient and equitable health system.

In the long run, these steps will not only save costs but will also improve patient safety and satisfaction. A more educated public about the importance of proper care and a more transparent system will be the foundation for improving health services in Indonesia. Thus, Indonesia's health system can become more sustainable and able to provide high-quality care to all its citizens.

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