Social Health Insurance: Definition, Principles and Example
What is social health insurance? Learn the definition, its two core principles, flat premiums and unlimited benefits, plus a worked premium example.
Social health insurance is a health insurance system widely used around the world because it handles and guarantees the health needs of a country's citizens well.
Indonesia's Law No. 3 of 1992 sets out the definition of social health insurance as the transfer of the cost of illness from the insured party, or premium payer, to the insurer. The insurer then bears the responsibility and must pay for or provide health care when the insured party falls ill.
Principles of Social Health Insurance
Like other insurance products, social health insurance rests on firm principles that give the insured party clear benefits. The principles fall into two groups: the insurance premium and unlimited benefits.
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Social health insurance premiums
Social health insurance holds to the principle that there is no profit sharing, margin or distribution of earnings. If you buy or use social health insurance, the premium you pay is flat for everyone. Premiums do not vary from person to person.
The premium contributions that must be paid are low, while all the benefits and advantages received belong to the premium payer, or policyholder. The financial system of social health insurance is also managed by the Financial Services Authority (OJK), so the cost of health services can be negotiated with medical providers.
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Unlimited benefits
Beyond the definition above, social health insurance offers policyholders unlimited benefits. It can cover treatment costs for many kinds of illness, mild or serious, including conditions the policyholder already has. Why is that?
It comes down to membership. Membership in social health insurance is mandatory and universal, so there is no need for another health check to become a member.
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Social Health Insurance Example
To help you understand social insurance better, read the following example. Both Mr. Putra and Mr. Sujarwo use health insurance.
Mr. Sujarwo is a civil servant in grade IA with a base salary of Rp1,500,000, which comes to Rp2,000,000 with other allowances. He is required to pay a premium of 2% of his total salary, so the premium due is 2%/100 x Rp2,000,000 = Rp40,000 per month, covering his wife and two children. The premium per member that Mr. Sujarwo pays is therefore Rp10,000. If one of Mr. Sujarwo's family members falls ill and must be hospitalized, the health insurer will cover the cost, subject to the current additional contribution.
Mr. Putra is a civil servant in grade III A with a base salary of Rp2,400,000, which comes to Rp3,000,000 with other allowances. He is also required to pay a premium of 2% of his total salary, so the premium due is 2%/100 x Rp3,000,000 = Rp60,000 per month, covering his wife and one child. The premium per family member that Mr. Putra pays is therefore Rp20,000. If one of Mr. Putra's family members falls ill and must be hospitalized, the health insurance will cover treatment costs in the same amount as for the employee in Mr. Sujarwo's grade above.
The example above shows cross-subsidy between Mr. Putra's family and Mr. Sujarwo's family. Do you have a clearer picture of social health insurance now?
That covers the definition, principles and an example of social health insurance. We hope this information helps you understand social health insurance.
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