Easing the Co-Payment Burden with a Reinsurance Approach

By Diding S. Anwar, Chairman of the Standing Committee on Guarantee, Insurance, and Pension Funds, KADIN Indonesia Fiscal, Monetary, and Financial Industry (FMIK)

Jakarta – IN the journey of life, sickness is a test, and health protection is a necessity. Many of us are grateful to be covered by Health Insurance, either through national schemes such as BPJS Kesehatan, or through commercial insurance.

However, recently, there has been renewed anxiety in the community regarding the co-payment policy, which is the obligation of participants to bear part of the cost of treatment even though they have paid a premium. This policy is indeed based on the spirit of togetherness and prudence, namely so that participants also take responsibility and prevent excessive use of services (moral hazard).

Through SEOJK No. 7/SEOJK.05/2025, the Financial Services Authority has set a maximum co-payment limit of 10 percent, along with certain nominal limits. But in practice, especially when dealing with large and urgent medical costs, co-payments often become a real burden felt by the community.

The question is no longer whether co-payments should be applied, but how can this policy be fairer and less burdensome for the public?

In the spirit of finding a balanced solution, I would like to invite all stakeholders, insurance companies, regulators, and the wider community, to consider the reinsurance approach as an alternative to a fairer risk sharing system.

Reinsurance, which has been known as the company’s internal risk management instrument, can actually play a greater role in protecting the public from the burden of co-payments. Through appropriate agreements with reinsurance partners, insurance companies can absorb some of the risk of large claims, without having to pass it on to the participating community.

Some Reinsurance Strategies that Can Be Applied

1.           Products Without Co-Payment with Treaty Reinsurance

Companies can design health products that are free of co-payments, with financial risks controlled through treaty schemes with reinsurers.

2.           Excess of Loss Reinsurance

In this strategy, the reinsurer covers claims that exceed a certain threshold, so that participants are not burdened with additional costs when facing serious health conditions.

3.           Internal Subsidy Pool for Vulnerable Participants

Companies and Reinsurers can establish a joint fund to finance the co-payments of participants who fall into the low-income category, without disrupting the financial stability of the company.

4.           Top-Up Plan Integrated with BPJS Health

By bringing together the strengths of social security and commercial insurance, BPJS participants can receive additional benefits without co-payments, with additional risks covered by reinsurance.

Learning from the International World

Similar approaches have been implemented in various countries with well-established health systems: Switzerland limits co-payments nationwide and transfers large risks to domestic reinsurers. The Netherlands absorbs the risks of vulnerable groups in a social reinsurance scheme.

In the United States, the Medicare Advantage program enables co-payment-free coverage thanks to the support of a federal reinsurance fund.

All this points to one important point:

“Co-financing does not always have to fall on the backs of the small, if our system is able to absorb and distribute risk fairly.”

Maintaining a Balance between Sustainability and Care

We recognize that the Insurance Industry needs financial sustainability to grow and remain responsible. However, the noble goal of Health Insurance will not be achieved if participants are reluctant to seek treatment for fear of not being able to pay co-payments.

It is this balance that we must maintain:

The company remains financially healthy, participants remain thoroughly protected, and regulators continue to maintain a trusted and functioning social protection system for all levels of society.

Insurance that Favors the People

Reinsurance is not merely a technical instrument. It is a tool of mutual cooperation, a channel of justice, and a bridge of empathy that can be used to ensure that health protection is not only available, but also accessible and equitable for all citizens.

Through more adaptive policies that dare to put people at the center, we can realize a health insurance system that is not only strong in structure, but also warm in feeling.

Let us keep health protection not only a right listed in the policy, but a real, light, and dignified experience for all.

Reinsurance, when applied with the principle of fairness, can be the key to paving the way for health insurance that is more inclusive, sustainable, and in favor of the people.

This article is part of a joint effort to build a national health insurance system that is socially just and oriented towards the public interest. (*)