Impact of the Indonesian Healthcard on Child Health Care Use

Objective The objective of this paper is to examine the impact of the Indonesian healthcard on health care use by children. The healthcard was the key component of a targeted price subsidy programme in the public health sector in Indonesia introduced in the aftermath of the economic crisis in 1998. It was introduced in a context where utilisation had been depressed as a consequence of the economic crisis that affected South-East Asia in the 1990s. Method Evaluation of the healthcard effect is complicated by the fact that the allocation of the healthcards to households was non-random. Propensity score matching is used to control for systematic differences between treatment and control groups that could potentially bias the estimation of the programme effect. A second potential source of bias is related to contemporaneous, exogenous influences on health care use unrelated to the healthcard. The availability of panel data collected just prior to the introduction of the healthcard in 1997 and again in 2000 makes it possible to use a difference-in-differences estimator. The combination of propensity score matching with difference-in-differences eliminates selection bias as well as bias caused by time-invariant unobservables from the estimated healthcard effect. Results The key finding is that although health care use declined for all children during the crisis years of 1997-2000, the use of public sector outpatient services declined less for children with healthcards. The healthcard resulted in a net increase of 3.6% in public sector utilisation for healthcard children relative to others. The protective effect of the healthcard on public sector use was concentrated among children aged 0-5. The healthcard had no significant impact on use of private sector services, however. This suggests that with respect to children at least, the healthcard programme was not associated with any substitution from private to public health care. The findings also suggest that there was less recourse to self-medication among healthcard owning children, although these results are not statistically significant. Financial barriers to seeking care are frequently cited as one of the main causes of underutilisation of child health care services. These results highlight the need to provide adequate protection against the financial burden of health care costs, particularly during economic crises. Contributions to research This study goes beyond a previous evaluation of the Indonesian healthcard by Pradhan et al (2001) in several ways. It is concerned with the impact of the healthcard on children's use of services, whereas the earlier study examined outpatient care use for the population as a whole. In addition to evaluating outpatient care utilisation, this study looks at the effects of the healthcard on self-medication among children which has not been considered previously. Finally, Pradhan et al's analysis reflects the experiences of the first five months of the healthcard programme while data used for this paper reflect a longer time interval of 2-3 years. Healthcard ownership nearly doubled after the first year of programme implementation, making it quite critical to evaluate its effects beyond the initial time period.