Tax Issue Amid Polemic on Increase in BPJS Kesehatan

It has been around three months that Indonesia implements a Large-Scale Social Restrictions (PSBB) to dampen the Corona Virus Disease-2019  (Covid-19) pandemic. During that period–since March 2020, there have been many regulations or policies issued by the government, both related to PSBB or not. Almost every regulation gets the public spotlight, and not a few that reap controversy and become polemic. 

One of them is President Regulation Number 64 Year 2020 on the Second Amendment to President Regulation Number 82 Year 2018 on Health Insurance. This Regulation is a revision of the previous provision (President Regulation Number 75 Year 2019) that through Article 34 paragraph (1) and paragraph (2) stipulates an increase of almost 100% BPJS Kesehatan contribution as of 1 January 2020, before it was later canceled by the Supreme Court over the lawsuit of the Indonesian Dialysis Patients Community (Komunitas Pasien Cuci Darah Indonesia/KPCDI). In its Decision (No. 7 P/HUM/2020), the Supreme Court argues that the increase in participants’ contributions is not a solution to the problem of BPJS Kesehatan’s deficit assessed due to errors and fraud in the management and implementation of national health insurance program. 

However, the government always has a way to get around the provision. Instead of returning the participants' contributions that have already been raised since January 2020, the government has repolished the increase in BPJS Kesehatan contribution–by issuing President Regulation Number 64 Year 2020–at a time when people are tightening their belts due to economic pressures as the impact of Covid-19 pandemic. Class I participant contribution rose 87.5% from IDR80,000 to IDR150,000, class II increased 96.07% from IDR51,000 to IDR100,000, and class III increased 37.25% from IDR25,500 to IDR35,000. 

Table on Development of Health BPJS Contributions

Type of Membership		Perpres No. 82/2018	Perpres No. 75/2019	Perpres No. 64/2020
Not Paid Workers Participants
Class 3*		IDR25.500	IDR42.000	IDR35.000
Class 2		IDR51.000	IDR110.000	IDR100.000
Class 1		IDR80.000	IDR160.000	IDR.150.000
Premium Assistance Recipient (PBI)- Borne by The Government
Class 3		IDR25.500	IDR42.000	IDR35.000
Paid Workers Participant**
ASN/TNI/Polri (4%of Government and 1% of Participant)		5% of monthly salary	5% of monthly salary	5% of monthly salary
BUMN/BUMD/Private Companies (4% of Employer and 1% of Participant)		5% of monthly salary	5% of monthly salary	5% of monthly salary

Information: 
(Source: BPJS Kesehatan and various sources, processed) 

 *) 2020: Class 3 participants only pay IDR25,500 and the difference of IDR 16,500 is subsidized by the government. 

     2021: Class 3 participants only pay IDR35,000 and the difference of IDR7,000 is subsidized by the government. 

**) Contributions include membership of the insured family member (a wife and 3 children) 

 Additional family contributions (the fourth child and so on, father, mother, and in-laws) 1% of monthly salary, paid by workers. 

Earmarking Tax 

The root cause of the increase in health insurance contributions is none other than the deficit in the National Health Insurance (JKN) budget that increasingly swells. Based on the BPJS Kesehatan Annual Work Plan Budget (RKAT) in 2019, as stated in the Supreme Court Decision No. 7 P/HUM/2020, health financing expenditure is planned as much as IDR102.02 trillion and revenue is estimated at IDR88.8 trillion, so the difference in deficit is estimated at IDR14 trillion. If it is coupled with a deficit of 2018, the government estimates that the deficit will widen by around 27%-32% to IDR28 trillion to IDR32 trillion by the end of 2019. With the JKN deficit, it is assumed that BPJS Kesehatan will not be able to pay for health service claims in about four months. Even based on the latest actuarial calculations, the deficit of BPJS Kesehatan is projected to reach IDR75 trillion in 2023. Based on this consideration, the government for the umpteenth time raises the dues of BPJS Kesehatan. 

Meanwhile, the Supreme Court has another record regarding the deficit of BPJS Kesehatan. In its Decision, the Supreme Court states that one of the causes of the JKN deficit is allegedly due to errors and fraud in the management and implementation of the social security program by BPJS Kesehatan. The Supreme Court also considers the State Capital Injection (Penyertaan Modal Negara/PMN) policy to BPJS Kesehatan and the increase in the participants’ contributions that had been carried out are proven unable to overcome the JKN deficit issue.  

On that basis, the Supreme Court considers that the JKN deficit should not be borne by the public, by increasing fees for non-salaried employee participants (Peserta Bukan Penerima Upah/PBPU) and non-employee participants (Bukan Pekerja/BP) as regulated in the provision of Article 34 paragraph 1 and 2 of President Regulation No. 75 Year 2019. The Supreme Court asserts that the government must find a good and prudent solution by fixing the mistakes and the cheating on the JKN implementation without having to force the community to bear the losses inflicted.  

BPJS Kesehatan Financial Projection Table (In IDR Trillion)

	2019	2020	2021	2022	2023
Revenue	89.40	96.49	104.83	113.47	122.73
Guarantee Cost	118.45	136.64	156.10	173.81	192.30
Operational Cost	4.09	4.44	4.82	5.23	5.68
(Deficit)	(33.14)	(44.59)	(56.08)	(65.57)	(75.25)

(Source: Supreme Court Verdict No.7 P/HUM/2020)

In addition to being obedient to the Supreme Court's ruling, the government actually has other options to patch up the deficit of JKN. For example, by implementing earmarking tax, in the form of the use of taxation instruments to address health issues. Earmarking tax is the collection of certain types of tax for specific purposes that have been determined by the government. In this case, this specified tax revenue is used fully to finance activities related to its purposes and designation. 

The use of revenue sharing fund of tobacco products excise and regional cigarette tax is one of the earmarking taxes that should be optimized for collection and its allocation. Earmarking tax is also in accordance with the mandate of Law No. 39/2007 on Excise that assigns the Government to control the consumption of certain goods that could cause negative impacts on society or environment. Although it is only as a means of controlling consumption, the contribution of excise to state revenue turns out to be quite significant, when compared to the annual JKN budget requirements. It means that, if only the revenue from the excise is intended for half of JKN, BPJS Kesehatan operations should not be constrained by a deficit. 

Table of Comparison of Excise Revenue and JKN Budget Requirements

Budget (IDR Trilion)	2014	2015	2016	2017	2018	2019	2020*
Excise Revenue	118.09	144.64	143.53	153.29	159.69	172.42	172.90
JKN Budget	42.66	57.11	67.4	74.25	94.3	?	?

Questioning Tax  

One more important thing to highlight is the tax aspect in implementing the JKN. During this time, the employees’ BPJS Kesehatan dues—of which 4% are borne by employers or companies—are considered employee income and are subject to Income Tax Article (ITA) 21. The reason why BPJS Kesehatan contribution is taxed is because JKN contribution is equated with health insurance premiums in general. As a result, the company not only has to bear 4% of the employees’ BPJS contributions, but also must pay ITA 21 for the JKN contributions. 

In this context, we need to reexamine the positive spirit of the JKN program that forces or obliges the entire employers to bear 4% of BPJS Kesehatan dues per employee. In my perspective, this should be seen as the contribution of the company to the country in order to succeed the JKN program, not a business to business transaction between the company and BPJS Kesehatan. In other words, BPJS contribution paid by companies should not be interpreted as insurance premiums, but rather as companies’ contributions to the state in order to ensure the availability of health insurance for every citizen. 

The company's compliance in paying the employees’ JKN dues should be a plus in the midst of the issue of health care discrimination as well as the failure of BPJS Kesehatan to crack down on the implementation of JKN, as declared by the Supreme Court.  

If the contributive and participative spirits put forward, should the JKN contribution be subject to ITA 21? It should not.  

*) This article was published in Republika Online, 27 May, 2020

 

 

 

 

Republika Online

Disclaimer! This article is a personal opinion and does not reflect the policies of the institution where the author works.