How are health budgets allocated and dispersed, across program areas? | Indonesia How are health budgets allocated and dispersed, across program areas? | Indonesia

13 Apr 2022

In Indonesia, there are two pooling mechanisms that allocate and disperse health budgets across the country. First, central government funds are pooled and then transferred to provincial and district governments. Second, the BPJS pools social insurance funds (Mahendradhata et al., 2017, p.87).

Pooling of central government funds means that the State Revenue and Expenditure Budget (APBN) determines allocation of funds centrally. For health funds, this allocation is decided by the Ministry of National Development Planning of the Republic of Indonesia (BAPPENAS) in consultation with the Ministry of Heath and the Ministry of Finance. The final allocation of funds needs to be approved by the national parliament (DPR). The budget allocation is based on:

  1. ‘Historical budgets,
  2. Proposal by ministries,
  3. Calculation of local needs according to population size’ (Mahendradhata et al., 2017, p.87).

It is noteworthy that non-technical and political considerations by the House of Representatives (DPR) that influence the indicate budget levels, play a role as well. (Mahendradhata et al., 2017, p.87).

The Ministry of Health distributes the health budget to central-level departments and health agencies as well as to provincial and district governments. The fund allocation includes:

  1. Dana dekon (de-concentration fund) is allocated to provincial health offices to manage health functions in its districts and to ‘build capacity of [district health offices] in national priority programmes’.
  2. Tugas perbantuan (assisting task fund) is given to district health offices for spending related to carrying out assisting/operational tasks around the puskesmas.
  3. Dana alokasi khusus (special allocation fund) is ‘allocated […] to local governments and earmarked for specific health infrastructure construction such as […] puskesmas, sub-puskesmas, and district hospitals’. For health, this fund can used for financing primary health care, referrals to secondary and tertiary care, and pharmacy services (including generics procurement) (Mahendradhata et al., 2017, p.88).

In addition to central resources mechanism, provincial and district government also prepare plans and budget proposals (bottom-up approach). Local government’s revenue and expenditure budget (APBD) is divided into indirect expenditure (salaries of civil servants in health facilities) and direct expenditure (operations of health services and programmes and allowances of health services staff). However, indirect expenditure can take up more than 80% of the total budget allocation, which may limit funding for operational expenditure (Mahendradhata et al., 2017, pp.88-89).

The second mechanism represents the distribution of social insurance funds through the BPJS. All social insurance contributions of the population, including government funds, are pooled into a single trust fund (Dana Amanat). ‘The allocation of revenue from central government to the BPJS is based on the number of members entitled to have their contribution paid by the government (PBI members), and the agreed premium to be paid by the government’. ‘The PBI contribution is then allocated to districts based on the number of PBI members in each district’ (Mahendradhata et al., 2017, p.88).


Mahendradhata, Y., Trisnantoro, L., Listyadewi, S., Soewondo, P., MArthias, T., Harimurti, P., & Prawira, J. (2017). The Republic of Indonesia Health System Review (Vol. 7, Issue 1). https://apps.who.int/iris/bitstream/handle/10665/254716/9789290225164-eng.pdf