Indonesia is embarking on far-reaching health sector reform with the aim of achieving universal health insurance coverage by 2014. The ambition to provide universal coverage was formalised in 2004, followed in 2005 by the introduction of subsidised social health insurance targeted towards informal sector workers and the poor, who did not have access to social or private health insurance through formal sector employment. In addition to this national scheme, individual districts are undertaking their own health financing initiatives and reforms. The transition to universal coverage is far from complete, however, and the steps necessary to reform Indonesia's health system, and in particular health financing, are a subject of debate.

With regard to the poor, these reforms need to attend to three key policy issues: equity in utilisation of public health care and overall health status; service delivery, in terms of providing access to care and a basic health care package; and social risk management, in terms of reducing the financial risk of health shocks for the poor. The current debate is focused largely on financial sustainability and efficient service delivery, which are crucial for successfully implementing universal coverage. However, the expected equity impacts of health financing reforms and subsequent demand-side responses have received relatively less attention and scrutiny.

Questions remain about the drivers of inequity and financial risk, the scope for public intervention and the ability of social health insurance to provide a remedy. For example, are the main barriers to health care access for the poor set by the direct costs of seeking care (for example, medical expenses), the indirect costs (forgone income, travel costs) or the poor quality of public health care? What financial risk from illness do households face, and what are the main sources of this risk (medical expenses, reduced labour supply, loss of income)? What are the main coping strategies employed by households (reduce savings, incur debt, sell assets, forgo health care), and to what extent are households able to deal with the financial consequences of health shocks? Finally, which of these cost barriers and sources of financial risk can be addressed by social health insurance?

This chapter aims to contribute to the debate by exploring policy lessons and future challenges for universal coverage and social risk management. It draws on recent experience with subsidised social health insurance and other health financing programs for the poor over the past decade.