Does Social Health Insurance Help Owners of Micro- and Small Firms Cope with Family Hardships? Evidence from Indonesia

Lau, Siew Yee and Parinduri, Rasyad and Lee, Yoong Hon (2019): Does Social Health Insurance Help Owners of Micro- and Small Firms Cope with Family Hardships? Evidence from Indonesia.

Abstract

Micro- and small firms lack access to external finance and the labour market so that they are vulnerable to family hardships experienced by the owners such as deaths or sickness of family members. The literature is thin on how these firms cope with family hardships, in particular on whether owners’ access to social health insurance helps. We examine whether a social health insurance in Indonesia, Askeskin, protects owners of micro- and small firms against family hardships. We find some evidence Askeskin reduces the adverse effects of recent deaths in the family, outpatient care, and traffic accidents on net profits; Askeskin also protects the firms’ assets against owners’ outpatient care need. Social health insurance may, therefore, improve micro- and small firms’ survival, which (because most people in developing countries’ labour markets work in micro- and small firms) helps governments’ efforts to eradicate poverty.

• Item Type: MPRA Paper
• Language: English
• Keywords: social health insurance, Askeskin, family hardships, micro- and small firms, firm performance, Indonesia
• Subjects: I - Health, Education, and Welfare > I1 - Health > I13 - Health Insurance, Public and Private; I - Health, Education, and Welfare > I1 - Health > I18 - Government Policy ; Regulation ; Public Health; L - Industrial Organization > L2 - Firm Objectives, Organization, and Behavior > L25 - Firm Performance: Size, Diversification, and Scope; O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O12 - Microeconomic Analyses of Economic Development

References

Aji, B., De Allegri, M., Souares, A., & Sauerborn, R. (2013). The impact of health insurance programs on out-of-pocket expenditures in Indonesia: An increase or a decrease?. International Journal of Environmental Research and Public Health, 10, 2995-3013. doi:10.3390/ijerph10072995

Alam, K., & Mahal, A. (2014). Economic impacts of health shocks on households in low and middle income countries: A review of literature. Globalization and Health, 10. doi:10.1186/1744-8603-10-21

Anderson, M., Dobkin, C., & Gross, T. (2012). The effect of health insurance coverage on the use of medical services. American Economic Journal: Economic Policy 4 (1): 1-27. doi:10.1257/pol.4.1.1

Angelini, P., & Generale, A. (2008). On the evolution of firm size distributions. The American Economic Review, 98, 426-438. doi:10.1257/aer.98.1.426

Angelucci, M., Karlan, D., & Zinman, J. (2015). Microcredit impacts: Evidence from a randomized microcredit program placement experiment by Compartamos Banco. American Economic Journal: Applied Economics, 7, 151-182. doi:10.1257/app.20130537

Arifianto, A., Marianti, R., Budiyati, S., & Tan, E. (2005). Making services work for the poor: A report on health financing mechanisms in Kabupaten Tabanan, Bali. SMERU field report. Jakarta: SMERU Research Institute.

Australian AID. (2011). Targeting the poorest: An assessment for the proxy means test methodology. Canberra: Australian Agency for International Development.

Axel, D. (2016). Health shocks and permanent income loss: the household business channel. Unpublished paper.

Bachtiar, A., Wibisana, W., & Pujiyanto. (2006). Asesmen Cepat Program PKPS-BBM 2005 Bidang Kesehatan.

Banerjee, A., Duflo, E., Glennerster, R., & Kinna, C. (2015). The miracle of microfinance? Evidence from a randomized evaluation. American Economic Journal: Applied Economics, 7, 22-53. doi:10.1257/app.20130533

Banerjee, A., Duflo, E., & Hornbeck, R. (2014). Bundling health insurance and microfinance in India: There cannot be adverse selection if there is no demand. American Economic Review: Papers & Proceedings, 104, 291-297. doi:10.1257/aer.104.5.291

Beck, T., & Demirgüç-Kunt, A. (2006). Small and medium-size enterprises: Access to finance as a growth constraint. Journal of Banking & Finance, 30, 2931-2943. doi:10.1016/j.jbankfin.2006.05.009

Beck, T., Demirgüç-Kunt, A., & Maksimovic, V. (2005). Financial and legal constraints to growth: Does firm size matter? The Journal of Finance, 60, 137-177. doi:10.1111/j.1540-6261.2005.00727.x

Beck, T., Demirgüç-Kunt, A., & Maksimovic, V. (2008). Financing patterns around the world: Are small firms different? Journal of Financial Economics, 89, 467-487. doi:10.1016/j.jfineco.2007.10.005

Beck, T., Demirgüç-Kunt, A., Laeven, L., & Maksimovic, V. (2006). The determinants of financing obstacles. Journal of International Money and Finance, 25, 932-952. doi:10.1016/j.jimonfin.2006.07.005

Beegle, K., De Weerdt, J., & Dercon, S. (2007). Adult mortality and consumption growth in the age of HIV/AIDS. Economic Development and Cultural Change, 56, 299-326. doi:10.1086/522895

Bridges, S., & Guariglia, A. (2008). Financial constraints, global engagement, and firm survival in the United Kingdom: Evidence from micro data. Scottish Journal of Political Economy, 55, 444-464. doi:10.1111/j.1467-9485.2008.00461.x

Carpenter, R. E., & Petersen, B. C. (2002). Is the growth of small firms constrained by internal finance? The Review of Economic and Statistics, 84, 298-309. doi:10.1162/003465302317411541

Cole, S., Giné, X., Tobacman, J., Topalova, P., Townsend, R., & Vickery, J. (2013). Barriers to household risk management: Evidence from India. American Economic Journal: Applied Economics, 5, 104-135. doi:10.1257/app.5.1.104

Crépon, B., Devota, F., Duflo, E., & Pariente, W. (2015). Estimating the impact of microcredit on those who take it up: Evidence from a randomized experiment in Morroco. American Economic Journal: Applied Economics, 7, 123-150. doi:10.1257/app.20130535

De Mel, S., McKenzie, D., & Woodruff, C. (2011). Enterprise recovery following natural disasters. The Economic Journal, 122, 64-91. doi:10.1111/j.1468-0297.2011.02475.x

Demirgüç-Kunt, A., & Klapper, L. (2012). Financial inclusion in Africa: An overview. World Bank Policy Research Working Paper No. 6088. Washington: World Bank.

Gertler, M. (1988). Financial structure and aggregate economic activity: An overview. Journal of Money, Credit and Banking, 20, 559-588. doi:10.2307/1992537

Gertler, M., & Hubbard, R. G. (1988). Financial factors in business fluctuations. NBER Working Paper No. 2758. Cambridge MA: National Bureau of Economic Research.

Gertler, P., & Gruber, J. (2002). Insuring consumption against illness. The American Economic Review, 92, 51-70. doi:10.1257/000282802760015603

Gruber, J., Hendren, N., & Townsend, R. M. (2014). The great equalizer: health care access and infant mortality in Thailand. American Economic Journal: Applied Economics, 6, 91-107. doi:10.1257/app.6.1.91

Guariglia, A., Liu, X., & Song, L. (2011). Internal finance and growth: Microeconomic evidence on Chinese firms. Journal of Development Economics, 96, 79-94. doi:10.1016/j.jdeveco.2010.07.003

Harimurti, P., Pambudi, E., Pigazzini, A., & Tandon, A. (2013). The nuts and bolts of Jamkesmas, Indonesia’s government-financed health coverage program for the poor and near-poor. UNICO Studies Series 8. Washington: World Bank.

Hubbard, R. G., & Kashyap, A. (1990). Internal net worth and the investment process: An application to U.S. agriculture. NBER Working Paper No. 3339. Cambridge MA: National Bureau of Economic Research.

Hyytinen, A., & Toivanen, O. (2005). Do financial constraints hold back innovation and growth? Evidence on the role of public policy. Research Policy, 34, 1385-1403. doi:10.1016/j.respol.2005.06.004

ILO. (2008). Social security in Indonesia: Advancing the development agenda. Jakarta: International Labour Organisation.

Isoto, R. E., Sam, A., & Kraybill, D. S. (2016). Uninsured health shocks and agricultural productivity among rural households: The mitigation role of microcredit. The Journal of Development Studies, 53, 2050-2066. doi:10.1080/00220388.2016.1262027

Khan, F., Bedi, A. S., & Sparrow, R. (2015). Sickness and death: Economic consequences and coping strategies of the urban poor in Bangladesh. World Development, 72, 255-266. doi:10.1016/j.worlddev.2015.03.008

Kushnir, K., Mirmulstein, M. L., & Ramalho, R. (2010). Micro, small, and medium enterprises around the world: how many are there, and what affects the count? MSME country indicators. Washington: World Bank/IFC.

Levine, D., Polimeni, R., & Ramage, I. (2016). Insuring health or insuring wealth? An experimental evaluation of health insurance in rural Cambodia. Journal of Development Economics, 119, 1-15. doi:10.1016/j.jdeveco.2015.10.008

Mahal, A., Karan, A., Fan, V. Y., & Engelgau, M. (2013). The economic burden of cancers on Indian households. PLoS ONE, 8, e71853. doi:10.1371/journal.pone.0071853

Mboi, N. (2015). Indonesia: On the way to universal health care. Health System and Reform, 1, 91-97. doi:10.1080/23288604.2015.1020642

Mitra, S., Palmer, M., Mont, D., & Groce, N. (2016). Can households cope with health shocks in Vietnam? Health Economics, 25, 888-907. doi: 10.1002/hec.3196

Musso, P., & Schiavo, S. (2008). The impact of financial constraints on firm survival and growth. Journal of Evolutionary Economics, 18, 135-149. doi:10.1007/s00191-007-0087-z

Myers, S. C., & Majluf, N. S. (1984). Corporate financing and investment decisions when firms have information that investors do not have. Journal of Financial Economics, 13, 187-221. doi:10.1016/0304-405X(84)90023-0

Nguyen, C. (2016). The impact of health insurance for children: Evidence from Vietnam. Health Economics Review, 6. doi:10.1186/s13561-016-0111-9

Nguyet, N. T. N., & Mangyo, E. (2010). Vulnerability of households to health shocks: An Indonesian study. Bulletin of Indonesian Economic Studies, 46, 213-135. doi:10.1080/00074918.2010.486108

Pál, R., & Kozhan, R. (2009). Firms’ investment under financial constraints: A euro area investigation. Applied Financial Economics, 19, 1611-1624. doi: 10.1080/09603100802599605

Palmer, M., Mitra, S., Mont, D., & Groce, N. (2015). The impact of health insurance for children under age 6 in Vietnam: A regression discontinuity approach. Social Science & Medicine, 145, 217-226. doi:10.1016/j.socscimed.2014.08.012

Parinduri, R. (2014). Family hardship and the growth of micro and small firms in Indonesia. Bulletin of Indonesian Economic Studies, 50, 53-73. doi:10.1080/00074918.2014.896237

Quayyum, Z., Nadjib, M., Ensor, T., & Sucahya, P. K. (2009). Expenditure on obstetric care and the protective effect of insurance on the poor: Lessons from two Indonesian districts. Health Policy and Planning, 1-11. doi:10.1093/heapol/czp060

Rooyen, C. V, Stewart, R., & de Wet, T. (2012). The impact of microfinance in Sub-Saharan Africa: A systematic review of evidence. World Development 40 (11): 2249-2262. doi:10.1016/j.worlddev.2012.03.012

Sparrow, R., Suryahadi, A., & Widyanti, W. (2013). Social Health insurance for the poor: Targeting and impact of Indonesia’s Askeskin programme. Social Science & Medicine, 96, 264-271. doi:10.1016/j.socscimed.2012.09.043

Strauss, J., K. Beegle, B. Sikoki, A. Dwiyanto, Y. Herawati, & F. Witoelar (2004). The third wave of the Indonesia family life survey (IFLS3): Overview and field report (WR-144/1-NIA/NICHD). Santa Monica, CA: RAND.

Strauss, J., F. Witoelar, B. Sikoki, & A.M. Wattie (2009). The fourth wave of the Indonesia family life survey (IFLS4): Overview and field report (WR-675/1-NIA/NICHD). Santa Monica, CA: RAND.

Sumarto, S., & Bazzi, S. (2011). Social protection in Indonesia: Past experiences and lessons for the future. The 2011 Annual Bank Conference on Development Opportunities, Paris, World Bank and OECD, May 30-June 1.

Thabrany, H. (2008). Politics of national health insurance in Indonesia: A new era of universal coverage. The 7th European Conference on Health Economics, Rome, July 23-26.

Thornton, R. L., Hatt, L. E., Field, E. M., Islam, M., Diaz, F. S., & González, M. A. (2010). Social security health insurance for the informal sector in Nicaragua: A randomised evaluation. Health Economics, 19, 181-206. doi:10.1002/hec.1635

Wagstaff, A. (2007). The economic consequences of health shocks. Journal of Health Economics, 26, 82-100. doi:10.1016/j.jhealeco.2006.07.001

Wagstaff, A. (2010). Estimating health insurance impacts under unobserved heterogeneity: The case of Vietnam’s health care fund for the poor. Health Economics, 19, 189-208. doi:10.1002/hec.1466

Wagstaff, A., & Lindelow, M. (2008). Can insurance increase financial risk? The curious case of health insurance in China. Journal of Health Economics, 27, 990-1005. doi:10.1016/j.jhealeco.2008.02.002

Wagstaff, A., & Lindelow, M. (2014). Are health shocks different? Evidence from a multi-shock survey in Laos. Health Economics, 23, 706-718. doi:10.1002/hec.2944

Wagstaff, A., Lindelow, M., Jun, G., Ling, X., & Juncheng, Q. (2009). Extending health insurance to the rural population: An impact evaluation of China’s new cooperative medical scheme. Journal of Health Economics, 28, 1-19. doi:10.1016/j.jhealeco.2008.10.007

Wagstaff, A., & Pradhan, M. (2005). Health insurance impacts on health and nonmedical consumption in developing country. Policy Research Working Paper 3563. Washington: World Bank.

Wagstaff, A., & Yu, S. (2007). Do Health sector reforms have their intended impacts? The World Bank’s Health VIII Project in Gansu Province, China. Journal of Health Economics, 26, 505-535. doi:10.1016/j.jhealeco.2006.10.006

Wang, H., Yip, W., Zhang L., & Hsiao, W. C. (2009). The impact of rural mutual health care on health status: Evaluation of a social experiment in rural China. Health Economics, 18, S65-S82. doi:10.1002/hec.1465

World Bank. (2008). Finance for all? Policies and pitfalls in expanding access. Washington: World Bank.

World Bank. (2012). Jamkesmas health service fee waiver: Social assistance program and public expenditure review 4. Jakarta: World Bank.

Yamauchi, F., Buthelezi, T., & Velia, M. (2008). Impacts of prime-age adult mortality on labour supply: Evidence from adolescents and women in South Africa. Oxford Bulletin of Economics and Statistics, 70, 375-398. doi:10.1111/j.1468-0084.2008.00504.x

Yilma, Z., Mebratie, A., Sparrow, R., Abebaw, D., Dekker, M., Alemu, G., & Bedi, A. S. (2014). Coping with shocks in rural Ethiopia. The Journal of Development Studies, 50, 1009-1024. doi:10.1080/00220388.2014.909028