2.1 Health Economics and Health System Performance

Health economics examines how limited resources are allocated to improve population health while balancing efficiency, equity, and financial sustainability (Culyer, 2019; Zweifel, 2022). Within the context of UHC, health system performance is shaped by the interaction of financing arrangements, governance structures, provider incentives, and service delivery mechanisms (Paul et al., 2022; Abimbola et al., 2019). In Indonesia, the implementation of JKN has expanded healthcare access and financial protection while creating new challenges related to sustainability, equity, and institutional coordination (Agustina et al., 2019). These interconnected dimensions provide the conceptual basis for examining health economics evidence in Indonesia.

2.2 Health Financing and Equity Challenges

Health financing remains central to Indonesia's progress toward UHC. Since the introduction of JKN, insurance coverage has expanded considerably, improving healthcare utilization and financial protection (Agustina et al., 2019). However, concerns persist regarding fiscal sustainability due to recurring deficits, difficulties in collecting contributions from informal-sector workers, and rising healthcare expenditures (Pribadi & Setijaningrum, 2023). Moreover, out-of-pocket spending continues to expose many households to financial hardship (Fattah et al., 2023).

Despite expanded coverage, substantial inequalities in healthcare access remain across income groups and geographic regions. Evidence indicates that socioeconomic status, education, insurance status, and place of residence continue to influence healthcare utilization and health outcomes (Efendi et al., 2020; Wenang et al., 2021; Wulandari et al., 2022). These findings suggest that achieving equitable UHC requires not only financing reforms but also improvements in service availability and resource distribution.

2.3 Efficiency, Provider Incentives, and Governance

Efficiency is a key concern in Indonesia's health system, particularly regarding provider payment mechanisms and resource allocation. Studies have reported discrepancies between hospital costs and INA-CBG reimbursement rates, raising questions about provider incentives and financial sustainability (Halim & Manggala, 2025; Fitri & Sundari, 2023). At the same time, economic evaluations generally support greater investment in preventive and primary healthcare interventions because of their favourable cost-effectiveness profiles (Suwantika et al., 2021; Priyadi et al., 2021).

Governance also plays an important role in shaping health system performance. Indonesia's decentralized health system allows local adaptation but may contribute to variations in implementation capacity, resource allocation, and service quality across regions (Silalahi, 2024; Abimbola et al., 2019). Consequently, governance and financing reforms are increasingly viewed as complementary strategies for improving accountability, efficiency, and UHC sustainability (Herawati et al., 2022).

2.4 Health Interventions, Innovation, and Sustainability

Economic evaluations consistently show that preventive and primary healthcare interventions are cost-effective and generate substantial long-term health and economic benefits, supporting greater investment in prevention as a strategy for improving health system sustainability (Suwantika et al., 2021; Priyadi et al., 2021).

Recent studies also highlight the potential of digital health technologies, including telemedicine and electronic health information systems, to improve service delivery, efficiency, and healthcare access, particularly in underserved areas (Adidharma et al., 2024; Sari, 2023). However, limitations in infrastructure, interoperability, regulation, and digital literacy continue to constrain their impact.

Overall, the literature suggests that financing, governance, provider incentives, and service delivery are closely interconnected determinants of health system performance. However, these dimensions are often studied separately, limiting understanding of how they jointly influence equity, efficiency, health outcomes, and UHC sustainability. This review addresses that gap by providing an integrated synthesis of evidence on health economics in Indonesia.

3.1 Study Design

This study employed a systematic literature review (SLR) to synthesize evidence on health economics in Indonesia. The review followed the Preferred Reporting Items for Systematic Reviews and Meta-Analyses (PRISMA 2020) guidelines to ensure methodological transparency, reproducibility, and rigor. The review was guided by the conceptual framework (see Figure 1), which links health financing, governance, incentives, service delivery, equity, efficiency, and health outcomes within the broader objective of achieving sustainable UHC.

3.2 Eligibility criteria

Studies were included or excluded according to their relevance to Indonesia and their focus on health economics, as summarized in Table 1.

3.3 Information sources

The literature search was conducted across multiple academic databases and grey literature sources to ensure comprehensive coverage of relevant evidence. Academic databases included Scopus, Web of Science, PubMed, and Google Scholar. The final search was completed in June 2025.

3.4 Search strategy

Searches used a combination of keywords and Boolean operators tailored for each database. The combination of keywords is included in the box.

3.5 Selection process

The study selection followed the four PRISMA stages: identification, screening, eligibility, and inclusion. A total of 345 records were retrieved from the selected databases, and duplicates were removed. Titles and abstracts were then independently screened by two reviewers for relevance. Full-text articles that passed screening were assessed against predefined inclusion criteria, with disagreements resolved through discussion or consultation with a third reviewer when necessary. In the final inclusion stage, 27 studies met all criteria and were included in the review. The selection process is presented in Figure 2.

Figure 2PRISMA flow diagram of study selection 

3.6 Data Extraction and Synthesis

Relevant information was extracted from each included study using a standardized data extraction form. The extracted variables included author(s), publication year, study objective, study design, data source, geographic focus, key findings, and policy implications. To ensure consistency and accuracy, the extracted information was reviewed and verified throughout the data collection process.

A thematic synthesis approach was employed to analyze and integrate findings from the included studies. The evidence was organized into six analytical themes: (1) Health financing and fiscal sustainability, (2) equity and access, (3) efficiency and cost-effectiveness, (4) governance and decentralization, (5) healthcare interventions and system innovation, and (6) policy implications for UHC. This thematic framework was developed from the study's conceptual framework and provided a structured basis for comparing and synthesizing evidence across studies with diverse methodological designs and analytical approaches.

3.7 Quality Assessment

Study quality was assessed using design-specific tools. Economic evaluation studies were appraised using the CHEERS 2022 checklist, covering six domains: title and abstract, introduction, methods, results, discussion, and other information. Each item was scored as 2 (fully reported), 1 (partially reported), or 0 (not reported), and studies were classified as high (≥80%), moderate (60–79%), or low quality (<60%).

Qualitative and observational studies were assessed using the Critical Appraisal Skills Programmeme (CASP) checklists, evaluating validity, methodological rigor, and relevance, using the same scoring and quality categories.

The overall certainty of evidence was evaluated using the GRADE framework. Evidence was assessed across five domains: risk of bias, inconsistency, indirectness, imprecision, and publication bias. Based on these assessments, the certainty of evidence was classified as high, moderate, low, or very low.

Overall, 21 included studies were of moderate to high quality. Economic evaluations generally scored higher due to more complete reporting, while observational studies showed greater variability in quality. GRADE assessments provided an overall evaluation of the strength and reliability of the evidence base.

4.1 Study characteristics

The 27 included studies demonstrated considerable diversity in study design, geographic scope, and population focus. Cross-sectional and econometric studies were the most common designs (n = 11), examining healthcare utilization, catastrophic health expenditure, service access, and health equity. Policy reviews, system analyses, and conceptual studies accounted for five studies, primarily addressing UHC, health financing, governance, and health information systems. Economic evaluations comprised three studies, focusing on vaccination programmes, hospital reimbursement, and healthcare financing efficiency. Quasi-experimental and evaluation studies represented five studies, while one study employed Data Envelopment Analysis (DEA), one was a systematic review, and one used qualitative method to assess mobile health services.

Regarding geographic scope, national-level studies predominated (n = 15), drawing on nationwide datasets and addressing JKN implementation, health financing, maternal health, digital health, and health system performance. Regional and provincial studies accounted for seven studies, with a particular focus on Papua, Eastern Indonesia, Java, and rural or underserved settings. Three studies were conducted at the hospital level, examining efficiency, reimbursement systems, and claims management. Two studies included international comparisons involving Indonesia and other countries.

The populations studied were diverse. General population and household-based studies were most common (n = 8), followed by women, mothers, and children (n = 8). Studies involving JKN beneficiaries and healthcare service users accounted for four studies, while healthcare providers and hospitals were examined in three studies. Other populations included patients with chronic diseases, older adults, rural poor communities, and remote populations. The characteristics of the included studies are summarized in Table 2.

Overall, the included studies provided broad evidence on health financing, service utilization, equity, efficiency, governance, and digital health in Indonesia. The evidence covered both national and subnational contexts and reflected key challenges and policy responses related to achieving UHC.

4.2 Evidence on Health Economics in Indonesia

4.3 Health Economics Challenges in Indonesia

4.4 Policy Responses and Reforms

5.1 Health Economic Performance under UHC

The findings of this review indicate that Indonesia has expanded healthcare coverage and improved access to services following the implementation of JKN. Consistent evidence across the reviewed studies demonstrates increased healthcare utilization, broader insurance coverage, and improved access to maternal, preventive, and facility-based healthcare services (Agustina et al., 2019; Nugraheni et al., 2020; Rahmawati & Hsieh, 2024). These developments represent important steps towards UHC and represent important milestones in Indonesia’s health sector development.

However, the evidence also demonstrates that insurance expansion has not been sufficient to ensure financial protection, equitable access or consistent service quality. Although financial barriers have been reduced for many households, catastrophic health expenditure persists among vulnerable populations, particularly low-income households and individuals with chronic health conditions (Fattah et al., 2023; Afrizal et al., 2025; Sosodoro et al., 2023). Furthermore, persistent disparities in healthcare access across geographic regions suggest that improvements in coverage have not produced equally distributed gains in access or health outcomes.

The reviewed studies collectively indicate that health system performance should be evaluated through multiple dimensions, including financial protection, accessibility, efficiency, quality, equity, and sustainability. Improvements in one dimension do not necessarily result in progress in others. Consequently, the Indonesian experience highlights the complexity of achieving UHC objectives within a large and diverse health system.

5.2 Structural Drivers of Health System Challenges

The persistence of financing, equity, efficiency, and governance challenges reflects underlying structural characteristics of Indonesia’s health system. A key structural constraint is the financial sustainability of JKN. Rising healthcare utilization, population ageing, and the growing burden of non-communicable diseases have increased expenditure pressures, while contribution collection remains challenging within Indonesia’s large informal employment sector (Afrizal et al., 2025; Rahmawati & Hsieh, 2024).

Geographic conditions also contribute significantly to health system challenges. Indonesia’s archipelagic geography creates logistical barriers that affect healthcare infrastructure development, workforce distribution, referral systems, and service accessibility. Evidence from eastern Indonesia and remote regions consistently demonstrates that insurance expansion alone is insufficient to overcome geographic barriers to healthcare access (Efendi et al., 2020; Wulandari et al., 2023; Wenang et al., 2021).

Governance capacity is another important source of variation in health system performance. Decentralization has enabled local adaptation and innovation; however, differences in administrative capacity, fiscal resources, and implementation effectiveness contribute to unequal outcomes across provinces and districts (Bahasoan et al., 2025). The evidence suggests that governance effectiveness depends not only on policy design but also on the capacity of institutions to implement and monitor reforms.

Importantly, these challenges are interconnected. Financing constraints affect service availability, governance influences resource allocation, and workforce shortages reduce the effectiveness of insurance coverage. This reinforces the need for reforms that address financing, governance, workforce capacity and service delivery as mutually dependent components rather than isolated policy areas in which health system performance is determined by the interaction of multiple components rather than by any single factor.

5.3 Effectiveness of Current Policy Responses

The policy responses identified in the reviewed literature indicate a broad policy agenda to address health system challenges through financing reforms, provider payment mechanisms, primary healthcare strengthening, and governance innovations. The expansion of JKN has increased insurance coverage and reduced direct financial barriers to healthcare utilization (Agustina et al., 2019; Nugraheni et al., 2020). Likewise, provider payment reforms, including INA-CBGs and capitation systems, have introduced mechanisms intended to improve efficiency and expenditure management (Fitri & Sundari, 2023; Rahmawati & Hsieh, 2024).

Investments in preventive healthcare and community-based programmes further demonstrate increasing recognition of the importance of primary healthcare in improving population health outcomes and controlling long-term healthcare costs (Priyadi et al., 2021; Akseer et al., 2022). Similarly, digital health initiatives have improved information management, administrative efficiency, and service accessibility in several settings (Herawati et al., 2022; Adidharma et al., 2024).

Despite these advances, the evidence suggests that policy achievements remain uneven. Persistent geographic inequalities, continued catastrophic health expenditure, and variation in local implementation capacity indicate that existing reforms have not fully resolved underlying structural challenges. The findings imply that the effectiveness of policy interventions depends not only on their design but also on implementation quality, institutional capacity, and local context.

5.4 Lessons from International Experiences for UHC

Indonesia’s experience in advancing UHC shares important similarities with other middle-income countries that have pursued large-scale health system reforms. Drawing on Thailand’s experience, Animashaun et al. (2025) argued that successful UHC implementation depends not only on financing mechanisms and service expansion but also on the convergence of political commitment, institutional readiness, and sustained technical preparation. Their analysis highlights how coalition-building, bureaucratic capacity, and strategic policy entrepreneurship enabled Thailand to achieve near-universal coverage despite fiscal and political constraints. These findings suggest that Indonesia’s continued progress toward UHC requires not only expanding coverage but also strengthening institutional coordination and aligning financing arrangements with service delivery capacity.

Evidence from Vietnam provides further insights into the challenges of translating insurance expansion into effective financial protection. Matsushima et al. (2020) found that the expansion of health insurance significantly increased healthcare utilization, particularly inpatient services, but had only a limited effect on reducing out-of-pocket expenditures. They emphasized that insurance expansion must be accompanied by adequate supply-side investments to meet growing demand and improve service accessibility. Similarly, Mao et al. (2020) observed that although Vietnam achieved substantial gains in population coverage through sustained government commitment and targeted subsidies for vulnerable groups, catastrophic health expenditure remained disproportionately concentrated among lower-income populations. These findings resonate with Indonesia’s experience, where expanded insurance coverage has improved access to healthcare services while financial hardship and catastrophic health spending continue to affect vulnerable households.

Experiences from the Philippines and Cambodia further underscore the importance of governance and institutional capacity in achieving sustainable UHC outcomes. According to de Claro et al. (2025), health financing reforms in the Philippines are often constrained by limited integration of research evidence into policymaking, insufficient data accessibility, and competing fiscal and political priorities. The authors argue that strengthening health financing governance requires robust research systems, transparent data-sharing mechanisms, and stronger links between evidence generation and policy decisions. In Cambodia, Sorn (2025) identified weak governance structures, healthcare quality disparities, and inadequate financing arrangements as major barriers to UHC advancement. The study emphasizes that institutional reforms, stronger regulatory frameworks, and multisectoral coordination are essential for improving healthcare access and financial risk protection. Complementing these findings, Kolesar et al. (2021) demonstrated that strategic purchasing, targeted coverage expansion, and alignment of reimbursement mechanisms can improve both efficiency and financial sustainability in health financing systems.

Collectively, these international experiences demonstrate that achieving UHC extends beyond increasing insurance coverage. As evidenced by Thailand, Vietnam, the Philippines, and Cambodia, sustainable progress depends on the effective integration of health financing, governance, service delivery, and institutional capacity. For Indonesia, these lessons highlight the need to strengthen policy coordination, enhance financial protection for vulnerable populations, and ensure that coverage expansion is supported by corresponding improvements in health system performance and governance.

5.5 Strategic Priorities for Sustainable UHC Development

The findings of this review identify four strategic priorities for strengthening Indonesia’s health system. First, health financing reforms should focus on improving fiscal sustainability through enhanced contribution collection, expenditure management, and strategic purchasing mechanisms. Second, greater investment in preventive and primary healthcare may improve both efficiency and population health outcomes, as economic evaluations consistently demonstrate favourable cost-effectiveness profiles for these interventions (Suwantika et al., 2021; Priyadi et al., 2021; Fritz et al., 2024).

Third, strengthening governance and institutional capacity remains essential for reducing regional disparities and improving policy implementation. Better coordination between national and local governments, stronger accountability mechanisms, and investments in administrative capacity may support more equitable health system performance. Finally, continued investment in digital health infrastructure offers opportunities to improve service delivery, information management, and health system monitoring, although these benefits will depend on addressing infrastructure and implementation challenges across regions.

5.6 Strengths, Limitations, and Future Research Directions

This review provides a comprehensive synthesis of recent evidence regarding health economics, health system challenges, and policy reforms in Indonesia. By integrating findings across financing, equity, efficiency, governance, and policy domains, the review contributes to a broader understanding of the factors influencing UHC implementation and health system performance.

Nevertheless, several limitations within the existing evidence base should be acknowledged. Most studies employed cross-sectional, observational, or descriptive methodologies, limiting the ability to establish causal relationships between policy interventions and health outcomes. Although several quasi-experimental studies were identified, rigorous impact evaluations remain relatively limited.

Geographic representation also remains uneven. A substantial proportion of available studies focused on Java and other relatively developed regions, whereas fewer investigations examined eastern Indonesia and remote provinces where health system challenges may be most pronounced. This limitation restricts the generalizability of some findings and highlights the need for more geographically diverse research.

Future studies should prioritize longitudinal analyses, natural experiments, mixed methods approaches, and policy impact evaluations capable of examining interactions between financing mechanisms, governance structures, provider incentives, and service delivery systems. Greater attention to underserved populations and remote regions would further strengthen the evidence base and support more effective health policy development.