Impact of Health Insurance on Saving and Consumption Expenses in Indonesia (Evidence From Indonesian Family Life Survey)

ABSTRACT The Askeskin Health Program was implemented in 2005, to preserve access of health care services for the poor. Askeskin were allocated to poor households, entitling them subsidized care from public health care providers. The providers received budgetary support to compensate for the extra demand. This study focuses on the effect of the program on Saving and Consumption Expenses of the Poor Household in Indonesia. By reducing risk of large out-of-pocket medical expenses, Askeskin may reduce households’ motivation to engage in precautionary behaviors such as saving, and smooth their consumption expenditure. We use difference in difference (DID) and fixed effect method (FEM) to examine these effects, using Indonesian Family Life Survey data. Our study find that Askeskin can reduce the uncertainty of the out-of-pocket health expenditure, reduce saving and increase household consumption expenditure. The result suggest that financial risk and level of health expenditure affect the level of saving and consumption expenditure.Keywords: Askeskin, Precautionary Saving Motives, Consumption Expenditur