Micro-health insurance: how and why it works in Indonesia

Micro-health insurance: how and why it works in Indonesia

John Converse Townsend's picture

Keeping waste out of landfills? Making health care accessible to all? This 24-year-old Indonesian entrepreneur is doing just that.

Municipal solid waste (MSW) is ranked as the highest priority waste stream in Indonesia, based on a country needs assessment analysis by the United Nations Environment Programme. Organic waste isn't far behind. It's not so much a legal issue—Indonesia has passed a waste management law, but like the 18th amendment to the U.S. Constitution it is “not well implemented and enforced at all governmental levels.” It is, however, expensive to implement and expensive for consumers, which has led to low rates of compliance.

Urban areas like Malang, the second largest city in East Java, produce more than 55,000 tonnes of solid waste every day but only 50 to 60% is collected, the rest goes to open dump sites, which have been linked to “premature deaths, serious illness, and diminished quality of life.”

Households provided with government-run waste management services are forced to pay a monthly collection fee—as little as about $1.10 and as much as $3.20.

That's reasonable for many Indonesians, but still nearly 40% live on less than $1.80 per day (adjusted for purchasing power).

“We are building a system for management of garbage in communities,” Gamal Albinsaid said. He's the founder of the social enterprise Garbage Clinical Insurance. 

“It's a micro-health insurance program. Communities give garbage to us and pay a premium, about IDR 10,000 ($0.83). We convert the money to health fund and we give back to them in the form of health financing.”

Simply, GCI collects, repurposes or disposes people's garbage at a cheaper-than-government rate and provides subscribers with “free” quality health services, which include primary care at local clinics, family planning, nutrition consultations, in-school health advocacy, home visits for patients with chronic illnesses, and even telemedicine consultations with licensed doctors—uncommon in emerging markets. 

It's a welcome service in a country where, according to the World Bank, more than 75% of health care expenditures are paid for out-of-pocket. But it wasn't always simple. Albinsaid, 24, tried this project in 2010, but failed:

“Premiums were very low, the system wasn't good. We modified, took a scientific approach. My team now has a good system for monitoring and tracking information, which makes it easy to replicate the system.

"I have five clinics right now. At every clinic there are, maybe, 300 to 500 members. Some people go outside [for care], but we are always building sense of belonging from communities to our project."

Four of GCI's clinics—typically open from 7am till 9pm—are in Malang. One clinic is in a village outside the city limits. These clinics are operated by a total of 88 volunteers and interns, 15 doctors, 12 nurses, and midwives. 47 staff members are paid with profits from the waste collection service. “They get standard payment in Indonesia,” Albinsaid said. 

“We're social entrepreneurs. We focus on social impact: how can we manage a health fund to improve a community, and make it sustainable? I'm looking for young people. They have big spirit and some of them don't care about the money first.”

“Some doctors, some just come to us ... they want to work with us to develop this project."  

Both organic and non-organic waste is accepted for collection. Organic waste is repurposed with the Takakura composting method - a process that purifies waste through fermentation - and then sold back to Indonesians as fertilizer: “We get a lot of money from fertilizer entrepreneurs.” Albinsaid said he can sell 1kg of fertilizer for IDR 5,000, or about $0.41. Non-organic waste is collected, sorted and sold to the Malang City garbage bank for recycling. The GCI team hopes to tackle recycling themselves with additional program funding.

This project is a little bit of change in a big city. But Albinsaid said micro-health insurance is catching on in Indonesia, and fast, which is good because Indonesia's population could total 280 million by 2030 with more than 70% of Indonesians living in urban areas.

“I have five clinics. But, honestly, the system is starting to replicate in other cities with other people. They have coordinated with us. We help them, we advise them, and we guide them guide them to start this project, but we make sure that community gets impact from the project.”

Gamal Albinsaid is one of seven finalists in the Unilever Sustainable Living Young Entrepreneurs Awards, who will be featured on Virgin.com in the coming weeks. Learn about the other finalists where you can also share your own project.