Length of Hospital Stay in Different Health Insurance Payment Systems

Before the merging of health insurance schemes in 2014, Indonesia has two type of government health insurance programs based on its payment system. Jamkesmas applied diagnosis-related groups-based (DRG) payment system, while Askes and Jamsostek are much alike to fee-for-service (FFS) model. The different payment systems likely affect hospital behavior in delivering health services. One direct measure to address this issue is hospital length of stay (LOS). This paper focuses to examine the effect of Indonesia's health insurance payment systems on hospital LOS using the Indonesia National Socio-Economic Survey (Susenas) 2012 dataset. Count data model is used to address endogeneity issue of health insurance. Our findings suggest that FFS insurance have strong effect to increase LOS, on the contrary, DRG insurance give strong effect to reduce LOS. This finding supports the idea that FFS encourages hospitals to apply more services, while DRG encourages hospitals to keep their costs low to avoid making loss.