Decentralization and Health Resource Allocation: A Case Study at the District Level in Indonesia

Abstract

Health resource allocation has been an issue of political debate in many health systems. However, the debate has tended to concentrate on vertical allocation from the national to regional level. Allocation within regions or institutions has been largely ignored. This study was conducted to contribute analysis to this gap. The objective was to investigate health resource allocation within District Health Offices (DHOs) and to compare the trends and patterns of several budget categories before and after decentralization. The study was conducted in three districts in the Province of Nanggroe Aceh Darussalam. Six fiscal year budgets, two before decentralization and four after, were studied. Data was collected from the Local Government Planning Office and DHOs. Results indicated that in the first year of implementing a decentralization policy, the local government budget rose sharply, particularly in the wealthiest district. In contrast, in relatively poor districts the budget was only boosted slightly. Increasing total local government budgets had a positive impact on increasing the health budget. The absolute amount of health budgets increased significantly, but by percentage did not change very much. Budgets for several projects and budget items increased significantly, but others, such as health promotion, monitoring and evaluation, and public-goods-related activities, decreased. This study concluded that decentralization in Indonesia had made a positive impact on district government fiscal capacity and had affected DHO budgets positively. However, an imbalanced budget allocation between projects and budget items was obvious, and this needs serious attention from policy makers. Otherwise, decentralization will not significantly improve the health system in Indonesia.