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Abstract This paper explores the conditions under which democratic decentralisation has contributed to pro-poor policy reform in Indonesia by examining the politics of health insurance for the poor in two Indonesian districts, Jembrana and Tabanan, both located in Bali. Governments in these districts have responded quite differently to the issue of health insurance for the poor since they gained primary responsibility for health policy as a result of Indonesia's implementation of decentralisation in 2001. We argue that this variation has reflected differences in the nature of district heads' political strategies - particularly the extent to which they have sought to develop a popular base among the poor - and that these in turn have reflected differences in their personal networks, alliances and constituencies. Comparative research suggests that pro-poor outcomes have only occurred in developing countries following democratic decentralisation when social-democratic political parties have secured power at the local level. In the Indonesian case, we suggest, political parties are not well defined in ideological and programmatic terms and tend to act as electoral vehicles for hire and mechanisms for the distribution of patronage, while local-level politics is increasingly dominated by the executive arm of government. Hence the pathway to pro-poor policy reform has been different - namely, via the emergence of local executives who pursue their interests and those of allies and backers via populist strategies with or without the support of parties. [ABSTRACT FROM AUTHOR]