The body of research examining the welfare systems of the Global South has expanded, yet there remains a lack of knowledge regarding the implications of modernising the welfare system in rural agrarian societies. A research gap in this area led us to conduct a live-in observation and 17 interviews with peasants in Merjosuro village—a rural area in Central Java, Indonesia—to examine how farmers’ rationality affects the perception of social risks and the decision-making process regarding health risks management. The study has two key findings. The first finding reveals that differences in the rationality of risk between policymakers and the Merjosuro community are the reason why the community does not participate in the National Health Insurance (JKN). The second finding indicates that the monthly contributory system promoted by JKN is incompatible with the livelihoods in an agrarian society characterised by unstable and irregular income depending on harvest time. Overall, the case in Merjosuro highlights the understudied phenomena of expanding modern-formal social policies within more traditional community-based informal welfare arrangements, which were found to have limited the pace of transformation of the welfare state expansion in the examined case. Additionally, the study has practical implications for rethinking contextualised designs of welfare state policies and practices for the Global South.
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