HCF/NHIS

• Healthcare financing is a function of a health system concerned with the mobilization, accumulation, and allocation of money to cover the health needs of individuals and collectives
• Healthcare financing has three major functions: revenue mobilization, pooling of resources, and purchasing of services/resource allocation
• Principles of healthcare financing include equity, effectiveness, comprehensiveness, and efficiency
• Historically, in the world, Ancient Greek had a funeral society in 1200BC that began the principle of resource pooling and spreading risk by paying members' funeral costs
• In the 19th century, labor unions and individual employees joined relief funds, many of which came under government regulation
• Germany enacted compulsory health insurance laws in 1853 (Prussia) and 1883 nationwide, which later spread to other European countries and the rest of the world
• African countries like Algeria, Libya, Tunisia, and Nigeria have made strides in healthcare financing, with Nigeria establishing the National Health Insurance Scheme (NHIS) in 1999
• African countries face challenges in funding healthcare, with a significant burden of maternal and child deaths, malaria, HIV/AIDS, and other diseases
• In Nigeria, healthcare financing is mainly the responsibility of the three tiers of government: Federal, State, and Local, with the NHIS established under decree 35 of the 1999 constitution
• Healthcare financing options include direct government financing, social and private insurance, individual consumer expenditure (out of pocket), community financing, employee benefits, non-governmental organizations, grants, and loans
• World health expenditure composition includes government (33%), social insurance (26%), out-of-pocket (18%), private insurance (19%), and other (4%)
• Nigerian health expenditure composition by source includes government (21.6%), out-of-pocket (65.9%), private firm (6.4%), and donor (6.1%)
• Direct government financing for healthcare includes budgetary allocation, designated taxes, deficit financing, and earmarked taxes like VAT on goods and services
• Health insurance is a system where consumers make payments to a third party for future illness expenses, based on the principle of resource pooling and sharing the burden of paying for health services
• Types of health insurance include government or social health insurance (e.g., NHIS), private non-profit health insurance, private for-profit health insurance, and employer-based health insurance
• The National Health Insurance Scheme (NHIS) in Nigeria was established in 1999 under Act 35 to improve the health of all Nigerians at an affordable cost
• The goal of NHIS is to enhance the health status of citizens through the provision of financial protection
• Goal of NHIS:

  • To enhance the health status of citizens through provision of financial protection and customer satisfaction
• NHIS Objectives:

  • Ensure Nigerians have access to good health care
  • Protect families from financial hardship of huge medical bills
  • Limit the risk of cost of health care services
  • Equitable distribution of health care cost among different income groups
  • Equitable distribution of health care facilities within the federation
  • Improve efficiency, encourage public-private partnership and participation
  • Ensure patronage, to ensure fund availability to the health sector for improved service
• Classification of NHIS programme:

  1. Formal sector SHIP:

  • Public sector
  • Organised private sector
  • Tertiary students
  • Military, police, uniformed men
  • Voluntary contributor

  2. Informal sector programme:

  • Rural community
  • Urban self-employed
  • Diaspora family & friend programme
  • International travel Health Insurance programme
• Classification of NHIS programme:

  3. Vulnerable group programme:

  • Children under 5
  • Permanently disabled person
  • Prison inmates
  • Aged and retiree
• Stakeholders of NHIS:

  • Government (10%)
  • Employee (5%)
  • Employer (10%)
  • Other contributors (urban self-employed and rural community)
  • HMO and others (Health care provider Bank, insurance, insurance broker, companies, Professional bodies)
• Advancement in NHIS Programme:

  • Started with federal government worker and informal sector 4% of population
  • 8000 health facilities and 61 HMO across the country
  • Subsidized funding for pregnant women and under-5 in 12 states
  • Now to include community health insurances and voluntary contributors
• Advancement in NHIS Programme:

  • Addressed self-employed individuals, student programme (tertiary institution), armed forces, police, and retiree
  • Others safety net; disabled, prisoners, indigent; mobile phone tariffs: 1 kobo per sec
  • States that adopted NHIS include Cross River, Bauchi, Enugu
• Individual Consumer Expenditure:

  • Out of Pocket: pay at point of service delivery
  • Community financing: Fee for services, Drug sales (Drug Revolving Fund), Personal pre-payment, Income generation, Community labour, Individual labour, Other sources (Donations, grants, and loans)
• Community financing:

  • Classical example: Hygeia community health insurance
  • Offers health insurance to about 177,500 people
  • Implemented on behalf of HIF by pharmAccess and Hygeia Nigeria limited
  • Coverage in primary health care limited secondary care
  • Donors: Dutch ministry of foreign affairs, World Bank, and the Kwara state government
• Drug Revolving Fund (DRF):

  • Recycling of funds set aside for essential drug programme
  • Aimed at increasing the availability of essential drugs and healthcare services in sub-Saharan Africa
  • Self-financing once the initial money has been provided
• Healthcare Financing Options:

  • Employee benefits: Company retainer arrangement with hospitals or Company-based clinic
  • Non-Governmental Organizations and developing partners funding: UNICEF, WHO, USAID, UNDP, Cater Foundation, Bill Gates Foundation, etc.
  • Grants and Loans: World Bank, IMF, donations from philanthropists, religious bodies, Non-profit health services, etc.
• Healthcare Financing Prospects in Nigeria:

  • Government must allocate more funds to health, especially PHC
  • Enactment of National Health Bill to increase funding to health
  • Public-Private partnership should be encouraged
  • Community financing should be encouraged
  • Insurance should be expanded to include other sectors, states
  • Prepaid payment should be encouraged
• Challenges of Healthcare Financing in Nigeria:

  • Stagnant monoeconomy dependent on crude oil
  • Rapid population growth
  • Political instability/Policy instability
  • Corruption
  • NHIS poor implementation
  • Irregular monetary allocation/low budgetary allocation
  • Private spending more out of pocket than prepayment
  • Donor dependency
  • Poor regulatory framework and environment
  • Poverty level (60-70%)
• Recommendations:

  • Diversify resources and sources of wealth
  • Monitor and encourage family planning methods
  • Ensure political stability, food security, peace/conflict resolution, tolerance
  • Transparency and accountability in government
  • Increase political will and information on healthcare financing
  • Encourage cost recovery and Drug Revolving Fund
  • Increase the scope of NHIS to include more coverage
  • Encourage community participation
  • Involve the private sector in partnerships
  • Coordinate and sustain grants and loans
• Conclusion:

  The healthcare financing options in Nigeria need to be well coordinated, efficient, and fair to improve healthcare delivery to the common man
• Health financing is a core function of health systems that can enable progress towards universal health coverage
• Health financing represents a flow of funds from patients to health care providers in exchange for services
• Healthcare financing has 3 major functions:

  • Revenue raising (sources of funds)
  • Pooling of funds
  • Purchasing of services
• Sources of healthcare financing:

  1. General revenue or earmarked taxes

  2. Social and private insurance

  3. Individual consumer expenditure (Out of pocket)

  4. Community financing

  5. Non-government organization and developing partner funding

  6. Grants and loans
• Direct government financing systems are where government revenues are the main source of health care expenditure
• Sources of budgetary allocation for direct government financing include:

  • General revenues
  • Duties on imports & exports
  • Personal income taxes
  • Indirect taxes like VAT
  • Deficit financing
  • Earmarked tax (e.g. alcohol, tobacco, cars)
• Health insurance is a system where prospective consumers make payments to a third party for future illness expenses
• Types of health insurance:

  • Government or social health insurance
  • Private health insurance