Reasons Why Health Insurance Should Be Compulsory In Nigeria
Written By Ifelola Olaleye David
A research from 2012 revealed that 80% of all healthcare expenditure in Nigeria was made by the private health sector, in comparison to 20% spent within the public health sector. When we combine the high prevalence of private healthcare provision to our soaring population (high birth rate of 5.4 per woman) it becomes increasingly clear that Nigeria has an opportunity to remodel the structure for healthcare financing into a more effective and inclusive program.
While subsidized public healthcare continues, it only represents a minor share in all of healthcare spending and could become less effective a model of financing if the government predictably becomes more cash strapped in line with her recent economic and debt woes. This in addition to soaring cost of medical resources caused by inflation could cause a sharp decline in quality of health service provision in both private and public care.
Back in 2004, the President Olusegun Obasanjo administration did well to set up the National Health Insurance Scheme which today serves about 5 percent (Nine million people) of the Nigerian population. Much of the modest progress made by the scheme has enabled employers cover staff and up to six dependents for family subscriptions ranging from N100, 000 – N1, 500, 000 for coverage running into several millions. While individual premiums starting around N20, 000 – N35, 000 with coverage ranging from N800, 000 and above per annum.
Unfortunately, apart from B2B buyers of insurance, by employers who are more or less required to cover employees, there has been lower adoption by individuals in B2C market who are neither covered by employers or any support group. Instead, what we have is people with ongoing medical needs approaching insurance for coverage. This in turn increases risk for the market and a lackluster desire to sell insurance premiums outside of city centers where formal jobs are more prevalent.
However, any health insurance model seeking to serve only city people in employment cannot be considered a success.
There’s need to pull tens of millions of Nigerians into the health insurance scheme mandatorily within the next decade. This would go a long way for a more sustainable health financing program which would cause a host of other benefits listed below.
A mandatory insurance policy can be driven by making subscription to insurance a prerequisite to access certain social services.
Nigeria would equally be joining a list of even wealthier nations which currently hold mandatory health insurance policy; USA (Obamacare), France, Switzerland, Oman, Azerbaijan, Kazakhstan and Dubai (UAE)
BENEFITS OF A NATIONAL MANDATORY HEALTH INSURANCE POLICY
Eradication Of Out Of Pocket Pay For Healthcare Services.
According to PwC, 75% of healthcare funding in 2016 was through out-of-pocket, 15% through government spending, 2% through insurance and 8% from outside the country. Now according to the world bank, 100 million people are pushed into poverty every year because of healthcare spending.
Nigeria should look to phase most of out of pocket pay in place of insurance funding. The era where “down payment” is requested must be brought to an end.
Increased Private Investment In Healthcare Infrastructure Across Nigeria
One of the biggest benefit of mandatory insurance would be massive private infrastructure spending in healthcare. This would happen as healthcare service providers can now situate, example top quality hospitals in rural communities without being threatened by the income levels of that community so far most people in such community are covered by premiums much of which the hospital can execute for in partnerhip with the insurance provider.
Reduction In Self Medication Emanating From Fear Of High Cost Hospital Care
As much as 60 – 90% of Nigerians self medicate partly due to the high cost associated with seeking professional care. This would expectedly reduce if an effective consumer insurance program is instituted. It is expected that the availability of a financing program would encourage Nigerians to go through the right process in taking good care of health responsibly.
Lower Cost Of Insurance Premiums
Adding millions of people to the insurance pool should cause insurance to become more affordable, yet sustainable. It is also important that the NHIS reviews carefully the number of insurers that exist as careless proliferation of insurers would cause more problems for the scheme.
It is estimated that it is possible to get insurance premium to a minimum of N10, 000 with a corresponding N500, 000 worth of coverage in year 2021.
Better Targeted Intervention For Both Federal And State Governments
Of course, not all segments of the Nigerian population would be able to uptake insurance. Intervention programs can identify such communities that are severely economically disadvantaged and offer them direct subsidized healthcare. Such programs can be lifted as economic indices within those communities improve.
Improved Healthcare Services Would Reduce Health Tourism
With improved health services due to sustainability insurance could create, it is expected that the need for travel tourism would drastically reduce just as health infrastructure improves.
Better Retention Of Healthcare Personnel
Nigeria currently loses much of her health personnel due to our internationally uncompetitive pay grade, which is a fraction of what is offered in developed nations, causing enmasse emigration of very needed healthcare workers.
This article was written by Ifelola Olaleye, a co-founder and the CEO of Cydern Technologies LLC and the MedicBird Teleresponse Command Center.