HMOs and Health Insurance in Nigeria; the future


In this guest post, Dr. Ayomide Owoyemi writes on the future of HMOs and health insurance in Nigeria

Nigeria’s Health Insurance Scheme was signed into law in 1999 as the National Health Insurance Scheme (NHIS) act 35 of 1999, It did not properly take off until the year 2005, and since then it has only managed to cover less than 5% of the population, most of whom are in the formal sector. Data from NHIS shows that programme has registered more than 4 million, but based on data from submissions of HMOs to NHIS, less than 1 million people are privately insured. The Health Management organizations (HMO) have been key players in the Nigerian health insurance sector, we presently have over 20 of them in operation. But a recent investigation by the house of representatives have called into question the usefulness of the HMOs in further service delivery.

First we must consider how the HMOs came to be big players in the health insurance sector, as at the time of execution of the health insurance act, there was a lack of technical capacity amongst government bureaucrats which occasioned a reliance on private sector actors for input into public policies meant to regulate their own operations. This led to an alteration of the policy, states were excluded as stakeholders and uptake was made voluntary while the HMOs were used as intermediaries, this also compromised the potential for effective regulation and mobilization of funds from states to extend coverage

In a study conducted by Philips consulting it was found that about 50% of those who are on HMO plans rated the quality of care from HMOs as the same as when health services are self-funded, and 21% indicated that the quality is much worse. In addition to allegations of mismanagement levelled against HMOs, reports have shown that Some healthcare facilities have opted out of the NHIS, largely due to “unrealistic” capitation payments in the face of rising health cost. Other factors like late payments and at times nonpayment of capitation by the HMOs.

With all that has been said about HMOs, you would ask if they are required in the journey towards improved health financing and universal coverage. Studies have shown that for low-middle income countries like ours with large populations in the informal sector, poor tax collection capacities and insufficient financial and administrative capacity to establish a single payer system, a multi-payer system in the interim with a long term plan of harmonizing into a single pool is the best to pursue. For example, in Taiwan, the precursor of the current universal single-payer insurance system was a three insurance pool system covering 55% of the population/private-sector employees, government employees, and farmers. It is at this juncture that we must understand that for the multiple payer {HMO involved) to work to the benefit of the citizens, the government must adequately exercise its oversight functions, create rules that will eliminate cases of adverse selections and also ensure that premiums are not prohibitive.

The blame for the stall in expansion of health insurance coverage cannot be laid squarely on the shoulders of the HMOs, the government is culpable in not appropriately planning the policy to aid its expansion, while this has been rectified in the new health bill, government will need to either follow the path of a compulsory social health insurance scheme for all citizens like Germany, or that of China with allocating subsidies to enhance participation by other sectors and individuals.

In the long run and for considerations of efficiency and equity, the global trend is towards a single pool of resources by a single payer providing equal level of coverage to all of which a good example is Taiwan’s single payer system. But the overall capacity of the government must improve, primary healthcare must be significantly developed, tax collection capacities must be enhanced, administrative oversight must be well designed and also the taxing must be progressive. In principle single payer system is what the country needs, but in practice, a multiple payer is what we can sustain and support at the present stage of our development.



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  7. WHO Advanced Course on Health Financing for UHC for Low and Middle Income Countries.

This piece was contributed by  Dr. Ayomide Owoyemi M.B. ch.B (ife) M. ScPH (Unilag). The author lives and works in Lagos


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