Medically reviewed by Dr. Isiaka Rabi
I know you are thinking, “Do I really need health insurance?”
Well, let us start by saying, we insure our cars, companies, and houses, so why not our health too? Life is unpredictable, you may be hale and hearty right now, but it may take a turn for the worse in the next moment. Therefore, everyone – both adults and children, need a form of healthcare insurance. And since everyone needs health insurance, it simply implies that everyone should be involved. Now that this is established, the next important step to take is in the direction of knowing what health insurance entails and possibly how to enrol in one.
What Is Health Insurance?
Health insurance, also known as healthcare or medical insurance, is a type of insurance that covers the whole or part of the medical expenses of the policy holder. It is a system of advance financing of health expenditure through contributions, premiums, or taxes paid into a common pool to pay for all or part of health services specified by policy or plan. In simpler terms, health insurance can be said to be an agreement whereby the insurance company agrees to undertake a guarantee of compensation for medical expenses in case the insured falls ill or meets with an accident that leads to the hospitalization of the insured.
The extent to which the health insurance covers depends on the health plan and the insurance policy for the chosen plan. The medical expenses incurred from an accident, illness, or injury may be paid by the insurance company directly to the healthcare provider, or the policyholder may be reimbursed for the expenses incurred during the treatment.
Types of Health Insurance Schemes in Nigeria
1. Social Health insurance is financed by compulsory contributions mandatory by law or taxes, and the system’s provisions are specified by legal statute. The level of contribution is not determined by health risk but by the ability to pay, and it is non-profit based.
2. Private health insurance companies is risk-based (both financial and health risks borne by enrollee), organized by an insurance company or private agency, with the provisions specified in a contract. They offer different packages which individuals depending on which aspect of their health they want to be covered and to what extent. These private health insurance organizations are only allowed to operate here in Nigeria after being accredited by the National Health Insurance Scheme.
3. National Health Insurance Scheme (NHIS) is an insurance scheme run by the government. It is a corporate body, established by Act 35 of May 1999 by Gen. Abdulsalami Abubakar. NHIS was established to accommodate and provide all Nigerians with suitable and affordable health care. It has branches all over the six geopolitical zones of the country. It has an organized payment structure where an individual contributes a certain amount that is kept with government contributions for the individual and family’s healthcare. The funds contributed are put together and administered by Health Management Organizations (HMOs) for disbursement to various health care facilities (providers). Individuals need to register with the NHIS.
The scheme by this Act is empowered to regulate and provide health insurance in Nigeria and issue appropriate guidelines to maintain its viability and achieve its objective. The decree became operational in 2004 to provide financial risk protection for citizens and reduce the burden of out-of-pocket spending on individuals and households.
The NHIS combines the principles of Socialism, being one’s brother’s keeper, and of insurance, pooling of risks and resources. Healthcare services are paid from a common pool of funds contributed by the participants of the scheme.
Why Individuals Should Be Involved In Health Insurance
Most people may not see the need to go for any health insurance coverage, especially when they are still young, healthy, with a stable job, and they hardly get sick. And many wonder why they should bother getting health insurance. After all, we all know that health insurance is not that cheap, so why spend a huge amount of money monthly or yearly on health insurance? Yet we go about insuring our cars and other properties and not our health!
You may feel that not paying for health insurance premiums is a smart way to save money because it will remove the expenses of paying for your budget coverage. So when it comes to paying for your medical costs, it may seem like the best idea for you is to pay-as-you-go.
But then, what happens if there is a medical emergency, like if you get into an accident or get extremely ill. Can you still be able to pay for your medical bills directly from your bank account? You may not know this, but “one of the expenses that can drive you into bankruptcy is medical bills”.
When you are undergoing a medical emergency, you may not be able to work, and the medical bills begin to pile up, and there is no way to escape it. You may be able to take good care of yourself by living healthy so as not to fall sick, but accidents can happen at any time! But if you are covered and if such misfortune should befall you, you may not have to worry about the financial burden.
Why Employees Should Be Involved In Health Insurance
In every place of work, every employer wants their employees to give in their best. No employee would want their employees to be distracted or absent-minded during working hours or working with a long and sad face.
To avoid this, employers should take care of their workers by providing incentives that will make the worker happier and give in their best. One way to do that is to enrol their employees and their immediate family members for medical insurance.
This will ensure that their workers are in optimum health, and they don’t have to worry about their health care or how to take care of their medical expenses or that of their loved ones. This will make the employees happier and more productive.
Why The Government Should Be Involved In Health Insurance
The government must take responsibility for the largest share of spending on health, rather than the individuals. Otherwise, the poor may be denied access to healthcare, and others may be pushed to poverty through health expenditure.
However, funding of health care is the entire population’s responsibility and should not be left to the government alone if it must meet the required needs. Different countries have different ways of meeting the health needs of their populace. The various ways healthcare is financed largely determine whether people can obtain needed health care and whether they suffer financial hardship to receive care.
Health financing also involves ensuring affordability and accessibility of health care, equity in access to medical services, and guarantee financial risk. The funding of health care in Nigeria is inadequate, with budgetary provision hardly exceeding 3% of the nation’s total budget.
The public health care expenditures are 20-30%, and private expenditures account for 70-80%. The dominant private expenditure is through out-of-pocket, accounting for more than 90%. High levels of infant mortality and morbidity rates are associated with high out-of-pocket payments.
Terminologies in NHIS
- Employer: Public or private organization that hires and pays workers
- Employee: A paid worker
- Beneficiary/Enrollee: A person who has enrolled with NHIS and by being up to date with payment of premium is entitled to cover by NHIS.
- Principal Enrollee: The main contributor on behalf of whom the dependents are enrolled
- Provider: These are Primary, Secondary & Tertiary healthcare facilities that are licensed/accredited by relevant authorities to provide services
- HMO: A private or public incorporated company registered with the NHIS to manage the provision of healthcare services through healthcare providers accredited by the scheme
- Capitation: Payment to a primary care provider by the HMO on behalf of the contributor for services to be rendered. Its made regularly and in advance irrespective of utilization.
- Benefit Package: These are services that the NHIS defines as within its scope of coverage. NHIS contract limits coverage to these services
- Fee-For-Service (FFS): Payment made by the HMO to secondary or tertiary healthcare providers that render services on referral from accredited healthcare providers. Primary healthcare providers can also be paid FFS for emergency cases.
- Per Diem: Payment made by PCP and HMO for bed space during hospitalization
- Co-Payment: Payment made by the enrollee to the accredited Pharmacy provider at the point of service. 10% of the total cost of drugs dispensed per prescription in accordance with the NHIS Drug price list
- Co-Insurance: Part-payment made by the enrollee for treatment or Investigations covered under partial exclusion list while the HMO pays the balance
Objectives of NHIS
The objectives of NHIS include;
- ensure every Nigerian has access to good healthcare services
- protect families from the financial hardship of huge medical bills, limit the rise in the cost of healthcare services,
- ensure equitable distribution of healthcare costs among different income groups
- maintain a high standard of healthcare delivery services within the scheme
- ensure efficiency in healthcare service
- improve private sector participation in the provision of healthcare Services
- ensure adequate distribution of healthcare facilities within the Federation
- Equitable patronage of all levels of Healthcare and availability of funds to the health sector for improved services.
Other Responsibilities of the NHIS are:
- register HMO’s and providers
- issue appropriate guidelines to maintain the viability of the scheme
- approve the format of contracts between HMO and all providers
- determine after negotiations capitation and other payments due to providers by the HMO
- Advice relevant bodies on inter-relationship of the scheme with other social security services, research & statistics of matters related to the schemes.
Programs Developed By NHIS
NHIS developed various programs for different sectors of society to ensure coverage and efficiency. They include:
1. Formal sector Social Health Insurance Programme: (Public Sector, Organized Private Sector, Armed Forces, Police, and other uniformed services, Students of Tertiary Institutions SHIP)
2. Informal Sector SHIP: (Community Based SHIP, Voluntary Contributors SHIP)
3. Vulnerable Group SHIP: (Physically challenged persons, Prison inmates, Refugees, internally displaced persons, immigrants & victims of human trafficking, Pregnant women, Children Under Five).
Guidelines for Public & Organized Private Sector
Membership (Employees of organizations employing ≥ 10 persons): contributions are earnings-related. An employer may decide to pay all + extra for additional coverage to the benefit package for a waiting period of 90days before access to healthcare.
Public (Federal) Sector: (Employer pays 3.5%, employee pays 1.75%, representing 5.25% of the employees Consolidated Salary).
Private sector & other government tiers: (Employer pays 10%, employee pays 5%, i.e. 15% of the employees Basic Salary). Scope of coverage was employee, spouse, 4 biological children < age of 18years. More dependents or a child >18yrs of age is covered on the payment of additional contributions by the principal beneficiary. Principals can register 4 biological children each. A spouse or child cannot be registered twice.
Registration of Employer or Employee entails the following:
- an employer shall register with NHIS
- affiliates with NHIS accredited HMO
- registration of enrollees is the responsibility of HMO
- employer to supply the NHIS & HMO info on the name of employer, category of the employer (public or private), nominal roles with staff details, basic salary
- employee shall register Self, a Spouse, 4 Biological Children < 18yrs
- The employers pay for the 1st NHIS enrollees ID CARD. Replacement ID and additional dependents by the enrollee.
Rights and Privileges of Beneficiaries:
Freely choose NHIS accredited Primary Hospital Contribution Fund (PHCF), free to change PHCF after 6 months, access care once the name is on the current NHIS enrollee register after proper identification, treatment at the nearest NHIS accredited HCF in an emergency, add/remove dependents subject to approval, adding extra dependents on payment of a fee.
Benefits Package: Out-patient care, primary care, secondary care (all high-risk pregnancies), all eligible live births to extend to 12 weeks postpartum, coverage of preterm births for 12 weeks postpartum, maternity care for all pregnancies ending in live births, additional care if any stillbirth, prescribed drugs, pharmaceutical care, diagnostic tests as contained in lists, consultation with specialists, hospital care in a standard ward for cumulative 21 days following a referral (Orthopaedic cases – 6 weeks, PHCF – 15 days, HMO – 27 days), eye exam (low priced spectacles no contact lenses), prostheses (made in Nigeria only), dental care (preventive and promotive oral care), annual medical checkup, preventive care, Health and Family Planning education, Adult immunization ( hepatitis).
Other sources of health care financing are
- community mobilization for participation in health care
- cooperative health care contribution
- out of pocket financing
- The government completely funded health care such as “Free Heath Care at all levels.”
- Foreign Agencies (UNICEF, WHO, CDC, USAID), Philanthropic Foundations such as the Bill & Melinda Gates Foundation.
Benefits of Health Insurance and why Everyone needs to be Involved
- You may feel that health insurance is expensive but not having it may cost you more, especially when misfortune strikes. Have you ever stopped to imagine how you will cope financially if you get into an accident or if you find out that you have a serious health condition like diabetes, cancer, or heart attack? Now imagine how much it will cost you for treatment, surgeries, medications, or chemo in cancer cases. Compare that cost to paying monthly insurance premiums. You will notice that paying for health insurance pays you more.
- Health insurance does not only cover you in case of an accident or sudden ailment, but it also helps you to stay healthy. It covers essential health benefits critical to maintaining health by providing you with preventive care. People with health insurance are more likely to use it to get vaccines, routine checkups, and screening, which will help them find out early about any medical condition they may have and treat it early before the condition gets out of hand.
- Using health insurance will cost you less. This is because health insurance companies have special negotiations on the rates for treating particular health conditions, surgeries, and medications with hospitals or doctors who are included in their network.
- Helps boost employee productivity-60% of employers say offering health insurance has led to higher productivity levels. According to the Centre for Disease Control, employees who prioritize preventive care – like regular check-ups, get more accomplished at work.
- As an employer, enrolling your employees in health insurance doesn’t only help them stay healthy but also make them happier. This also shows that you care for their well-being and want to protect them from unexpected, high medical expenses.
Challenges Of Health Financing In Nigeria
- Lack of consumer awareness and participation
- Inadequate laboratory facilities
- Lack of basic infrastructure and equipment
- Poor human resources and management
- Poor remuneration and motivation
- Lack of fair and sustainable hospital contribution fund
- Pervasive corruption
- Very low governments expenditure on health (global economic recession)
- High out of pocket expenditure
- Absence of integrated systems for disease prevention, surveillance, and treatment.
- Federal government to explore ways towards improving access to primary health care.
- Effective monitoring and evaluation of performance (tracking the use of resources, health policies, and reforms)
- Strategic and progressive leadership in health delivery services, better mind-sets, and behaviour.
- Implementation of an integrated model for community-based chronic and communicable disease control in health services delivery,
- Building fairer economic relations with the world, increasing funding to the health sector, economic empowerment programs.
- Political stability and Political will to provide standard health care for the populace.
- Better government health policy for affordable health care
- Adequate manpower training and development
- Tackling corruption holistically and with good intention.
Health insurance is about service delivery rather than paying to compensate for the loss. It is a financial instrument that makes service delivery possible and not a health intervention. With the continuous increase in healthcare costs in our country and the rising cases of chronic diseases like diabetes and cancer, health insurance is essential and not something to be ignored. NHIS has the potential to provide financial risk protection for essential health care for all Nigerians, but it cannot solve all the financial problems of the health system in Nigeria.
Instead of waiting for the government to handle all about the health insurance scheme, we all have to be involved. Employers in informal sectors need to participate by insuring their employees as part of the employees’ benefits. You, as an individual, can also get yourself insured. Since medical emergencies can happen at any time, preparing yourself financially by getting yourself and even your loved ones covered will give you peace of mind. You won’t have to worry about paying for your medical bills.
• Federal Ministry of Finance (2013) Understanding Budget 2013, Budget Office of the Federation
• Federal Ministry of Finance (2012) Understanding Budget 2012, Budget office of the Federation.
• WHO (2010) Constraints to scaling up the health Millennium Development Goals: costing and financial gap analysis, Background Document for the Taskforce on Innovative Financing for Health Systems, WHO. www.who.int/choice/publicationsd_ScalingUp_MDGs_WHO_report.pdf
• PMNCH (2013) PMNCH Knowledge Summary #24 The economic benefits of investing in women’s and children’s health, www.who.int/pmnch/topics/part_publications/knowledge_summary_24_eco nomic_case/en/index.html
• National Health Insurance Scheme, Operational Guidelines, Revised 2012. • Aderounmu AO, National Health Insurance Scheme. Paper presentation
• Agba AM, et al. National Health Insurance Scheme and Employees’ access to healthcare services in Cross River State, Nigeria. Global Journal of Human Social Services; vol 10 Issue7; 2010:9-12
Dr. Isiaka Rabi is a Resident Doctor at the Family Medicine Department, National Hospital Abuja.