HEALTH FINANCING AND THE QUEST FOR AN EFFECTIVE HEALTH SYSTEM AND HEALTH SERVICE DELIVERY IN NIGERIA

1.0 Introduction

The recent outbreak of the Corona Virus pandemic globally and its devastating effects economically and the mortality rate in developed nations and much more in developing nations like Nigeria has made it necessary for all men of goodwill and the government to want to take a second look at the state of our health system as a nation with the objective of strengthening it. This is sequel to deficiencies noticed in the response to the pandemic and other day to day diseases that Nigerians suffer from.

Health system strengthening is used to describe means to improve the health care system of a country and this encapsulates issues that have to do with improving health policy, increasing funding for health infrastructure, achieving universal health coverage and improved health outcomes.

It is instructive that for a functional, responsive and effective health system to be built, the funding policy is a critical angle that must be looked into and taken proper care of. This is why in development circle, the subject of health financing is getting the desired attention globally. In Nigeria, our quest to have an effective health system and to deliver an effective health services must be articulated with a proper health financing policy.

Health financing in a general sense can be defined as the combination of activities which include the mobilization of funds for health care and the allocation of funds among competing needs in the health sector to achieve certain stated objectives. It also refers to the function of the health system that is concerned with the mobilization, accumulation and allocation of money to meet the health needs of the people individually and collectively in an effective and efficient manner.

The World Health Organization (2000) defined health system financing as that which is generally concerned about getting needed funds as well as setting the right financial incentives to providers to ensure that all individuals have access to effective public health and personal health care.

The health status of a nation impacts on its economic wealth and general development. According to Kutzin (2013) health financing mechanisms can influence individual choices and options with regard to employment.

The methods and extent to which a country finances its health care system has been known to impact on the health of its citizenry hence the selection of an adequate and efficient method of financing as well as the organisational delivery structure for health services in a country will impact on its overall health policy objectives.

According to Babajide (2012) a health care financing system involves the means by which funds are generated, allocated, utilized for health care. It has three basic functions of collecting venues, pooling resources and purchasing services. The measure of the success of a country’s health financing approach is linked to its effects on equity of access and health outcomes, the quantum of revenue generated, efficiency in generation and effects on user behaviour and provider.

There is the consensus that a good health financing system is supposed to generate enough funds for health in ways that citizens can access needed services readily and protected from the impoverishment associated with having to pay for them. As such, health financing frameworks should take into consideration the fate of the most vulnerable.

The goals of health financing basically includes the following:

  1. Reducing inequality
  2. Preventing individuals from falling into poverty as a result of emergency high medical expenses.
  3. Protecting and improving health status of individuals and population by ensuring financial access to essential public and personal health services.

In developing countries like Nigeria where health care delivery is still relatively very poor due to a number of reasons among which is the inadequate government or public sector spending on the health sector, having a robust health financing framework that is underpinned by good policies is imperative. Improved health sector funding will be needed in specific areas among which are:

  1. Improving human resource for health
  2. Health system development
  3. Addressing specific diseases that are peculiar to the society and others that can be transmitted across borders of nations.
  4. Improving health sector infrastructure
  5. Research and development for preventive purposes and solving existing health related problems.

2.0 Health Financing and Health System Delivery

In Nigeria where the total budget for the health sector has consistently fallen below 10% of the total government expenditure in the last twenty years and with an ever increasing population growth rate estimated to be about 3% it is not surprising that financial help is needed from other sources to adequately cater for the health needs of the populace. In actual fact the budgetary allocation to the health sector by the Federal Government in the last four years have been an average of 4.2 % of the national budget which is obviously grossly inadequate.

In year 2016, the capital budget appropriation made to the health sector was N28.65 billion, in year 2017 it was N55.61billionand in year 2018 it rose to N86.49 billion but decreased in 2019 to N57.09 billion and further decreased in year 2020 to N46.48 billion. The reduction in budgetary allocation has by implication reduced the per capita spending on health in Nigeria.

Against the backdrop of the high out-of-pocket payment type of health care expenditure done by citizens, majority of people are excluded from adequate and timely health care with the result being the high mortality rate across the different age brackets and especially among the vulnerable ones in the society whose lives are characterised by abject poverty.

According to Hsiao and Shaw (2007) in a World Bank Report, out-of pocket payments is as high as 80% in most Sub-Saharan African countries due to the high level of poverty. This creates an unending cycle of poverty in that a huge unanticipated health spending of a family struggling to exit poverty can further plunge such a family lower and deeper into poverty. This makes resource pooling imperative in Sub-Sahara Africa.

In the study by Acharya and (2012), they identified the fact that financial constraints hinders most people in low and middle-income countries from adequate access to health care. According to the report of the National Population Commission, as at 2013 over 90% of the Nigeria population had no form of health insurance and as at year 2020, the number of those who have access to health insurance has only increased marginally while those in the informal sector of the economy are largely excluded. Even at that the diseases and sicknesses for which coverage is provided for are still few as ailments such as cancer, renal diseases are still not taken care of by the insurance scheme in place. 

3.0 An Overview and Method for Sustainable Health System Financing

Herein, a narrative approach to the issues of health system strengthening through effective and efficient health financing is used. Health system strengthening entails every legitimate step and actions taken to improve the health care system in order to minimize the possible impacts of health shocks. This is more so because health shocks have multi-dimensional impacts on household consumption, productivity and by extension income.

To this extent, health insurance has been seen as a most probable approach to sustainable health system financing. According to Hsiao and Shaw (2007) health insurance is a veritable way of overcoming the problem of out-of pocket expenses in accessing health care services as has been seen in civilized climes.

In a study conducted by Wagstaff and Pradham (2005), the impact of health insurance on income and non-medical expenditure show an increase for insured people much more than the reduced expenditure on out-of-pocket payment in a study on voluntary health insurance programme in Vietnam.

Hitherto, many citizens of developing countries in Africa have been using informal coping mechanisms to address health shocks such as through the use of local cooperative and other social money contribution associations like age groups.

The high incidence of out-of-pocket payments in low and middle income countries as depicted by several studies including the multi-country and country-specific country studies in Burkina Faso, Argentina and India conducted by Alam and Mahal (2014) confirmed the same pattern in most West African countries including Nigeria.

In year 2005, the World Health Assembly took the bold step in asking all countries to improve and scale up their health systems to move towards universal health coverage. Universal health coverage as defined by the World Health Organization (WHO) in 2015 is an arrangement that ensures that all people are able to access and use health services they need without the risk of financial hardship.

This definition was further expounded by Wagstaff and Lindelow. (2008)  as a situation whereby all people can access health services as they require irrespective of their ability to pay and in a timely manner without suffering an undue financial hardship.

There are different methods by which health insurance can be deployed and in recent times, a public-private-partnership model for delivery at community level as has been experimented in Kwara State, Nigeria in order to minimize long-term effects of health shocks is seen as plausible. 

4.0 Discussion On the Nigeria Experience and Reforms

It has been advocated that in order to get the funding of the sector right there is the need for a financing mix that will integrate all the possible funding sources and also incorporate all segments of the society in a functional manner.

Ordinarily the different sources of funding for the health sector in Nigeria hitherto includes the following:

  1. Government budgetary expenditure
  2. Out of pocket expenses
  3. Public-Private-Partnership funding
  4. Health Insurance (Government such as NHIS, Community, Private)
  5. Donor funding which could be bilateral or multilateral
  6. Private sector tax
  7. SURE-P

In order to effect needed positive changes in health care delivery the Federal Government of Nigeria have at different times initiated and implemented health sector reforms to address both policy and specific disease related and funding challenges. In year 2004, a bold health sector reform was initiated by the Obasanjo administration with the objectives being:

  1. To improve the performance of the stewardship role of government.
  2. Strengthen the national health system and improve its management.
  3. Improve the availability of health resources and their management.
  4. Improve the access (including physical and financial) to quality health services.
  5. Reduce the disease burden attributable to priority health problems.
  6. Promote effective public-private-partnership in health
  7. Increase consumer awareness of their health rights and health obligations

Specific health reform actions taken thus far in Nigeria subsequently after year 2007 includes among others the following:

  1. The National Strategic Health Development Plan

This was put in place by the Goodluck Jonathan administration which focused on four thematic areas namely:

  • Basic health service delivery
  • Preventive health care
  • Clinical governance
  • Unlocking the potentials of the private sector.
  1. National Health Bill (2012) by the Federal Government of Nigeria under the Jonathan administration. The bill had provisions such as:
  2. The establishment of National Health Systems that defines and provides a framework for standards and regulation of health services.
  3. The establishment of National Council on Health.
  4. Establishment of National Tertiary Hospital Commission as a regulator of tertiary health facilities.
  5. Establishment of Primary Health Development Funds to be used for the provision of basis minimum package of health services through the National Health Insurance Scheme (NHIS), provision of essential drugs and improved health services as well as human resources for health.
  6. Evaluating the services of health establishments to reinforce compliance with standards in tertiary facilities.
  7. A certificate of standard which will be required before setting up any health facility in Nigeria.
  1. Anti-tobacco Bill
  2. NAFDAC Act (Amendment) Bill
  3. NHIS Act (Amendment) Bill
  4. Save One Million Lives Initiative
  5. Midwives Service Scheme
  6. Community Based Social Health Insurance

It is instructive to state the funding of the health sector in Nigeria has had a huge dose of donor development organisations involvement at both bilateral and multilateral levels. At a point Nigeria used to be the 3rd highest recipient of donor funds after Zimbabwe and Botswana. The multilateral ODA to the health sector in Africa includes Global Fund, European Union Institutions, UNICEF, World Health Organization, The World Bank, International Development Association etc.

At the bilateral level, the top donor countries to the health sector in Nigeria include the United States of America, United Kingdom, Netherlands, France, Denmark and Canada among others.  However, with the global financial crisis that occurred in year 2008 with its effect on the global economy still felt till year 2010 when slow paced recoveries started in some developed countries, the size of funding assistance to Nigeria and other developing countries have waned.

For example, at a point, the donor funding component of the HIV/AIDS response in Nigeria was about 85% while other funding components including the government component made up the dismal balance of 15%. According to Obademi (2015) the funding situation for the health sector has however become more precarious in recent years due to so many reasons among which are:

  1. Reduction in government revenue from crude oil earnings due to the falling level of production and oil price volatility.
  2. Corruption by government officials in form of mismanagement of funds.
  3. Low private sector participation in funding the health sector.
  4. Over-centralization of funding decisions
  5. Increase in social and economic crisis that has led to the diversion of funds to issues relating to terrorism, disaster management, and bailout funds for States.
  6. Low tax-based revenue

Of note is the fact that there is a nexus between health sector governance and an effective health financing arrangement and this was highlighted in the discussions at the Presidential Summit on Universal Health Coverage held in Nigeria in year 2014 with the aim of addressing critical issues that can promote enhanced health service delivery at the three levels of health care namely; primary health care, secondary health care and tertiary health care.

The NHIS and other innovative funding arrangements are expected to help enhance the improvement in health systems performance on the following fronts:

  1. Access
  2. Coverage
  3. Effectiveness and efficiency
  4.  Equity
  5. Quality
  6. Safety
  7. Sustainability

The National Health Insurance Scheme is organised into and to cater for the following categories of coverage:

  1. Social Health Insurance Programme (SHIP)
  2. Formal sector
  3. Urban self-employed
  4. Rural Communities
  5. Children under five years of age
  6. Permanently disabled persons
  7. Prison inmates
  8. Tertiary Institutions
  9. Voluntary participants
  10. Armed Forces
  11. Police and Uniformed services

It is instructive however to say that hitherto in year 2020, it is only the formal sector social health insurance programme that and few community based health insurance programme that is effectively operational in Nigeria.

According to Okunogbe (2019) in the quest to achieve Universal Health Coverage, three dimensions can be used in monitoring progress towards it namely;

  1. The fraction of the population in a financial protection scheme or that has some form of insurance coverage.
  2. The type of services covered
  3. Financial risk protection.

From the policy angle, the idea of building a human economy as advocated by development experts is more likely to be a lasting solution. A human economy is one which the governments of nations will work or not less than 99% of its population with ample provision for the participation of women and marginalised groups who suffer more from dysfunctional infrastructures and defective health systems.

In this regard, it is expected that governments will cooperate and not compete with the private sector ensuring that people pay fair taxes, the environment is protected and workers are paid well and their health needs are taken into consideration in the development planning process. From the corporate perspective, companies are expected ensure profits and proceeds from the enterprise will be extended to those who created them in a fair manner without losing sight of gender equality.

Conclusion

If the health system is to be very functional, there is the need for more investments by the government and the private sector players. This of necessity has to be supported by strong institutional and political commitments as well as technical capacity.

Going by the results from the study of Onwujekwe and Mbachu (2019) that health financing mechanisms in Nigeria do not operate optimally because allocation and use of resources are neither evidence-based nor result-driven, there is the need adequate data for planning and policy making. This should also be complemented by a review of health financing legal and regulatory frameworks.

In addition, there is the need for the periodic measurement of the extent of health system strengthening using the framework developed by the World Health Organization which comprises of six core components needed for an objective assessment namely:

  1. Service delivery
  2.  Health workforce
  3. Health information system
  4. Access to essential medicines
  5. Extent and modes of health financing.
  6. Health sector leadership and governance 

With the increasing interest in health financing within the context of the study on global health policy, it is expected that scholars will begin to conduct studies that will add value to the society and influence government policy in a positive way especially as it concerns workable health insurance to is underpinned by effective and efficient risk pooling models.

References:

Acharya, Arnab, Sukumar Vellakkal and Shah Ebrahim (2012) “The impact of health insurance schemes for the informal sector in low and middle income countries: a systematic review” The World Bank Research Observer p. 1ks 009

Alam, Khurshid and Ajay Mahal (2014) “Economic impacts of health shocks on households in low and middle income countries: A Review of the Literature” Globalization and Health Vol10 No 1 p21 

Okunogbe, Adeyemi (2019) “Health Shocks, Health Insurance Uptake and Financial Risk Protection” http:/www.rand. org/pubs/rgs_dissertation/PGSD423.html

Babayemi Olakunle (2012) “Public health care financing in Nigeria: Which way forward” Annals of Medicine Vol 6 Issue 1 pp 4-10

Hsiao, William and Paul Shaw (2007) “Social health Insurance for developing nations”  The World Bank Report 2007

Joseph, Kutzin (2013)”Health financing for universal coverage and health system performance: Concepts and implications for policy” Bulletin of the World Health Organisation 2013 http//dx.doi.org/10.2471/BLT 12 113985

Obademi, O (2015) “Domestic Resource  Mobilization for HIV/AIDS in Nigeria” Unpublished Health Finance and Governance Project Seminar Paper Series.

Onwujekwe, O and N. Mbachu (2019) “Exploring effectiveness of different health financing mechanisms in Nigeria: What needs to change and how it can happen” BMC Health Research Services 19 666(2019) https//doi.org/10.1186/s12913_019_4512_4

Wagstaff, Adam and Menno Pradham (2005) “Health insurance impacts on health and nonmedical consumption in a developing country” Vol 3563. The World Bank Report.

Wagstaff, Adam and Magnus Lindelow (2008) “Can insurance increase financial risk?  The curious case of health insurance in China” Journal of Health Economics Vol 27 No 4 pp 990 -1005.

World Health Organisation (2000) Toolkit on monitoring health systems strengthening.

World Health Organisation (2015) Tracking Universal Health Coverage; First global monitoring report.

Thanks for reading.

Dr Olalekan Obademi, Country Team Lead, Focused Development Associates.

Email: [email protected] or www.fdass.com

1 thought on “HEALTH FINANCING AND THE QUEST FOR AN EFFECTIVE HEALTH SYSTEM AND HEALTH SERVICE DELIVERY IN NIGERIA”

  1. Good and robust analysis.
    Financing as one of WHO’s complete health system’s six building blocks is a major issue in Nigeria health systems performance considerations. It is plagued by several factors major among which are low budgetary allocation by all 3 tiers of governments, corruption, poor public account framework that promotes inefficiency and “redtapism”, as well as the dwindling inflow of funds from international donors, especially on special diseases like malaria, tuberculosis and HIV/AIDS (Global Funds, USAID, RBM, etc) from where the country received substantial amount until 2017 or thereabout! All these negatively impacts adequate funding of critical health care services with its resultant pressure on the people and resulting in out-of-pocket financing of their own healthcare services to as high as between 76%-80% of their healthcare cost(DFID, 2010)!…

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