FINANCING HEALTH SERVICES IN NIGERIA

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  • Isaac Adewole, Olusoji Adeyi and Rachid Benmessaoud argue that the country needs to invest more in the health of the citizens

As Nigeria joins the rest of the world to mark Universal Health Coverage day we argue that investments in health are powerful drivers of economic growth and overall development. Ensuring a healthy workforce for today and the future amounts to investments in human capital, on a par with investments in the infrastructure for power generation, transport, and telecommunications. The Government of Nigeria has committed itself to ensuring universal health coverage for all citizens, and fulfiling that goal requires a commensurate investment of Nigeria’s own domestic resources. We reflect on this challenge and opportunities for improvement.

Nigeria currently under-invests in the health of its citizens, and it underperforms in health financing when compared to other Lower-Middle-Income Countries (LMICs) and countries in the Upper-Middle-Income (UMIC) Group, to which Nigeria aspires. Although the country has made efforts to increase federal allocations to the health sector, with improved budgetary allocations from 2014 to 2017, health sector allocation as a percentage of the total federal budget has decreased. In 2014, N264 billion (5.63%), N260 billion in 2015 (5.78%), N257 billion in 2016 (4.23%), and N340 billion in 2017 (4.15%) were budgeted. These are nominal amounts; when adjusted for inflation, the purchasing power of the health budget has declined even further. The proposed budget for 2018 is N340 billion (3.95% of the total). These data are from the annual appropriation bill from the Budget Office of the Federation, and they reflect only the allocations to the FMOH.

A report published in 2017 by the Global Burden of Disease Health Financing Network provides several points of reference for comparison. First, public health spending as a share of total health spending in Nigeria is low at 22%, compared to 36% for LMICs and 57% for UMICs. Second, private out-of-pocket spending in Nigeria is about 70% of the total, compared to 58% and 34% in LMICs and UMICs, respectively. It should be noted that private out-of-pocket spending at the point of service delivery is undesirable because it causes financial distress, especially for the poor. It can tip households into poverty or deepen existing poverty. Most Nigerians cannot comfortably pay these fees at the point of service delivery. Third, pre-paid private spending (such as health insurance premiums) as a share of total health spending is just 0.8% of the total, compared to 3.1% and 8.7% in LMICs and UMICs, respectively. Fourth, development assistance accounts for 7% of total health spending in Nigeria, compared to 3% and 0.3% in LMICs and UMICs, respectively. Finally, total health spending in Nigeria, estimated at U$$225 in 2014, was only 3.7% of Gross Domestic Product; this was less than the 5.9% for sub-Saharan Africa.

Increasing the fiscal space for primary health care delivery is important to addressing the poor health outcomes in Nigeria, and the calls for additional resources for primary health care are well founded. Currently, a vast proportion of illnesses afflicting Nigerians are readily treatable in primary care centres and first-level hospitals. The current expenditure pattern is thus out of alignment with the needs of the population hence our commitment to re-draw the balance in favour of preventive care. Secondly, external financing continues to take the place of government spending on the most basic goods and services, such as vaccines for childhood immunisation, and the prevention and treatment of common illnesses such as malaria. The country goes through cycles of alarm when problems emerge in such basic services, followed by the mobilisation of external financing, then a lull that is characterised by complacency in the domestic budgets for health. The reality is that Nigeria is overly dependent on external financing and goodwill for some of the most basic and essential primary health services.

The past five decades have seen numerous health policies and development plans in Nigeria, culminating in the National Health Act of 2014. The act provides for a range of responsibilities, instruments, and institutions, covering but not limited to: responsibility for health, eligibility for health services, and establishment of a national health system; financing; health establishments and technologies; rights and obligations of patients and healthcare personnel; national health research and information system; human resources for health; control of blood products, tissue and gametes in humans; and regulations and miscellaneous provisions. The Ministry has so far inaugurated the committees to drive the implementation of the different sections of the act and measurable progress has been made in this regard. In this note, we are primarily concerned with potentially the most consequential provision of the act: translating from paper to reality the provisions of the National Health Act of 2014, central to which is the establishment of the Basic Health Care Provision Fund to be funded from a federal government annual grant of not less than one per cent of its consolidated revenue fund, grants by international donor partners, and funds from other sources. Doing so would make it possible for the country to truly take financial responsibility for basic health services for its citizens, get a credible grip on progress towards universal health coverage, with attention to sustainable financing from domestic sources, and effective support for local governments through primary health care.

Adequate financing of primary health services would have additional benefits by ensuring that medium-term expenditure frameworks align with public policy priorities, and better align development assistance with domestic planning and financing cycles.

There are grounds to expect improvements in health financing in Nigeria, as both the executive and legislative branches of the federal government are now attending to the challenges. We note some key considerations to inform successful policy choices. First, most countries have multiple revenue sources for their health services, such as general revenues (i.e., from the regular government budget); various forms of premium-based health insurance (social health insurance, voluntary private insurance, and community-based health insurance); out-of-pocket payments at the point of service delivery (which have severe disadvantages as noted earlier); and external financing. Nigeria will evolve its own combination of these sources. Second, when formulating a pluralistic approach to health financing, it is essential to keep in mind the need to fund essential health services, especially for the poorer segments of the population. Third, it is important to ensure institutional capacities to manage the complexities of health insurance systems, including but not limited to the following: the cost of collecting premiums relative to premiums collected; the administrative challenge of insuring a workforce that is largely informal and therefore, unsuitable for easy collection of premiums; the risk that governments end up subsidising premiums for the middle class without adequate general revenues to ensure services for the poor; efficiency of health expenditures; and the separation of the institutional purchasers of health services from the providers of health services. Finally, it is essential to make better regulated and accountable use of the Nigerian private sector for supply chain management, distribution, and dispensing of prescribed medicines and supplies.

A better future is possible, starting with financing the basics from the country’s own domestic budgets. With this in mind, the country will begin implementing the Basic Healthcare Provision Fund in three states (Abia, Niger, and Osun) in 2018, with financing from the World Bank and the Global Financing Facility supported by partners such as Gates Foundation. However, the fundamental requirements for success are to commit Nigeria’s own domestic budgets to the Basic Healthcare Provision Fund, and to do so on a nationwide scale. Therein lies the path to self-sufficiency and the sustainable financing of Universal Health Coverage.

Adewole is Nigeria’s Minister of Health; Adeyi is Director, Health, Nutrition, and Population Global Practice, World Bank while Benmessaoud is World Bank Country Director for Nigeria