Nigeria is characterized by poor health indicators and limited financial accessibility to health care despite considerable investment in the health sector. The health financing system suffers from segmentation, high out-of-pocket expenditures and inefficient use of resources. The nation’s health care system is plagued by budgetary constraints, persistent underfunding and inadequate financial protection for the poor. Access to adequate health care is still very unequal, but the government is committed to moving to universal coverage in order to provide adequate quality health care to all Nigerians. The current macroeconomic reality in Nigeria is that no government with the exception of Lagos State can engage in more expansionary fiscal stance through its budget allocation to health because of limited capacity to increase fiscal space through internally generated revenue. The other option which is fiscal expansion financed through government borrowing is not recommended given the weak debt situation[1] of most states.
To this end, a Presidential summit on Universal Health Coverage was organized by Federal Government in collaboration with all the 36 states in 2014 to identify the strategic directions for addressing these challenges. The summit ended with far reaching recommendations that commits all levels of government to place a high priority on establishing mandatory health insurance in Nigeria with special funds to cover the poor, development of alternative, innovative and sustainable financing mechanisms, strengthening and expanding financial risk protection mechanisms for the poor and vulnerable groups.
However, the resource landscape of health financing in Nigeria is likely to undergo a major transformation in the next few months. Firstly, there is a new government in power that is committed to improve the economy and fight corruption. Secondly, the National Health Act 2014 holds the promise of additional resources for the health sector through allocations to the NHIS and NPHCDA. Thirdly, following the completion of the NHIS/IFC diagnostic report on the state of the NHIS; the NHIS is undergoing major transformative reforms and on the planks of the reform is the assistance to state supported schemes. The NHIS is proposing to provide matching grants for state governments to allow them include the poor in their insurance schemes. More important to addressing the challenges is the development of a roadmap for establishment of state-based health insurance scheme coordinated by National Health Insurance Scheme (NHIS) – which is a product of joint collaboration of NHIS and 36 states. Sokoto and Bauchi states subscribed to the national /state collaborative roadmap for State based health insurance Scheme (SBHIS) to guide their pathways in domesticating it. Also there is the proposed 500M USD credit to the Government of Nigeria for the Saving One Million Lives (SOML) initiative. The credit allows for state government to access the credit on availability of costed demand side financed initiatives including pro poor insurance schemes. Finally there are several smaller programs planned or already in different stages of implementation which could provide much needed resources to this innovative state supported health insurance schemes a good example is the MDG conditional cash transfer program amongst others.
In order to expand fiscal space for health, these resources needs to be pooled to determine what percentage of the population can be covered, how generous should the benefit package of health care be to ensure equity, how much can government contribute from the total revenue of the state, how many years of payment of subsidy will the resources cover before long-run financial solvency is jeopardized and what is total amount that can be mobilise from external sources to expand coverage, the years and the benefit package. Response to these questions prior to embarking on establishment of state health insurance structure will ensure that health financing reform through social health insurance is evidence-based and responds to the specific health, demographic and epidemiological challenges faced by these states. This will require sufficient capacity at the state level to collect and analyse data key macroeconomic and epidemiological variables, current levels of health spending, coverage, and the availability and use of health services.
Sokoto and Bauchi States are required to do this based on the national /state collaborative roadmap for SBHIS. They will need to identify and critically analyze the factors that will determine the extent of fiscal sustainability of SBHIS. It is on this basis that both states have decided to undertake financial feasibility assessment and analysis of proposed State-Based Health Insurance Scheme[2]. This will generate evidence of the financial implications of moving from UHC commitment to financial protection to implementable actions by state governments.
[1] The solvency ratios of most Nigerian States are poor. Solvency ratio is one of the various ratios used to measure the ability of a government to service its long term debts.
[2] CHECOD did preliminary work on this for Lagos state in 2014 and more comprehensive modeling is under way once the current conduct of Lagos State Health Account has been completed.