ABSTRACT
The way a country finances its health care system is a key determinant of the health of its citizenry. Selection of an adequate and efficient method(s) of financing in addition to organizational delivery structure for health services is essential if a country is set to achieve its national health objective of providing health for all. Health care in Nigeria is financed by tax revenue, out-of-pocket payments, donor funding, and health insurance (social and community). However, achieving successful health care financing system continues to be a challenge in Nigeria. This article examines the different financing mechanisms that have been used in Nigeria, including the National Primary Health Care Development Fund proposed for increasing the resource allocation to primary health care. It draws on available and relevant literature to provide an overview and the state of public health care financing in Nigeria. This article concludes by recommending the need for Nigeria to explore and strengthen other mechanisms of health system and shift focus from out-of-pocket payments, address the issues that have undermined public health care financing in Nigeria, improve on evidence-based planning, and prompt implementation of the National Health Bill when signed into law.
Keywords: Health care financing, Nigeria, Economic growth
INTRODUCTION
The first wealth of a nation is its health. There is empirical evidence that the health of a nation significantly enhances its economic development, and vice versa. HIV/AIDS, maternal mortality, under-5 mortality, malaria, and tuberculosis have undermined development and impoverished many developing nations such as Nigeria. Nonetheless, it has been enunciated that the pursuit of better health should not await an improved economy; rather measures to improve health will themselves contribute to economic growth. The way a country finances its health care system is a key determinant of the health of its citizenry. Selection of an adequate and efficient method(s) of financing in addition to organizational delivery structure for health services is essential if a country is set to achieve its national health objective of providing health for all.
A health care financing system involves the means in which funds are generated, allocated, and utilized for health care. It has three basic functions of collecting revenues, pooling resources, and purchasing services. The commonly used mechanisms for implementing these functions include tax-based financing, out-of-pocket payments, donor funding, and health insurance (social and private). These methods are not mutually exclusive. In fact, most health systems adopt a mixture of various methods. The success of the different health financing methods can be measured by the overall effect on equity of access and health outcomes, revenue generation and efficiency, and the effects on user behavior and provider.
| The Nigerian Health Care Financing System |
The organization of health services in Nigeria is complex. It includes a wide range of providers in both the public and private sectors (private for profit providers, non-governmental organizations, community-based organizations, religious and traditional care providers). In the public sectors, Nigeria operates a decentralized health system run by the Federal Ministry of Health (FMOH), State Ministry of Health (SMOH), and Local Government Health Department (LGHD). The FMOH is the overall health policy formulating body. It coordinates and supervises the activities of the other levels. In addition, it provides tertiary care through teaching hospitals and federal medical centers. The SMOHs provide secondary care through the state hospitals and comprehensive health centers while LGHDs provide primary health care (PHC) services through the primary health centres. Although the local governments have the main responsibility of managing the PHC, all the three tiers of government and various agencies participate in the management of the PHC. This at times results in duplication, overlap, and confusion of roles and responsibilities.
Health care in Nigeria is financed by a combination of tax revenue, out-of-pocket payments, donor funding, and health insurance (social and community). Nigeria’s health expenditure is relatively low, even when compared with other African countries. The total health expenditure (THE) as percentage of the gross domestic product (GDP) from 1998 to 2000 was less than 5%, falling behind THE/GDP ratio in other developing countries such as Kenya (5.3%), Zambia (6.2%), Tanzania (6.8%), Malawi (7.2%), and South Africa (7.5%).
Achieving a successful health care financing system continues to be a challenge in Nigeria. Limited institutional capacity, corruption, unstable economic, and political context have been identified as factors why some mechanisms of financing health care have not worked effectively.
A. Tax Revenue
Health financing systems where government revenues are the main source of health care expenditure are referred to as tax-based systems. Funds are usually generated through taxation or other government revenues. Although the Nigerian government generates revenue through taxation, the bulk of the revenue is derived from the sale of oil and gas. Revenues are raised at the federal, state, or local government levels. However, the federally generated revenue which is shared according to a formula forms the majority of the funds for the other tiers of government. The states and local governments being closer to PHC are expected to provide adequate funding for PHC, but owing to their low internal revenue generation capacities, most of them still largely depend on the allocation from the federal government.
The total government health expenditure as a proportion was estimated as 18.69% in 2003, 26.40% in 2004, and 26.02% in 2005. Remarkably, the federal budgetary component of health expenditure has increased over the years. It increased from 1.7% in 1991 to 7.2% in 2007.
B. Out-of-Pocket Payments
This involves payment for health care at the point of service. The charges levied for health care services are referred to as user fees. The scope of user fees is quite variable and can include any combination of drug costs, medical material costs, entrance fees, and consultation fees. Out-of-pockets account for the highest proportion of health expenditure in Nigeria. Out-of-pocket expenditure as a proportion of an averaged 64.59% total health expenditure (THE) from 1998 to 2002. In 2003, it accounted for 74% total health expenditure (THE). It decreased to 66% in 2004 and later increased to 68% in 2005. This implies that households bear the highest burden of health expenditure in Nigeria.
User fee was introduced by the Nigerian government in 1998 under the Bamako Initiative which advocated for cost sharing and community participation to increase the sustainability and quality of health care. It was proposed that user fee will increase the resources available for health care and improve efficiency as well as equity to health care. The available evidence on the impact of user fees is equivocal. Hitherto, the bone of contention is to retain or remove user fee?
The issue of user fee in Nigeria has attracted scholars; however, there is dearth of information on the effect of user fee on revenue generation, health care seeking behaviour, access to care, efficiency, and utilization of services in Nigeria. Ogunbekun et al. reported that without accompanying visible quality improvement, user fees will result in lower utilization of health care services. A study that evaluated the effect of user fee on availability of drugs reported that user fee has not lead to increased drug availability. However, another study reported a better availability of drugs with the rider that it had given rise to excessive drug prescription. Negative effects have also been reported on the impact of user fees on health seeking behavior and equity. In a study by Uneke et al., it was reported that majority of study participants would prefer paying user fees if they are affordable and would guarantee efficient and quality service. However, it should be noted that the willingness to pay does not translate to ability to pay. The ability to pay might require poor household sacrificing their longer term economic well-being. This is referred to as catastrophic health expenditure and this has been shown to be high in Nigeria. The use of waivers and/or exemptions in Nigeria has also been suggested, but the implementation of waiver and exemption is fraught with challenges that have made it ineffective in many settings. Such difficulties include identification of eligible poor, limited administrative capacity, willingness of the health workers in enforcement of the guidelines, and inconsistencies in granting of exemptions.
James et al. concluded that abolishing user fees may not be appropriate in all contexts, nonetheless, in settings where it has been shown to have had limited benefits, removal should undoubtedly be a favorable policy options. User fees have been removed by the federal government and some states for the treatment of malaria in the under-5s and pregnant women.
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