Challenges of healthcare financing in Nigeria

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Posted on April 27, 2018

Healthcare financing refers to the mobilisation of funds for healthcare and mechanisms for paying for healthcare services. Healthcare financing entails allocation of funds to regions, groups and specific types of healthcare. Healthcare is financed through public expenditure, private expenditure or external aid. Public expenditure includes government expenditure spent by state-owned enterprises as well as government and social insurance contributions. Private expenditure includes voluntary payments by individuals and employers. External aid refers to the finance which comes through bilateral aid programmes or international non-governmental organisations. One of the major challenges of healthcare financing is unfair and unsustainable financing practice in healthcare services. Beyond the level of spending, the percentages of out-of-pocket expenditure or health insurance payment is very pivotal to the sector. The international best practice in healthcare financing is that whatever model of health financing that a country adopts should not prevent its citizens from accessing healthcare services. To a large extent, the implication of this international best practice is that out-of-pocket payment at the point of service delivery will have to be reduced to the barest minimum or be dependent on the ability of the patient to make such out-of-pocket payment. The preferred healthcare financing model should protect people from huge financial expenditure when they fall sick and also encourage healthcare providers to offer an effective mix of preventive and curative health care services. The high out-of-pocket expenditure on health care services in Nigeria is worrisome. This has gone a long way to further pauperise the poor masses. A survey conducted on the living standard of Nigerians indicates that out-of-pocket payment for health care services accounts for a significant percentage of household expenditure. Expenditure on outpatient care, transport to health facilities and cost of medication contributes a significant share of household expenditures in Nigeria

Another challenge of healthcare financing in Nigeria is the low budgetary allocation to the health sector. The allocation to the Federal Ministry of Health in the 2018 appropriation bill is 340.456bn, out of the total budget of 8.612trillion. This represents 3.95 per cent of the total budget. This is a far cry from the April 2001 Abuja Declaration on health which mandates African Union Countries to commit at least 15 per cent of their national budget to healthcare. Even if all the health-related expenses in the 2018 appropriation bill across all the federal Ministries, Departments and Agencies are added, they come up to 4.92 per cent of the total budget. These cross-sectoral health related-expenses include the contributions of the Federal Government of Nigeria to the National Health Insurance Scheme, counterpart funding for health, allocations to the State House medical centre, medical expenses, etc.  A majority of the expenditure on health by the Federal Government goes to teaching hospitals, specialised hospitals, and federal medical centres. Also worrisome is the refusal of the government to provide one per cent of the Consolidated Revenue Fund for the Basic Health Care Provision Fund, despite the signing of the National Health Act into Law since 2014.

The hydra headed monster called corruption is also a challenge in financing the health sector. Corruption in the provision of healthcare services manifests in wilful misdiagnosis of illness by healthcare providers, diversion of drugs and medical supplies, supply of fake and substandard drugs, procurement and contract inflation as well as stealing of budgeted monies. Corruption in the sector also leads to poor human resource management. The culture of rewarding hardworking and distinguished health personnel in order to motivate and encourage them is on the decline. The need to engage communities while providing healthcare facilities for them is being relegated to the background. The relationship between the sick and healthcare providers is almost non-existent. Basic healthcare infrastructure and equipment are in short supply in most rural healthcare centres. Effective provision of health care depends largely on the supply of equipment and infrastructure. Sadly, corruption has led many healthcare facilities to lack potable water and electricity.

Consequently, it is therefore recommended that the government should make provisions for the one per cent of the Consolidated Revenue Fund for the Basic Healthcare Provision Fund. The government should take concrete and targeted steps to establish alternative funding mechanisms for health. Concrete and targeted steps are necessary for aggressive domestic resource mobilisation especially in making health insurance compulsory for Nigerians. The government should also elevate maternal, newborn and childhealth to justiciable constitutional rights under chapter four of the 1999 constitution.


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