2. Outline
Introduction
Options for healthcare financing
◦ Direct government financing
◦ Out-of pocket expenses (user charges)
◦ Community financing
◦ Health insurance
◦ Foreign aid
◦ Voluntary contribution
Conclusion
3. Introduction
Health is defined as a state of complete
physical, mental and social well-being,
not just the absence of disease or
infirmity
It plays a major role in the socio-
economic development of any nation
No longer and cannot therefore be
regarded as a by-product of economic
development but a pre-condition for it
It is a fundamental right as declared by
article 25 of the Universal Declaration of
Human Rights 1948
4. Often times, government is viewed as
ultimately responsible for the
population’s health.
In Nigeria, in addition to financial
difficulties, there is also problem of
inefficient utilization of available
resources
5. Healthcare financing is a core function
of health systems that enables
progress towards universal health
coverage by improving effective
services coverage and financial
protection.
There is growing financial need to
fund healthcare in almost all nations
Many people do not access services
due to the cost
6. Healthcare financing is the flow of
funds from patients to healthcare
providers in exchange for service
In other words, it is the provision of
money, funds or resources to the
activities designed by government to
maintain people’s health.
These activities encompass the provision
of medical and related services geared
toward maintaining good health,
especially in the aspect of disease
prevention and curative treatment.
7. It is a key determinant of health
system performance in terms of
equity, efficiency and quality.
The amount of resources earmarked
for health care in a country is said to
be a reflection of health value
placement vis-à-vis other categories of
goods
8. Qualities of a good health
financing system
A good health financing system raises
adequate funds for health
Ensures access to quality healthcare
regardless of ability to pay
Protects people from financial
catastrophe
Allocates resources and purchase
goods and services in a way that
improves quality, equity and efficiency
9. Options for healthcare
financing
Direct government financing
Out-of pocket expenses (user
charges)
Health insurance
Donor funding
Voluntary contribution
10. Direct government financing
Budgetary allocation or taxation
Government either provides periodic
allocations from general government
revenues or assigns the proceeds of a
designated tax to the health sector or
both
In some cases, proceeds of a particular
tax is designated to the health sector.
e.g. Sin tax
In America and Asia, lotteries have been
organised to benefit social welfare
programs such as healthcare, education
11. Direct government funding alone has
been found to be inadequate in many
countries particularly in developing
countries.
12. Out-of-pocket expenses (User
charges)
Out-of-pocket (OPP) expenses covers on-the-
spot payment for health services received
A fee may be required for an encounter with the
healthcare provider, an episode of illness or a
fixed number of contacts within the healthcare
system
A single encounter may be broken into items like
laboratory tests, drugs, procedures etc.
A uniform price may be charged for all patients
Sliding scales of rates can be applied such that
persons of lesser means pay lower fees
Some may be exempted from paying
Has a potency to reduce healthcare uptake
13. There is high reliance on OOP health
payments as a means of financing
health system in Nigeria as over 90%
of Nigerians pay OOP for healthcare
Households who live below the
poverty line often do not use
healthcare services when the need
arises.
14. OOP health payments are capable of
making households incur catastrophic
health expenditure and this can
exacerbate the level of poverty.
Regarded as catastrophic when
healthcare expenditure affects the ability
of a household to purchase essential
non-medical goods and services e.g.
food, shelter, education
OPP is the least desirable means of
health care financing as it denies access
to health care to those who cannot pay
at the time of illness.
15. Advantages
Provides a link between financial
responsibility and the provision of
services
Helps to control the use of health
services by imposing financial
disincentives to consumers
Makes funds directly available for
providing services
16. Challenges
Affordability often a problem
OOP health payments are capable of
making households incur catastrophic
health expenditure and this can
exacerbate the level of poverty.
17. Health insurance
It is a pre-payment plan where the
participants or the insured person
pays a regular fixed amount, thus able
to get health services when required
without having to pay fully at the time
of need.
It is a system that guarantees
provision of needed health services to
persons on the payment of token
contributions at regular intervals
18. It spreads the burden of health cost
over time and across a wider
population which will reduce risk
It converts unpredictable future health
expenses into payments that can be
budgeted for in advance
19. It requires the patient to make an
initial payment for care before
applying for the benefits
May also require patient to pay a small
share of the additional amount
These two devices are intended to
discourage overuse of healthcare
services
20. Objectives of health insurance
Ensure that every person has access
to good health care services
Protect families from the financial
hardship of huge medical bills
Limit the rise in the cost of health care
services
Ensure equitable distribution of health
care costs among different income
groups
21. Improve and harness private sector
participation in the provision of health
care services
Ensure equitable distribution of health
facilities within the country
Availability of funds to the health
sector for improved services
22. Types of heath insurance
◦ Government/Social heath insurance
◦ Private heath insurance
◦ Community-based health insurance
23. Government/social health
insurance
Participation in the program is
compulsory either by law or by
conditions of employment
An employer makes a contribution to
the program on behalf of the
employee
Individuals also make regular income-
based contributions that are not tied
24. National Health Insurance
scheme (NHIS)
Nigeria’s National Health Insurance
scheme (NHIS) became fully operational
in 2005, though enabling law was signed
in 1999
Aims to improve the health of all
Nigerians at an affordable cost
Health care services of contributors are
paid from the common pool of funds
contributed by the participants of the
Scheme.
The contributions made by/for an insured
person entitles himself/herself, a spouse
and four children (under age of 18) to full
health benefits
25. Programmes under the NHIS
1. The Formal Sector Social Health
Insurance Programme- a a social health
security system in which the health care
of employees in the Formal Sector is
paid for from funds created by pooling
the contributions of employees and
employers.
Membership- Employees of the public
sector and organized private sector
organizations employing ten (10) or more
persons can participate in the
26. Contributions
Contributions are earnings-related.
For public (Federal) sector programme,
the employer pays 3.5% while the
employee pays 1.75% of the employee’s
consolidated salary.
For the private sector programme and
other tiers of Government, the employer
pays 10% while the employee pays 5%
(representing 15% of the employee’s
basic salary.)
27. Some terms in NHIS
Health Maintenance organisation (HMO)-
They are companies mandated solely to
manage the provision of health care services
through healthcare facilities accredited by the
NHIS.
Serve as intermediary between healthcare
providers and employers seeking to provide
healthcare for their employees
Their functions include:
Collection of contributions from eligible
employers & employees
Payments of healthcare providers for
services rendered
Maintenance of quality assurance in the
delivery of healthcare benefits under the
scheme
28. • Primary car provider- This health facility is
chosen by a HMO after accreditation to
provide primary care for a defined group of
enrollees according to the content of the
agreed package in the contract.
• It gets approval for and refers enrollees for
designated/approved secondary and tertiary
care centres.
• Secondary and tertiary care provider- they
are healthcare facilities that receive referral
from the primary care providers
29. Capitation- a negotiated payment to a
provider by the HMOs on behalf of a
contributor, for services rendered by
the provider. The payment is made
regularly (monthly) in advance
irrespective of utilization
30. Managed care
• A health care system that delivers
quality care to a defined population
(members) through a network of
contracted health care providers at a
cost-efficient, fixed and pre-paid
price, over a period of time.
• The content of care is well defined.
• The price is on a capitation (per
person) and fee-for-service basis.
31. 2. Informal sector social health
insurance programmes
a) Community Based Social Health
Insurance Programmes
b) Voluntary contributors Social Health
Insurance Programmes
32. The Informal Sector Social Health
Insurance Programme is a social
health security system for people not
captured in the formal sector.
It covers employees of companies
employing 10 or less people, artisans,
voluntary participants, rural dwellers
and others not covered under the
Formal Sector or the Vulnerable
Group.
33. 3. Vulnerable group social health
insurance programme
a) Physically Challenged Persons
b) Prisons Inmates
c) Children Under Five
d) Refugees, Victims Of Human
Trafficking, Internally Displaced
Persons And
e) Pregnant Women
34. Private health insurance
Health insurance plans run by private
insurance companies
Staggered deposit of premium as
cover for specific product (ill health) by
individuals.
Contributions are risk-based
35. The measure given by the individual
or the employer is the same measure
of service received.
Benefits are not uniform, contributions
are not the same and based on the
need of the individual.
36. Community-based health insurance
(CBHI)
Any not-for-profit insurance scheme
aimed primarily at the informal sector
and formed on the basis of
contribution of funds
A collective pooling of health risks in
which the contributing members
participate in its management.
37. Usually voluntary and characterized
by community members pooling funds
to offset the cost of healthcare.
May be within a community or a group
of people who share common
characteristics, such as geographical
location or occupation.
38. Common features
Small membership group, voluntary
Small and affordable premium with limited
benefits and coverage
Simple procedures and considerable
member participation in management of the
program
Membership premiums are often a flat rate
and independent of individual health risks
The scheme operates on a non-profit basis
39. Donor funding
Generated mostly through development-
oriented institutions such as bilateral
agencies, multilateral organisations and
banks e.g. UNICEF, WHO, UNDP, World
bank, USAID
May be in form of financial assistance
(loans or grants), commodities ( drugs,
medical equipment), technical expertise,
training, study tours, research funding
among others
Can also be in form of public-private-
partnership
40. Voluntary contributions
Usually from individuals or groups
within the country, philanthropists,
religious bodies-
Some groups run non-profit making
health services
May be cash or in kind (buildings,
equipment)
41. Conclusion
Healthcare financing is an important
component of the health system
building blocks
It encompasses 3 basic functions of
revenue collection, risk pooling and
purchase of health services
