Community based Health Insurance Scheme: An option to Health Care Financing in a Frail Economy

COMMUNITY-BASED HEALTH
INSURANCE SCHEME
An Option to Healthcare Financing in a Frail Economy
By
Dr. Nkiru Nwamaka Ezeama
(MB.BS, MPH, FWACP)
Department of Community Medicine
Nnamdi Azikiwe University Teaching Hospital, Nnewi

Presented during the
2016 Physicians’ Week of the
Nigerian Medical Association (NMA),
Nnewi Zone
Monday, 24th October 2016
Community-Based Health Insurance - Dr. Nkiru N. Ezeama 2

Nigeria is in economic recession……
• Economic growth figures for the April – June 2016 quarter1 show that
the Nigerian economy contracted by 2.06%
• The economy has seen two consecutive quarters of declining growth,
according to the report of the National Bureau of Statistics (NBS)
• Q1 2016, GDP declined by -0.36%
• Q2 2016, GDP declined by -2.06%
• A difference of 1.70%
• Q2 2015 (corresponding quarter in 2015), GDP rose by 2.35%
• A difference of 4.41%

Nigeria: A Frail economy
Some highlights….2 – 4
• 70% of government income is derived from crude oil sales
• Government revenue has been slashed due to
• Fall in global oil prices from highs of about $112 per barrel in 2014 to $50 per barrel
presently
• About 60% of revenue lost due to destruction of pipelines by Niger Delta militants
• Nigeria has lost its position of top oil producer in Africa to Angola
• GDP per capita income = $2548 (for SA, $7575.24; the UK, $40,933; US, $51,486; as at
December 2015)
• Inflation rate = 17.9%
• Dollar exchange rate (parallel market) = N460
• Foreign exchange reserves = 24.59 billion USD (as at 30 September 2016)
• Power generation = 2,687.2 MW (as at 6th June 2016)
• Unemployment rate = 13.3%

Sustainable Development Goals
- Universal Health Coverage5
• The Sustainable Development Goals endorsed in February 2015 by
heads of government puts Universal Health Coverage at the centre of
the overall health goal.
• Under SDG 3, UHC also has the specific Target 3.8:
“Achieve universal health coverage (UHC), including financial risk
protection, access to quality essential health care services, and access
to safe, effective, quality, and affordable essential medicines and
vaccines for all”5

The goal of universal health coverage
therefore, is to ensure that all people obtain the
health services they need without suffering
financial hardship when paying for them.

How do all these affect Health Care in Nigeria?

Source: The Punch Newspaper, captioned “Spending our way out of recession”

• The main function of a health system is to provide health services to
the population6
• The dramatic increase in health care expenditure worldwide has
prompted societies to look for health financing arrangements which
ensure that people are not denied access to care because they cannot
afford it6

• The main purpose of health financing:
• Make funding available, as well as set the right financial incentives for
providers, to ensure that ALL INDIVIDUALS HAVE ACCESS TO
EFFECTIVE PUBLIC HEALTH AND PERSONAL HEALTH CARE
• This means
• Reducing or eliminating the possibility that an individual will be unable to
pay for such care, or will be impoverished as a result of trying to do so6

To ensure that individuals have access to health services
Three interrelated functions of health system financing are crucial6
Revenue
collection
Purchasing
of
interventions
Pooling of
resources
Accumulation
and management
of revenue to
ensure proper
risk sharing
The process by
which the health
system receives
money
Pooled funds
are paid to
providers to
deliver health
interventions

• The financing of the Nigerian Health Sector has been a huge challenge
and a subject of serious debate for decades
• This year, out of the N6.08 trillion 2016 budget proposal, only 4.23%
was allocated to the health sector; a far cry from the WHO
recommendation of 15%7
• The Nigerian health financing system depends largely on cost-
recovery for health care via user fees and out-of-pocket expenditure

• Moving away from out of pocket payments to some form of
prepayment scheme is the key to reducing financial catastrophe from
health care costs.
• Prepayment can take the form of taxation, with health care costs paid
for by the government or through publicly (social health insurance) or
privately managed insurance premiums.6

• Globally, health financing via general taxation or via social health
insurance are recognized as powerful methods for universal health
coverage with adequate financial protection for all against health
costs6
• The alternative health financing options of general tax revenues and
social health insurance have not worked well in Nigeria for a number
of reasons:

Nigeria and General Tax Revenues
• Nigeria has been unable to develop a strong tax-funded health system
due to:
• Lack of a robust tax base
• Poor acceptance of the principle of taxation according to ability to pay
• Low institutional capacity to collect taxes
• Weak tax compliance
• Taxes are still heavily dependent on international trade and domestic
consumption, with income and asset taxes being very weak.6

NHIS
• The National Health Insurance Scheme was established by the Federal
Government of Nigeria under Act 35 of 1999 and launched in 2005
• The scheme was established on the principles of resource pooling and risk
sharing that should radically reduce dependence on government funding for
health services
• Paradoxically, the scheme has been receiving substantial allocations from the
Federal budgets, ranging from N0.4 to N4.5 billion annually8
• Although the scheme proposed to provide improved access to health care for
majority of Nigerians, it currently targets mainly the formal sector. This
constitutes just about 5% of the total Nigerian population.

Consequences of the Recession on Health Care
• With the frail Nigerian economy in recession, there’ll be greater
inability to expand the tax base
• The already paltry budgetary allocation to the health sector could still
experience a slash
• Total capital budget (all sectors) = N1.6trn 9
• Total amount released so far to all sectors (as at 16 October, 2016) = N350bn 9
• Increase in more out-of-pocket expenditure
• Some important health interventions would not be financed at all if
people had to pay for them, e.g. public good type of interventions10
• Out-of-pocket payment is usually the most regressive way to pay for
health, and the way that most exposes people to catastrophic
financial risk and impoverishment. 10

Source: World health statistics 200811
Community-Based Health Insurance - Dr. Nkiru N. Ezeama
Catastrophic OOP
payments5,11
Health care payments
reaching or exceeding 25% of
the total household budget
or 40% of a household’s
capacity to pay in any year.
Impoverishing OOP
payments5
When they push a
household’s other
spending below a
minimum socially
recognized living
standard such as that
identified by a poverty
line

There is the urgent need to explore and implement alternative
methods for funding health care in this time of recession and beyond
One of such methods is
COMMUNITY BASED HEALTH INSURANCE

Community Based Health Insurance Scheme
• CBHI is a form of community financing for health
• A form of voluntary health insurance whereby communities meet
their health financing needs through pooled revenue collection
and resource allocation decisions made by the community
• Allows members pay small premiums on a regular basis to offset
the risk of needing to pay large fees upon falling sick
• Are based on the concepts of mutual aid and social solidarity12

• CBHI schemes may develop around geographical entities
(villages or districts), trade or professional groupings (such as
trade unions or agricultural cooperatives) or health care
facilities
• Typically designed by and for people in the informal and rural
sectors who are unable to get adequate public, private, or
employer-sponsored health insurance
• Membership in a scheme is voluntary
• Always not-for-profit
• May be registered formal entities or operate informally
• Members generally participate in the management of the
scheme12

Some examples of CBHI schemes
in Nigeria

Anambra
• CBHI was initiated in 2003 in Anambra state, Nigeria
• The first was the Igbo-Ukwu Health Insurance Scheme (IUHI)13
• The scheme has been established in 10 communities namely:
• Ifite Ogwari, Ugbene and Achala in Anambra north senatorial zone;
• Abagana, Alor, Neni and Awka in Anambra central senatorial zone; and
• Igbokwu, Okija and Mbosi in Anambra south senatorial zone.
• Each community has a health centre which serves as the base focal health
centre for the scheme, serving the 4-7 villages in each community.14
• Membership of CBHI comprises of individuals and households in a
community, with a minimum of 500 persons required to form a user group
• The individuals pay a flat rate monthly, yearly or in convenient instalments

• For the IUHI,
• Number of beneficiaries was 12,450 as at 2006; which is 18% of the target
population assuming all the beneficiaries are financial members.
• A flat rate of N100 per month per adult and N50 per month per child is
paid to coordinators at the health facility. Although the rate was arbitrarily
fixed without any actuarial study.
• Other means of generating funds to run the programme include donations
in form of drugs from government and individuals and other forms of
donations like block payment of premium.
• The services offered are broad, covering primary and secondary (referral)
services and services are given by presentation of membership card.13

Lagos
• The Ikosi-Isheri Mutual Health Plan was launched on Wednesday, July 23,
2008.
• A pilot CBHI established by the Lagos State Government.
• The Scheme is targeted at the periurban Olowora community with an
estimated population of 70,000 persons
• The target coverage for the scheme was set at 5,000 persons or 833
families which comes to 7% of the population.
• The scheme provides a primary healthcare benefit package at a price of
N800.00 per family of six persons per month or N400.00 per single person
per month.
• There was a steady growth in enrollee population on a monthly basis with
current number (as at February, 2010) of registered members at 9,120
persons.15

Why Community based Health Insurance?

CBHI schemes can help to improve…..
•financial access,
•utilization,
•resource mobilization, and
•quality of health care services
…….through cooperative, community efforts. 12

Better quality of care & Resource mobilization
• Providers are accountable to CBHI scheme managers through
feedback mechanisms
• Quality of care may also be improved through contracts
between providers and CBHI schemes that stipulate certain
quality standards for different services
• Health facilities can utilize CBHI payments to regulate cash
flows or make investments in maintaining stocks and drug
supplies, etc. 12

Improved financial access to and utilization of
health care
• CBHI can reduce how much people pay for health care
when they seek care.
• Lower out-of-pocket spending per health event can
lead to more frequent utilization of health care
services and less delay in seeking care
• Members are unlikely to need to borrow and go into
debt in order to cover health care costs. 12

• For some, particularly poor groups, having to pay even
low-level fees when seeking care can create a barrier
to health care.
• CBHI schemes can reduce such financial barriers
• Usually fees paid by members when seeking care are
reduced to zero or an affordable co-payment.
• By removing the financial barriers at the time of need,
people are more likely to seek health care services12

• Payment of premiums can be adjusted to reflect local
conditions. For example, annual premiums at harvest
time for near-subsistence farmers.
• Financial access to health care can also be improved
by the ability of the CBHI scheme to negotiate lower
rates for services from providers, thereby enabling
members to get more for their money.

Some operational issues…..

• Setting up a CBHI scheme requires time and patience
• Requires feasibility studies with substantial technical
assistance outside the community
• Full participation of the community is essential
• Community engagement, education and information
• Democratic participation in
• scheme design,
• development of benefits packages
• setting of premiums
• establishment of operational procedures12

• CBHI tend to be most successful among the rural “middle class”
leaving the very poor behind.
• Relatively modest premiums can be too high for the poorest to pay
• Very few schemes allow payment-in-kind due to the complexity of
managing such payments, so cash-poor households are likely to be
excluded.
• Administrative costs
• This can up to 5 – 10% of total annual expenditure
• Administrative costs may be reduced through the use of
volunteers
• However heavy reliance on volunteer labour may raise issues
regarding sustainability.

Sustainability of CBHI schemes
• Sustainability of a CBHI scheme means that it has the capacity to keep operating
over time12
• Dimensions to sustainability include:
• Political
• predatory or unstable political environments
• Lack of continuity in government
• Social
• Perceptions and/or beliefs of the community
• Managerial
• volunteer labour may not be available or reliable,
• inexperienced management,
• inadequate dues collection
• lack of institutional development
• Financial
• Ability to balance expenditure and income
• schemes may be predicated upon continuing government or donor subsidy12

Ensuring sustainability of CBHI Schemes
• Training of scheme managers and technical assistance
• Definition of realistic benefits packages and premium rates
informed by data from feasibility studies
• Empowering CBHI managers with skills in the use of
information systems to manage data, accounting and
bookkeeping practices.
• Developing more accurate systems for collecting premiums.
• Effective implementation of risk management techniques12

• Develop the ability of CBHI schemes to retain their members and
recruit new ones (increase the size of their risk pools)
• Marketing and communication the value of CBHI schemes to the
public on a continual basis.
• Contracting with multiple and better providers, and promoting good
quality care, will attract new members.
• Monitoring and evaluation of schemes is also a way for CBHI
administrators to pinpoint and solve problems before they become
major issues. 12
• Reinsurance – insuring of CBHI schemes by larger insurance providers

In conclusion…..

• In light of the prevailing economic situation in Nigeria, CBHI
presents a viable option to health care financing in the country
• CBHI has a definite role to play in providing financial risk
protection and improving overall health care for the large
proportion of the Nigerian population outside the formal sector
• It is however not a universal solution for health care financing
and cannot meet the health care financing needs of the entire
country
• True community engagement in and ownership of the scheme, as
well as strong design and management are essential ingredients
to its success12

Universal Health Coverage

COMMUNITY
BASED HEALTH
INSURANCE
SCHEME
Definitely,
A VIABLE option
to health care
financing in a frail
economy

Thanks for listening

References
1. National Bureau of Statistics. Nigerian Gross Domestic Product Report Issue 10, Quarter Two, 2016
2. Trading Economics. Nigeria: Economic forecast, 2016 – 2020 outlook. www.tradingeconomics.com/Nigeria/forecast
3. World Bank. Nigeria: Country at a glance. https://www.worldbank.org/en/country/nigeria
4. Economic confidential. Nigerians groan as Africa’s largest economy battles recession. https://economicconfidential.com/2016/08/Nigerian-groan-
battles-recession/
5. World Health Organisation. World health statistics 2016: monitoring health for the SDGs, sustainable development goals.
www.who.int/gho/publications/world_health_statistics/2016/en/
6. World Health Organisation. World Health Report 2000: Health systems, improving performance
7. Blueprint. 2016 Budget: Controversy surrounding the health sector. Report published 14 April, 2016. www.blueprint.ng/2016/04/14/2016-budget-
controversy-surrounding-the-health-sector/
8. Adinma ED, Adinma BDJ. Community based healthcare financing: An untapped option to a more effective healthcare funding in Nigeria. Niger
Med J [serial online] 2010; 51(3):95 - 100 http://www.nigeriamedj.com/text.asp?2010/51/3/95/71010
9. Emejuiwe V. Funding healthcare in an economic recession. The Guardian. Published 9 October 2016. www.guardian.ng/opinion/funding-
healthcare-in-an-economic-recession/
10. World Health Organisation. Community based health insurance schemes in developing countries: facts, problems and perspectives. Discussion
paper, Number 1, 2003
11. World Health Organisation. World health statistics 2008 www.who.int/gho/publications/world_health_statistics/en/
12. Bennett S, Kelley AG, Silvers B. 21 Questions on CBHF: An overview of community based health financing. Partners for Health Reform plus, 2004
13. Federal Ministry of Health. Blueprint for the implementation of community based social health insurance in Nigeria
14. Uzochukwu BSC, Onwujekwe OE, Eze S, Ezuma N, Obikeze EN, Onoka CA. Community based health insurance scheme in Anambra State, Nigeria:
an analysis of policy development, implemtation and equity effects.Consortium for Research on Equitable Health Systems (CREHS), 2009.
15. Lagos State Ministry of Health. Community-based health insurance scheme. {Online} www.lagosstateministryofhealth.com

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