Health insurance is necessary to reduce the financial burden of purchasing health care by pooling funds and sharing the risks of unexpected health events. Risk-sharing mechanisms are particularly important in Sub-Saharan Africa (SSA) where most countries allocate insufficient resources to health care and most health care, including medicines, is out-of-pocket funded.
In Africa, 27 out of 48 countries are most affected by out-of-pocket payments (OOPs) for healthcare services. WHO Regional Committee for Africa Adopt a regional health financing strategy that recommends developing prepayment schemes to expand health insurance coverage and reduce out-of-pocket payments.
Closing this gap in access to health insurance is critical to achieving the goal of universal health coverage, which is to ensure that everyone has access to the high-quality health care services they need, without the risk of financial ruin or poverty.
Why is health insurance important?
The benefits of adequate and sustainable health insurance coverage in Africa are numerous. They include improving the availability and affordability of essential medicines; increasing access to care and protecting families from the adverse economic effects of ill health; Provide coverage for inpatient care to alleviate the sudden huge financial burden caused by hospitalization; Ensuring increased access to essential medicines and providing an incentive for appropriate use; Progress towards universal health coverage (UHC).
Unfortunately, there is great disparity in access to health insurance in Africa, with formal workers and wealthy people enjoying greater opportunities than informal workers and the poor and vulnerable groups. Closing this gap in access to health insurance is critical to achieving the goal of universal health coverage, which is to ensure that everyone has access to the high-quality health care services they need, without the risk of financial ruin or poverty.
The National Health Insurance Scheme (NHIS): A model for achieving broader and equitable health insurance coverage in Africa
A recent study revealed that although health insurance in sub-Saharan countries is highly inequitable, a large proportion of the inequality lies in private forms of health insurance as opposed to publicly owned health insurance plans. Private health insurance plans that require individuals to make contributions in order to access benefits, select higher socioeconomic individuals, and thus reinforce inequality.
Comparing 36 sub-Saharan countries, the study showed that the top three countries with the highest health insurance coverage and the least amount of inequality are Rwanda, Ghana and Gabon. These three countries have publicly owned health insurance systems that are funded largely by taxes, rather than relying on voluntary contributions.
It is clear that sub-Saharan African countries will not achieve the desired health insurance coverage, hence UHC uses de facto voluntary health insurance as a scheme for health financing. African countries should adopt publicly owned national health insurance plans that take into account the poor and vulnerable groups.
Case studies: Rwanda and Ghana
Other African countries can learn from the few countries on the continent that have rapidly increased their health insurance coverage and are characterized by inequality in health insurance coverage. In Rwanda, CBHI is managed centrally by a national government agency, is mandatory for all members of the informal sector and covers more than three quarters of the country’s population.
Under the scheme, all the poor receive full state subsidies, while some members of the informal sector receive partial subsidies. The scheme is largely funded by non-contributory mechanisms (donor funding and general taxation).
Ghana has one of the most advanced healthcare systems in Africa due to the general insurance system known as the National Health Insurance Scheme (NHIS). Before the public insurance system, Ghana used a “cash and carry” scheme that required payment for any treatment up front, which prevented many people from accessing care.
Ghana’s health insurance rate is among the highest in Africa, making the country one of the best on the continent, in terms of a comprehensive healthcare system.
As of 2021, nearly 70% of Ghana had health insurance coverage. NHIS in Ghana is primarily funded by a combination of government allocations from general tax revenue and a dedicated tax (2.5% of VAT and 2.5% of social security contributions).
Nigeria is making efforts to improve health insurance coverage
Nigeria is making great efforts in its journey to universal health coverage. In May 2022, a new National Health Insurance Authority (NHIA) law was signed into law. This act makes health insurance compulsory for all Nigerians.
It establishes and enables the NHIA to ensure the provision of health insurance to all Nigerians through a mandatory mechanism in cooperation with state health insurance agencies. This could mean that more than 70% of Nigerians who pay out-of-pocket healthcare costs, many of whom fall into poverty as a result, can benefit from compulsory health insurance at the national level.
An important point to note is that the NHIA Act provides for the creation of a new fund for vulnerable groups. The Vulnerable Groups Fund will provide health insurance coverage subsidy for vulnerable people and pay health insurance premiums for the indigent. Hence, members of the community in the informal sector and vulnerable groups will enjoy health insurance coverage.
In light of this, it is clear that health insurance in Africa is still developing. Learning lessons from countries like Rwanda and Ghana, other African countries need to adopt NHIS and ensure broader and equitable health insurance coverage in their countries, as this is a non-negotiable path towards achieving universal health coverage on the continent.
Anyakura is the CEO of Bloom Public Health and an expert in public health and
Odibeli is a Pharmacist and Research and Communications Coordinator at Bloom Public Health