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Implications of poor healthcare financing in Nigeria

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Melody Okereke

The principal treasure of a nation is its health. There is realistic evidences that the health of a nation significantly boosts 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.

Healthcare, Nigeria
Resident doctors demand improved healthcare infrastructure in S/East

Nonetheless, it has been said that the pursuit of better health should not look forward to an improved economy, rather measures to enhance health will themselves contribute to economic growth. The way a country finances its health care system is a major determinant of the health of its citizenry.

Selection of a sufficient 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 comprises of the means in which funds are generated, distributed, 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).

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 the effects on user behavior and provider.

Sadly, the organization of health services in Nigeria is complex. It includes a wide range of providers in both the public and private sectors. 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).

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 matched with other African countries.

Attaining 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 successfully.

The Nigeria government uses diverse mechanisms for public health care financing; yet, the health financing system is still characterized by little investment by the government, extensive out-of-pocket payments, limited insurance coverage, and low donor funding.

Thus, achieving the objectives of good health outcome, equity, patients, and providers’ satisfaction is very challenging. However, there may still be a way forward for Nigeria. This will require strengthening the health care financing system.

The system should guarantee that everyone who requires health care services is able to access them and not denied due to inability to pay. Citizens must be able to benefit from at least one of the financing mechanism in accessing health care services.

Given the backdrop of the weak institutional capacity, technical expertise, and high level of poverty, Nigeria will have to rely on a combination of mechanisms to achieve effective health care financing system. To achieve universal coverage of health care services for the poor, Nigeria must move from out-of-pocket payments to other mechanisms of financing.

While it might be difficult to completely abolish user fees, user fees for interventions that require wide coverage should be reduced or removed to increase access by the poor.

The time has come for health care financing to be seen by the Nigerian government as an investment, which certainly requires an effective management (political commitment) for it to be profitable. Other factors such as lack of awareness, corruption, and unstable economy that have undermined health care financing in Nigeria need to be addressed seriously.

Another important challenge in Nigeria’s health care system is the lack of use of evidence for planning and policy making. This could be attributed to lack of relevant research evidence.

Health care financing needs to be informed by research so that planning will be evidence based. Collection of reliable, relevant, and timely data for planning and evaluating policies should be improved in Nigeria so that the outcome of our policies will be very commendable.


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