Policy Brief September, 2012 Why are states not adopting the formal sector programme of the NHIS and what strategies can encourage adoption?

About the authors B a c k g r o u n d

The research presented in this The National Health Insurance Scheme (NHIS) in was launched in 2005 policy brief was conducted by Chima Onoka, Obinna Onwujekwe, as part of efforts of the federal government to achieve universal coverage with Benjamin Uzochukwu and Nkoli financial risk protection mechanisms. However, six years after the launch of the Ezumah. The researchers are part of the Health Policy Research programme, only 4% of the population (mainly federal government employees), Group, College of Medicine, Uni- are covered by health insurance and this is mainly through the formal sector versity of Nigeria, . social health insurance programme (FSSHIP) of the NHIS. In addition, only three For further information about this study, please contact: out of thirty-six states in Nigeria - Bauchi (2008), (2007) and Chima Onoka Enugu (2010) - had adopted the programme, suggesting the existence of con- [email protected] straints to adoption which need to be identified and addressed. [email protected] Based on a comparative case study carried out in two states in Nigeria, this pa- Purpose per presents new information regarding the reasons why different state (sub- national) governments have either adopted or not adopted the NHIS FSSHIP, The need to reduce the burden of health care payments to indi- and to identify strategies that encourage adoption. The information here pro- viduals and protect them against vides policy makers and implementers in Nigeria and elsewhere with some evi- the financial cost of healthcare dence that may enhance universal coverage reforms. led to the establishment of a National Health Insurance Scheme (NHIS) in Nigeria. Related policy brief :

Influence of stakeholder roles on adoption of the This policy brief looks at factors NHIS formal sector programme by states that may have enhanced or constrained adoption of the formal sector social health insur- ance programme (FSSHIP) of the NHIS by states in Nigeria. M e t h o d s In-depth interviews: 48 In-depth inter- views were conducted with state Key issues of interest level actors including policy makers, Focus states: Two states (Enugu and Eb- leaders of health care providers’ asso- onyi) with similar, political, geographic, and Interest of state govern- ciations, civil servants’ leaders, manag- ment in financial risk protec- cultural characteristics were chosen as case ers of FSSHIP and managers of health tion measures studies. Enugu had adopted the FSSHIP, maintenance organizations (HMOs) Concerns about role of while Ebonyi had not. that were or should have been in- states in the FSSHIP volved in the adoption process. Accountability systems for Document review: Documents that were FSSHIP relevant to the adoption process were re- Feasibility of making em- Data analysis: Data were analysed viewed including state health sector poli- ployer and employee contri- within and across cases, and the out- butions cies and plans, health financing documents, come was discussed at state-level post Capitation rates and drug and laws and guidelines for NHIS pro- study workshops (involving interview- lists grammes. ees and relevant stakeholders). Benefit package Pa ge 2 Onoka, Onwujekwe, Uzochukwu, Ezumah September, 2012

FINDINGS (Context)

About state government’s interest in financial risk protection measures Ebonyi (did not adopt FSSHIP) Enugu (adopted the FSSHIP)

Spends about US$100,000 monthly on free maternal and child Funds free MCH services (state-wide health (MCH) services in rural areas using public and non-profit using public facilities) private facilities. The focus on rural areas is based on the gover- No medical allowance for civil ser- nor’s philosophy that the share of the financial consequences of ill vants though previously requested by health is more on the more populous rural dwellers. them Medical allowance (10% of basic salary paid to civil servants monthly to help defray health care expenditure).

About case studies About role of states in the FSSHIP

Case studies are pre- Ebonyi (did not adopt FSSHIP) Enugu (adopted the FSSHIP) ferred when "how" or "why" questions are Policy makers reported that the independent es- Concerned about absence of being posed, and when tablishment of the FSSHIP by the federal govern- role for states and initially con- the focus is on a con- ment (which made it a federal programme), and sidered setting up a state level temporary phenome- the requirement for states to transfer contribu- health insurance scheme. tions to the federal level, made the scheme unap- non within some real- Made a failed attempt to retain pealing. life context. contributions at the state level They were concerned that the law establishing with state appointed HMOs Multiple case studies the NHIS did not specify a governance role for rather than the NHIS. enable comparisons states apart from their broad inclusion as employ- between two or more FSSHIP was chosen in order to ers of labour. case units with similar take advantage of existing in- or different contexts Civil servants and policy makers had previous stitutional structure and tech- and thereby help facili- negative experiences with a contributory federal nical capacity for managing tate generalization. led programme (National Housing Fund) - they insurance considered lacking in made contributions, were yet to enjoy the bene- state but available in the NHIS. fits and could not retrieve their funds.

About accountability systems for FSSHIP “With the closed system of NHIS where Ebonyi (did not adopt FSSHIP) Enugu (adopted the FSSHIP) information about its operations is not

available to the public, and the Nigerian Concerns were expressed by policy Accountability issues were makers that the NHIS had not pre- not raised during the adop- factor (the assumption amongst Nigerians

sented any audited financial and opera- tion process that non- transparency of a system is a tional report to the state or the general public since its inception created the consequence of the existing internal feeling of distrust towards the scheme corruption), it is difficult for us to do a blind and the unwillingness to release state transfer of state money to them (NHIS).” funds to the NHIS. (Policy Maker, Ebonyi) Providers, HMOs and civil servants were also unaware of any such report. Why are states not adopting the formal sector programme of the NHIS and what strategies Pa ge 3 can encourage adoption? FINDINGS (Design)

About employer contribution

Ebonyi (did not adopt FSSHIP) Enugu (adopted the FSSHIP) Policy makers considered the level of employer contri- Government was will- bution (10%) acceptable and economically feasible as ing to make contribu- long as the already paid medical allowance would be tion reallocated to the programme. Map of Nigeria They opposed the idea of using fresh resources for this as suggested by the NHIS and HMOs arguing that doing so would compromise the welfare of other citi- zens of the state. About employee contribution “We have made serious effort Ebonyi (did not adopt FSSHIP) Enugu (adopted the FSSHIP) to talk to civil servants. We

Civil servants considered wages too low Civil servants considered capitation have told them government’s to allow deductions even though the rate reasonable but wanted payment rate of 5% was considered reasonable. deferred to allow them time (at least position that they will release a year to benefit from the pro- The Government’s position that the the extra money we are gramme) to be convinced about ac- medical allowance would be reallocated tor commitment to implementation. already paying. A good number as employer contribution if adoption was considered meant that civil servants They also felt they would not be of them went to compute the would part with a total of 15% of their asked to contribute in the long run financial implication on their monthly salaries (equivalent to the em- because NHIS had allowed federal ployer and employee contributions). employees not to pay since inception monthly wage and were Both policy makers and civil servants of the programme in 2005, which discouraged.” considered this impracticable with the implied that employer contribution latter deciding not to demand adoption. was sufficient for the FSSHIP. (Policy maker, Ebonyi)

About Capitation rates and drug list Ebonyi (did not adopt FSSHIP) Enugu (adopted the FSSHIP) “You can’t give me 550 naira, Doctors reported having frequent con- Considered inadequate by health flicts with dissatisfied federal employees providers given the failure of the and expect me to go and pay a (existing beneficiaries) for two main rea- NHIS to revise the rates within the pharmacy when someone buys sons: low capitation and an unrevised first 6 years of implementation schedule of drugs (since 2005), which Concerns about drug schedule drugs there. So, it’s faulty that made patients to buy unlisted drugs out which had not been revised were you lump everybody and of pocket. raised by doctors and pharmacists. Pharmacists were opposed to the Global everything inside, and you call capitation strategy being used which was it global capitation. Nobody not in their favour. wants to release the one he About benefit package has”. Ebonyi (did not adopt FSSHIP) Enugu (adopted the FSSHIP) (Medical union leader, Enugu)

Considered sufficient enough to address Same as for most needs of households. Pa ge 4 Why are states not adopting the formal sector programme of the NHIS and what strategies can encourage adoption?

Recommendations 1. Adoption depends on the feasibility of making employer contribution: Adoption was more feasible in Enugu state because the state government was willing to make the required employer contribution to the NHIS. However, adoption did not HEALTH POLICY occur in Ebonyi state where, though such funds were already being provided di- RESEARCH GROUP rectly to civil servants (unlike in Enugu), reallocating such funds towards the FSSHIP was unfeasible. Programme implementers need to understand that adop- tion primarily has to be feasible (from government’s point of view) with regards to College of Medicine allocation of available resources towards the welfare of various categories of citi- , zens. In addition, each individual state needs to be technically supported based on Enugu Campus, Nigeria [email protected] its peculiarities, to overcome challenges to adoption.

2. The peculiarities of individual states need to be understood by programme im- plementers and effective strategies developed to address them in order to en- For further information courage adoption. Policy makers and programme implementers need to work to- about this study, please gether to develop and implement strategies that address peculiarities of individual contact states (such as existence of other forms of financial risk protection measures and Chima Onoka E-mail: the inability to reallocate funds towards FSSHIP) to enable states overcome hin- [email protected] drances to adoption. For instance, rather than first insisting on the FSSHIP, the [email protected] NHIS and HMOs could engage with states that provide some financial risk protec- tion mechanisms to vulnerable groups (e.g. free maternal and child health services in rural areas), to propose and implement strategies or products that show how public funds may be better utilized through insurance. Such products may stir the interest of civil servants to allow deductions while also enhancing the chance that AUTHORS health insurance will benefit the whole population. Chima Onoka Obinna Onwujekwe “We acknowledge that this study was financially Benjamin Uzochukwu and technically supported by the Alliance for Nkoli Ezumah Health Policy and Systems Research, WHO. We also wish to acknowledge the inputs of the Health Systems Financing Department, WHO and the late Guy Carrin, in particular.”

3. Managers of the FSSHIP need to improve transparency and accountabil- Overall, policy makers should care- ity systems in the existing programme to earn the trust of other stake- fully consider the potential pitfalls holders. The perceptions arising from the absence of published financial re- of employing universal coverage ports of NHIS activities influenced the decision not to adopt the FSSHIP in Eb- strategies that first focus on civil onyi. In line with the legal provisions establishing it, the NHIS council needs to servants, and permit civil servants commence the annual publication of reports of its activities, and its audited not to make contributions from accounts. Such information should be made available to states whether they inception. This is especially impor- have adopted the programme or not since they are being courted to do so. tant where providing coverage to 4. It is not enough to achieve adoption, efforts should be made to see that this already privileged group with the outcome of adoption protects the future of the programme: To help public funds potentially compro- ensure that adoption does not yield unintended outcomes, the reason why the mises the availability of financial NHIS has been unable to collect employee contributions needs to be identi- risk protection measures to other fied, understood and addressed in order to incentivize civil servants to contrib- citizens. Such approaches may ute to the FSSHIP. Not doing so only jeopardizes the future of the programme. elongate the time for the attain- ment of universal coverage goals.