The Impact Of Health Care Financing On Nigerian Economic Growth

The way a country finances its health care system is a key determinant of the health of its citizenry. Selection of an adequate 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. Health care in Nigeria is financed by tax revenue, out-of-pocket payments, donor funding, and health insurance (social and community). However, achieving successful health care financing system continues to be a challenge in Nigeria. This article examines the different financing mechanisms that have been used in Nigeria, including the National Primary Health Care Development Fund proposed for increasing the resource allocation to primary health care. It draws on available and relevant literature to provide an overview and the state of public health care financing in Nigeria. This article concludes by recommending the need for Nigeria to explore and strengthen other mechanisms of health system and shift focus from out-of-pocket payments, address the issues that have undermined public health care financing in Nigeria, improve on evidence-based planning, and prompt implementation of the National Health Bill when signed into law.

 

The first wealth of a nation is its health. There is empirical evidence that the health of a nation significantly enhances 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. Nonetheless, it has been enunciated that the pursuit of better health should not await an improved economy; rather measures to improve health will themselves contribute to economic growth. The way a country finances its health care system is a key determinant of the health of its citizenry. Selection of an adequate 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 involves the means in which funds are generated, allocated, 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). These methods are not mutually exclusive. 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 efficiency, and the effects on user behavior and provider. 

The organization of health services in Nigeria is complex. It includes a wide range of providers in both the public and private sectors (private for profit providers, non-governmental organizations, community-based organizations, religious and traditional care providers). 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). The FMOH is the overall health policy formulating body. It coordinates and supervises the activities of the other levels. In addition, it provides tertiary care through teaching hospitals and federal medical centers. The SMOHs provide secondary care through the state hospitals and comprehensive health centers while LGHDs provide primary health care (PHC) services through the primary health centres. Although the local governments have the main responsibility of managing the PHC, all the three tiers of government and various agencies participate in the management of the PHC. This at times results in duplication, overlap, and confusion of roles and responsibilities. 

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 compared with other African countries. The total health expenditure (THE) as percentage of the gross domestic product (GDP) from 1998 to 2000 was less than 5%, falling behind THE/GDP ratio in other developing countries such as Kenya (5.3%), Zambia (6.2%), Tanzania (6.8%), Malawi (7.2%), and South Africa (7.5%).

Achieving 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 effectively.