Financing health care in Ghana: Is one-time insurance premium the answer?
Annita Allotey, Research Assistant at the Institute of Economic Affairs-IEA discusses the evolution of the National Health Insurance Scheme (NHIS) in Ghana and the need for bi-partisan decision making with regards to social health policies.
(Joy Online) - Improving citizen’s health remains an important social objective for all nations in the world. Improved health not only benefits individuals but also benefits the broader society, accelerating economic growth and development. In recognition of this most countries, especially Sub-Saharan African countries including Ghana, have developed and implemented several polices aimed at improving their citizens’ health status. However, a major challenge faced by most governments has been financing of health services. For equitable and universal access to essential healthcare for all citizens, Ghana adopted the National Health Insurance Scheme (NHIS) to finance healthcare delivery. The current government has now come up with the idea of a one-time insurance premium payment to replace the annual renewable premium payment. This piece first assesses the various healthcare financing systems implemented in Ghana. Secondly, it examines the challenges associated with the current NHIS. Thirdly, this piece seeks to examine the proposed One-Time Insurance Premium. Lastly, makes some recommendations.
Healthcare financing in Ghana has travelled a long winding road, right from the period when medical care was virtually free, through to the period we had the ‘Cash and Carry’ system, to the current health insurance system of healthcare financing.
a) Free Healthcare System
Following the attainment of independence, the government of Ghana switched to tax-based financing and made all public sector health services free. However, the private sector health services were still paid for by the individuals themselves at the point-of-service (PoS) use during this same period. Ghana’s tax revenue dwindled due to the economic stagnation during the early 1970s. As a result government could not support the tax-based health financing system and this had adverse impacts on the health sector. In 1983, the PNDC government adopted an IMF and World Bank sponsored economic recovery programme. Owing to the economic recovery programme, the costs of health care services in most public health institutions were significantly raised and this was commonly known as ‘cash and carry’.
b) Cash and Carry Healthcare System
With the “Cash and Carry” system, patients were made to pay for the full cost of drugs and some medical consumables whenever they visited any public health institution, while the state was responsible for all other costs including consultations, salaries and emoluments for doctors, nurses and other healthcare workers in state hospitals. It was realized that people went to hospital only when they were very sick and had money to pay for the cost of care. In fact this system of payment arguably constrained a lot of people from accessing healthcare except when they were in dire circumstances. To improve access to healthcare (especially by the poor in the country) the ‘Cash and Carry’ system was replaced by the National Health Insurance Scheme (NHIS).
c) National Health Insurance Scheme (NHIS)
This system was implemented in 2004, though its foundation was laid between 1996 and 2000, with some pilot projects in the Dangme West District in the Greater Accra Region and Nkoranza District in the Brong Ahafo Region. It was implemented with a statutory enactment; the National Health Insurance Act, 2003 (Act 650). Under this system individuals who are 18 years and above pay a minimum annual premium and they receive medical care almost free of charge at the point-of-service use. This premium is renewable yearly. Indigents, elderly over 70 years, children under 18 years whose parents had enrolled, pregnant women and social security pensioners fall within the premium exemption group. This group do not pay premiums but they access medical care almost free of charge.
The NHIS has been the system of healthcare financing in Ghana for over five years. Funding for the NHIS comes from individual premium payments, the National Health Insurance Levy (NHIL) made up of the Domestic Value Added Tax (VAT) collection, transfer from the existing Social Security and National Insurance Trust, and Customs Collection. The National Health Insurance Authority (NHIA) was established to regulate and implement all forms of health insurance business in Ghana.
Challenges Associated with the NHIS
Although a lot of people have registered with the scheme and there has been much improvement in access to healthcare, several anomalies have been identified. These include double billing, failure of service providers to submit monthly bills on time for scrutiny and onward payment, and abuse by some scheme members who use their cards to patronize different hospitals at short intervals for the same treatment. Some people have also developed the habit of going in for drugs as a precautionary measure.
The Proposed One–Time Insurance Premium
In the current year, 2012, the Government proposes to replace the current NHIS premiums with a one-time insurance premium. Under this system of health insurance, individuals will be made to pay premiums once in their life time. In the lead up to the 2012 elections, such a policy may generate public support. Though implementing this method of healthcare financing may be desirable, the state should to be cautious in terms of availability of funding, infrastructure, personnel, etc.
Considering the global financial meltdown, we need to be cautious about relying on donor funds to support the proposed One-Time premium insurance scheme. Relying on the Ghana’s oil revenues to fund this scheme cannot not be guaranteed because, as was seen from the 2012 budget, none of the expenditures out of the oil revenues (ABFA) was allocated to the health sector.
Although, the number to subscribers to the current NHIS has increased, it may not guarantee the smooth implementation of the new scheme, because we need to consider the nature of the people who have subscribed to the scheme. If a majority of those insured fall within the high risk net or the premium exemption group, then there is the need for bigger sustainable funds. Premiums coming from payroll taxes may not be sufficient, since a majority of Ghana’s labour force are not found in the formal employment sectors. Some people currently find it difficult to pay the premium because it is expensive. The question is where will the state get the needed funds to support the implementation of the proposed insurance premium scheme? Is the current NHIL enough to support the proposed new scheme?
Another big problem envisaged by many with regards to the operation of the One-Time premium health insurance scheme is the quantum of the premium to be charged. The easiest direction is to calculate the premium as perpetuity and this comes with the demands of determining the discount rate to use in this calculation. For a social safety net program like the health insurance, perpetuities are far too expensive.
In the light of the above anticipated challenges that the proposed scheme may face, one may wonder why there is the need to create a whole new system rather than to address the problems with the existing NHIS to strengthen it.
There is the need for a comprehensive review of health worker gaps including health sector managers, pharmacists, nurses and midwives to inform human resources strategy.
A short term solution may be to rejuvenate the Community-based Health Planning and Services (CHPS) strategy to form the backbone of an expansion plan and foundation of an effective referral system.
More so, premium charges could be based on the health risk of the individual to lessen abuse by people. There is also the need to educate the populace on the importance of the scheme and encourage them to register.
There is also the need to educate the populace on the importance of the scheme and encourage them to register.
Social protection policies like the NHIS should not be politicized. We need to desist from discussing healthcare issues on partisan platform and put all hands on deck to come up with long-term sustainable solutions.