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Sustaining Ghana’s National Health Insurance Scheme

By Evelyn Amoako

Ghana established the National Health Insurance Scheme (NHIS) by ACT 650 in the year 2003 for financing health services, provide residents with accessible, equitable ,affordable and quality health care. This laudable initiative aimed at universal health coverage was expected to replace the former “cash and carry” system where individuals had to pay out of their pockets at the point of service delivery in other to utilize health care services. It was also expected to remove financial obstacles to health care for the poor and marginalized. The NHIS having evolved from initial community-based schemes had an active subscriber base of approximately 11.2 million with more than 29 million health facility visits by subscribers in 2016. Since its inception and reforms in 2012, the NHIS has made tremendous progress in improving access to essential health services. About 95% of disease conditions are expected to be covered by the NHIS in Ghana.
Funding for the NHIS is from the National Health Insurance Fund made up of the National Health Insurance Levy which is 2.5% value added tax (VAT) on goods and services; 2.5% on social security contributions by formal sector workers; informal sector premiums; donations and investment interests. Although, premiums from informal sector workers were expected to be calculated based on the income levels of individuals at the inception of the NHIS, the lack of information on actual earnings of informal sector workers makes it practically impossible. As a result, flat premiums are paid by all informal sector workers, many of whom earn more than formal sector workers. Contributions from the informal sector made up just 3.4% of cash in-flows to the National Health Insurance Fund in 2014.
Premium exemptions are also made for persons with mental disorders, children under 18 years, pregnant women,, persons over 70 years, some disabled persons as determined by Minister for Gender, Child and Social Protection, indigents, social security contributors and pensioners. With about 69% of registered subscribers exempted from paying premiums and contributions from the informal sector making up just 3.4% of total cash in-flows, the NHIL and social security contributions made up about 95% of revenue in 2014.
In recent years, the NHIS has been faced with financial challenges which threaten the sustainability of the scheme. Financial sustainability of the NHIS refers to its ability to meet its financial obligations without the scheme going bankrupt. Funds and contributions available to the NHIS are not commensurate with claim liabilities from providers resulting in high budget deficits, financial constraints and delays in the reimbursement of providers. The NHIS owed service providers an estimated GHS 1.2 billion in payment arrears as at April, 2017. At a recent meeting, a government official inquired the reasons why NHIS subscribers had to make co-payments in some health facilities. Except we are behaving like ostriches, answers to this are not far-fetched.
The National Health Insurance Authority has struggled to reimburse providers while providers have complained incessantly about unrealistic tariffs paid by the scheme. Consequently, some providers withdrew their services in the past whilst co-payments and high out-of-pocket payments have resurfaced as a result of low tariffs from the scheme. This has become a barrier to many individuals who are unable to afford payments which undermines the purpose for establishing the NHIS. Despite the efforts of the current government to fulfill the financial obligations of the NHIS, its financial sustainability remains a challenge and should be a concern for all well-meaning Ghanaians. The challenges faced by the scheme are linked with fundamental design elements of the health insurance policy which presents several gaps that need to be addressed to ensure sustainability of the NHIS.
The current policy provides broad exemptions for up to 69% of registered subscribers from paying premiums recognizing them as poor and vulnerable. A World Bank research in 2012 showed that at least 30% of those currently exempted are from of the highest wealth quintiles in the country that are capable of paying premiums. Excluding them from premium payments compromises the principles of equity, cross-subsidization and solidarity in setting up the NHIS. These exemptions reduce inflows that would otherwise have been available to the NHIS.
Again, the NHIS provides a basic package of health services which covers 95% of all common disease conditions. The comprehensive nature of the basic package of health services has resulted in costs far beyond resources available in Ghana, a lower middle income country making the scheme unsustainable.
In addition to immediately improving efficiency in the operations of the scheme by reducing administrative costs, there is the urgent need to introduce policy reforms to explore additional sources of funding for the NHIS, prevent financial insolvency, ensure sustainability and avoid the systematic re-introduction of the cash-and-carry system.
As a first step, it is important that levies collected for the NHIS through the National Health Insurance Levy goes directly to the Authority. Some of the delays in reimbursement of providers is as a result of the bureaucracies the Authority has to go through before funds are released.
Again, there is the need to increase the pool of funds by widening the tax net through a reduction in the exemptions list. A means-testing approach can be utilized to identify the actual poor and vulnerable who require exemptions as well as used for differentiating premiums for different categories of people instead of the flat premium that is sometimes charged. Colombia has utilized a proxy means-testing instrument called the System for Selecting Beneficiaries of Social Spending in identifying beneficiaries for its health insurance. Currently, in Ghana, the Livelihood Empowerment against Poverty (LEAP) of the Ministry of Gender, Children and Social Protection uses a proxy means-testing approach to identify beneficiaries. However, political influence on the selection of LEAP beneficiaries has affected its credibility. In the short term, aligning the NHIS with the current system of the LEAP programme and improving upon it would ensure successful targeting of the poor for exemptions instead of whole sale exemptions. Again, it is essential that measures are put in place to improve the effectiveness of the current LEAP system for better targeting. Although targeting would be an expensive venture, the benefits accruing from putting a proper system in place for effective targeting as well as ensuring equity, financial risk equalization and solidarity in the long term will outweigh the expenses incurred in the short term.
Again, the benefits package should be reviewed and re-designed to focus on primary health care coverage as well as maternal and child health. Focus should be on priority public health conditions addressing the disease burden of the country and preventive services aligned with the limited resources. It is feasible to reduce the basic package of health services to meet the health needs of the population. A modest benefits package can be designed with the opportunity of gradual increases. There can be the provision for individuals to insure for a more comprehensive package by paying additional premiums to the basic one. An alternative to this will be that services outside the basic package are paid for through out-of-pocket.
. In conclusion, the policy alternatives to pursue in ensuring the sustainability of the NHIS are a combination of re-designing the essential benefits package, and widening the tax net by reducing the exemptions list. Whilst the re-designing of the basic package ensures that priority of the scheme is placed on major public health problems and disease burden of the country in the medium term, additional taxes from a reduction of the exemptions list ensures the availability of the much needed funding. It is however essential that structural and operational inefficiencies in the current system are also addressed to make the scheme more viable and sustainable.
Evelyn Amoako MPH, RGN, BSN
Mandela Washington Fellow, 2017
Head of Institutional Public Health
St. Dominic Hospital, Akwatia, Ghana
Associate, Step-Up Foundation
Tel:+233 24 4846895


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