An Analysis of Nigeria s Health Sector by State: Recommendations for the Expansion of the Hygeia Community Health Plan

Transcription

1 An Analysis of Nigeria s Health Sector by State: Recommendations for the Expansion of the Hygeia Community Health Plan Emily Gustafsson-Wright 1 Jacques van der Gaag 2 August, 2008 This report was produced by the Amsterdam Institute for International Development (AIID) at the request of PharmAccess who provided funding for the work. 1 Amsterdam Institute for International Development (AIID) and Brookings Institution. egustafsson@brookings.edu 2 AIID and Distinguished Visiting Fellow Brookings Institution. jvandergaag@brookings.edu

2 1. INTRODUCTION 1 2. NIGERIA COUNTRY OVERVIEW 2 3. OVERVIEW OF NIGERIA S HEALTH SECTOR HEALTH STATUS OVERVIEW AND INEQUALITIES IN HEALTH DISEASE BURDEN AND KNOWLEDGE OF AND BEHAVIOR RELATED TO HIV/AIDS EVOLVEMENT OF NIGERIA S HEALTH SYSTEM HISTORICAL PERSPECTIVE ORGANIZATION AND GOVERNANCE HEALTH INITIATIVES NATIONAL HEALTH INSURANCE SCHEME HEALTH INSURANCE FUND/PHARMACCESS PROGRAMS HEALTH EXPENDITURES OVERVIEW NIGERIA NIGERIA IN THE CONTEXT OF AFRICA STATE-LEVEL HEALTH SECTORANALYSIS HEALTH CARE FACILITIES UTILIZATION OF HEALTH CARE HEALTH SHOCKS AND RISK-POOLING OUT-OF-POCKET HEALTH EXPENDITURES OVERALL TRENDS OUT-OF-POCKET HEALTH EXPENDITURES BY STATE HYGEIA COMMUNITY HEALTH PLAN CONCLUSIONS SUMMARY OF NIGERIAN HEALTH SECTOR SUMMARY OF STATE-LEVEL ANALYSIS KEY FINDINGS FOR THE EXPANSION OF HEALTH INSURANCE SCHEMES IN KWARA STATE 30 REFERENCES 32 i

3 List of Tables 2.1 Poverty Incidence in Nigeria by Sector and Zone 2.2 Inequality in Nigeria by Zone: Gini Coefficient 2.3 Mean Annual Per Capita Consumption in Nigeria By Poverty Status and Consumption Quintile 2.4 Nigeria s 10 Poorest States (based on Mean Annual Per Capita Consumption) 3.1 Knowledge of and Behavior Related to HIV/AIDS Infection 4.1 Type of facility Visited When Ill 5.1 Annual Per Capita Out-Of-Pocket Health Expenditures by Poverty Status and Quintile 5.2 Low-Cost Insurance Packages Offered by Hygeia in Kwara and Lagos 5.3 Annual Per Capita Health Expenditures as % of Total Per Capita Expenditures Top Ten States 5.4 Low-Cost Health Insurance Packages Offered in HCHP in Kwara and Lagos 5.5 Mean Annual Per Capita Out-of-Pocket Expenditures and as % of Per Capita Consumption 5.6 HCHP Premium as % of Per Capita Consumption List of Figures 3.1 Cause of Deaths Among Children Under Age Five in Nigeria 3.2 Composition of Nigerian Health Expenditures 3.3 Total Health Expenditures Per Capita in Africa 3.4 Government Health Expenditures as Percentage of Total Health Expenditures is Africa 3.5 Per Capita Government Health Expenditures in Africa 3.6 Prepaid Health Expenditures and Percentage of Private Health Expenditures in Africa 4.1 Health Care Facilities Per 10,000 Individuals by State 4.2 Private/Public Health Care Facility Use by State 5.1 Annual Per Capita Out of Pocket Health Expenditures By State 5.2 Ratio of Out-of-Pocket Per Capita Health Expenditures to Total PC Expenditures by State ii

4 1. Introduction Nigeria s health indicators have stagnated or worsened during the past decade. Life expectancy is 44 years, lower than the African and developing country average, and infant mortality is almost double the developing country average. An estimated 3.5 million Nigerians are infected with HIV and access to prevention, care and treatment is minimal. The burden of health care financing lies mainly on individuals, with private expenditures equaling 70 percent of total health expenditures and out-of-pocket expenditures (OOPs) totaling 90 percent of private expenditures. The Government of Nigeria (GON) has, however, made serious efforts to improve the quality of health of the Nigerian people. In 1999, the government established the National Health Insurance Scheme (NHIS) which is a federally funded social health insurance scheme. The scheme is designed to facilitate fair financing of health care costs through risk pooling and cost- sharing arrangements for individuals. The scheme was officially launched in 2005 and to date, over 1.2 million identity cards have been issued. 1 The programs of the NHIS seek to cover those in the formal and informal sectors and additional special needs groups. The majority of the coverage however reaches individuals working in the formal sector leaving large gaps among the poor and informally employed. In an effort to address some of the remaining gaps in coverage and improve Nigeria s health indicators by addressing the health financing side, PharmAccess, in collaboration with the Health Insurance Fund (HIF) and Hygeia Health Maintenance Organization, has sought to increase access to health care through private risk sharing arrangements. The pilot program, Hygeia Community Health Plan (HCHP) subsidizes insurance premiums for low income previously uninsured people and targets approximately farmers in Kwara State and local market women in Lagos. 1 According to NHIS as of July,

5 The GON has shown great interest in expanding this program to other states in the country. The feasibility of this expansion depends on effective demand for and ability to finance the scheme (by the potential insured and the subsidy) as well as on the existence and effectiveness of health care facilities. It is therefore imperative to gain a better understanding of the situation of the health sector in each state and in particular Kwara State, the central state of focus in the HIF program. This report provides an analysis of the status of the Nigerian health sector, using primarily the Nigeria Living Standards Survey (NLSS) from 2003/2004 as well as some additional available data. The questions we seek to answer are 1) who pays for health; 2) how much is paid for health; 3) who benefits from health expenditures; and the related divergence across demographic groups and states. The report is organized as follows: Section 2 provides an overview of Nigerian demographics including poverty and inequality statistics. Section 3 describes Nigeria s health sector including health status, the evolution of the country s health system, and health expenditures in Nigeria in the context of other African countries. In Section 4 we examine differences by state in terms of health facilities, health care utilization, and health expenditures. Section 5 discusses out-of-pocket health expenditures, the impacts of health shocks and the potential for HIF health insurance programs to mitigate these shocks. In Section 6 we conclude with a discussion of recommendations to HIF for the expansion and implementation of their programs. 2. Nigeria Country Overview Nigeria with its population of around 145 million and a population growth rate of 2.4%, is the most populous country in Africa and the 8th most populous country in world. The country is made up of 36 states and the Federal Capital Territory (FCT) where the capital Abuja is located. The country's tumultuous history is reflected in the abundance of states - at independence from the United Kingdom in 1960 there were only three states - which highlights the potential challenges of managing such a heterogeneous country. Nigeria is ranked as one of the fastest growing economies with a growth rate of 6.3 percent in

6 and 9.1 percent projected for Nigeria s GDP per capita is $2035 according to IMF estimates from Improved growth and lower inflation are good signs for Nigeria though inflation is currently at risk due to increasing food prices. One of the main issues facing the country is balancing oil sector revenues and government spending. Over the last years, the accrued oil revenues have not led to improvements in poverty. Poverty incidence in 2004 is shown in Table 2.1 with an overall rate of 54.4%. Sectoral differences are reflected in a contrast between rural areas with a rate of 63.3% and 43.2% in the urban sector. The poorest zones of the country are those in the north with the South East being the zone with the lowest incidence of poverty. Table 2.1: Poverty Incidence in Nigeria by Sector and Zones (2004) % Sector Urban 43.2 Rural 63.3 Geo-political Zone South South 35.1 South East 26.7 South West 43.0 North Central 67.0 North East 72.2 North West 71.2 National 54.4 Source: Adapted from Agbokhan, (2008). Inequality, as measured by the Gini coefficient has been rising since 1985, save for a slight decline in 1992 as can be seen in Table 2.2. Comparing across geo-political zones we are able to see that the South West is the most unequal area of the country. 2 International Monetary Fund, World Economic Outlook Database, April

7 Table 2.2: Inequality Trend by Zones (Gini Coefficient) Geo-political Zone South South South East South West North Central North East North West National Source: Adapted from Agbokhan, (2008). In Table 2.3, the NLSS data show mean per capita consumption to be 26,755 Naira or approximately 434 international dollars in 2003 with wide disparities between the poor and non-poor. In the top consumption quintile, individuals have an average mean consumption equal to nearly 10 times that of the poorest consumption quintile. Table 2.3: Mean Annual Per Capita Consumption NGN $US* $Int'l (PPP)^ Non-Poor Poor Quintile Quintile Quintile Quintile Quintile Total * Exchange rate as of March, 2008 is NGN to 1$US. ^ 2004 $International PPP. Source: Authors' calculations based on Nigeria Living Standards Survey (NLSS) 2003/2004. Table 2.4 gives mean annual per capita consumption in Nigeria poorest 10 states. Jigawa ranks number one as the poorest state and Kwara is the fourth poorest state. The richest state Bayelsa has a mean per capita consumption of almost 45,000 Naira which is almost 5 times the mean per capita consumption in the poorest state. 4

8 Table 2.4: Nigeria s Ten Poorest States (Based on Mean Annual Per Capita Consumption) State Per Capita Consumption Jigawa 9856 Kogi Kebbi Kwara Yobe Sokoto Gombe Adamawa Zanfara Taraba Source: Authors' calculations based on Nigeria Living Standards Survey (NLSS) 2003/ Overview of Nigeria s Health Sector 3.1. Health status overview and inequalities in health The patterns of health status in Nigeria mirror many other Sub-Saharan African nations but are worse than would be expected given Nigeria s GDP per capita. The sheer numbers are astounding due to the country s size - one million Nigerian children under five die annually. 3 Seen in Figure 2.1, the main cause of deaths in children under five are attributed to neonatal causes with the communicable diseases Malaria and Pneumonia following. Diarrheal diseases also contribute to a large proportion of child mortality up to 300,000 deaths annually. Nonetheless, the country as a whole has seen some improvements on this front over the last years. However, country-wide statistics hide regional differences in fact child mortality is among the worst in the world in the North of Nigeria. Infant mortality is also high 99 deaths per 1000 births (WHO, 2006) , National Bureau of Statistics MICS. 5

9 Figure 2.1 Cause of Deaths Among Children Under Age Five in Nigeria Pneumonia Other causes Neonatal causes Diarrheal diseases HIV/AIDS Injuries Malaria Measles Source: Authors' calculations based on WHO/WHOSIS Rates of malnutrition are high with 43% of children under-five being stunted (chronically malnourished) and 27% being underweight. At birth, 17% of children are underweight (WHO, 2003). There is great inequality in immunization coverage by urban and rural with one-third of urban children being immunized before their first birthday and only 10% of rural children being so. Maternal mortality is the highest in African with 1,100 mothers dying per 100,000 live births (WHO, 2006). Life expectancy is age 42 for women and 41 for men (WHO, 2003) which is close to the mean in Africa Disease Burden and Knowledge of and Behavior Related to HIV/AIDS The disease burden is relatively high in Nigeria. Tuberculosis (TB) incidence has more than doubled in the last two decades with 311 new cases per 100,000 individuals in 2007 implying over 450,000 new cases per year. TB prevalence is equal to over 890, 000 individuals infected. The HIV/AIDS epidemic has already devasted Nigeria with nearly a million people dead and more than 2 million orphaned. 4 HIV/AIDS prevalence is among the highest in the world with an estimated over 5 million adults (above 15) infected with the disease 4 From Aids in Nigeria: A Nation on the Threshold. Adeyi, O. P. Kanki, O. Odutolu, and J. Idoko. Harvard Harvard Center for Population and Development Studies, Cambridge, Massachussetts. 6

10 according to data from Table 3.1 from the NLSS data provides a perspective on knowledge and behavior related to HIV/AIDS. In all of the categories, the non-poor are better informed and use safer practices regarding HIV/AIDS, nevertheless, the differences are surprisingly insignificant. A sentinel surveillance of HIV prevalence among antenatal patients between 1991 and 2003 shows a dramatic increase over that decade however there is a wide variation in prevalence rates across states. Kwara and Lagos states, where the HIF/PharmAccess programs are taking place, have among the lowest prevalence in the country. 5 Table 3.1: Knowledge of and Behavior Related to HIV/AIDS infection for individuals older than 10 yrs. Use Protection Ever Used a Condom Circumcised* Heard of AIDS Ever Been Tested Is AIDS avoidable Can a Healthy Looking Person Have AIDS Change Behavior to Prevent AIDS Non- Poor YES NO DON'T KNOW Poor YES NO DON'T KNOW Total YES NO DON'T KNOW * For men only. Source: Authors' calculations based on Nigeria Living Standards Survey (NLSS) 2003/ Evolvement of Nigeria s health system Historical Perspective Organization and Governance At the time of Nigeria s independence in 1960, the health care system was largely engaged in curative care and health care was found almost exclusively in urban areas. The 1970 s and 80 s brought about large changes for health care in Nigeria with a dramatic expansion of the public health care system. The third National Development Plan introduced a Health Sector Strategy which focused on primary health care (PHC) 5 Adeyi et al

11 leading to a PHC model focusing on districts in which 1 comprehensive health center, 4 health centers and 20 clinics served around 150,000 individuals. In addition, schools of health technology were established in each state to train health care workers. The National Health Policy of 1988 set up a health system which defines much of what remains today. This included the establishment of a mainly decentralized system in which roles were defined at the federal, state and local levels as well as the development of parastatal agencies. In the early 1990 s, a community-level component was established as part of the health strategy, including training of PHC workers. The National Health Council which is chaired by the Minister or Health and comprised of the Commissioners of Health of all of the states has overall responsibility of health policy. At the federal level lie the responsibilities for policy guidance and technical support, national health management information systems, government service provision by tertiary and teaching hospitals and national laboratories and international health relations. 6 Government secondary (and some tertiary hospitals) and the regulation and technical support to PHC services are the responsibility of the state governments. Local governments (LGAs) hold the responsibility of operation of public sector PHC services under which the services are organized by district. The majority of government resources come from oil revenues to the Federation Account (contributing to an uneven government budget 7 ) while some additional resources come from tax revenues. The transfers of funding to states and local governments are not earmarked and budget and expenditure reports are not required of the states and LGAs by the federal government however, lending to a poor system of accounting. Government health expenditures by state are discussed in more detail in section Health initiatives In the late 1980 s, in order to address problems at the PHC level primarily, numerous federal and state level parastatal agencies were created. By 1999, there were16 programs at the federal level, 11 agencies and departments and 14 different policies or strategies to 6 World Bank, World Bank,

12 address certain issue. Funding issues were resolved by external donor support to singleissue initiatives. Some of the programs included: Hospital Management Boards (HMBs) National Agency for Food and Drug Administration and Control (NAFDAC) National Primary Health Care Development Agency (NPHCDA) National Programme for Immunization (NPI) Population Activities Fund Agency (PAFA) National Action Committee on AIDS (NACA) National Health Insurance Scheme (NHIS) Coordination between parastatal agencies and programs and the federal and states ministries of health has presented many challenges which has affected effectiveness of health service provision. Nevertheless, there have been attempts at joining together in regular meetings of the National and States Health Councils National Health Insurance Scheme In 1999, the National Health Insurance Scheme (NHIS) was established after many years of attempts at getting it started. The scheme is designed to facilitate fair financing of health care costs through financial risk protection and cost-burden sharing for individuals. The scheme was officially launched in Payment to the primary provider is provided by capitation, meaning that a certain amount is paid to the primary provider monthly in advance. It is the responsibility of the pharmacy provider to make all prescribed drugs available to the beneficiary, even if it means sourcing it from other pharmacy providers. However, where necessary, the prescription may be changed to a close substitute by the prescriber where necessary. HIV/AIDS treatment is not covered by the scheme but associated opportunistic illnesses/diseases like diarrhea, tuberculosis etc are included in the benefit package. 8 Those included in the scheme per family include the contributor, their spouse and four biological children under 18 years of age. Extra dependants can be covered by payment of additional contribution. Children above 18 years of age that are not in a tertiary institution can be covered as extra dependants and those who are students in a tertiary institution can be covered under the Tertiary Institution and Voluntary 8 The National Action Committee for AIDS (NACA) is handling the supply of antiretroviral drugs. 9

13 participants Social Health Insurance Programme. The NHIS is comprised of numerous programs about which more information can be found in the appendix. To date, over 1.2 million Identity Cards have been issued. So far 32 HMOs have been accredited and registered and more applications are being processed. Presently, about 7,000 Healthcare Providers, 10 Banks, 5 Insurance Companies and 3 Insurance Brokers have also been accredited and registered. In the list of states that have so far shown their interests are; Rivers, FCT, Benue, Ekiti, Akwa Ibom while Cross River State has fully rolled in Health Insurance Fund/PharmAccess Programs The first PharmAccess/HIF program was started in Nigeria in early 2007 under the name Hygeia Community Health Plan (HCHP). President Obasanjo stated that he would match the program funds and provide support to additional target groups in the informal sector. He emphasized that this approach would cover workers in the informal sector for whom such facilities are not yet available. Since the launch of the scheme, an active enrollment campaign is underway to mobilize and enroll target group members. Enrollment in the program is voluntary; registration is done per family. The program targets a potential 115,000 individuals. This includes 10,000 market women and their families in Lagos (total target group 40,000 persons) and 7,500 farmers and their families of the rural Shonga community in Kwara State (total target group 75,000). Annual premiums are $60 per person per year in Lagos and $27 per person per year in Kwara State. In the first year, the insurance scheme members pay 5-10% of these annual premiums themselves; the remaining 90-95% is subsidized by HIF. The benefit package provides coverage for the most common medical problems found among the target groups and includes primary care, limited secondary care and medication, including HIV/AIDS voluntary counseling and treatment (VCT). The local executing partner of the program is Hygeia, the largest Health Maintenance Organization (HMO) in Nigeria, which has a local network of over 200 clinics and hospitals throughout Nigeria and around 200,000 paying members. Hygeia has 20 years 10

14 of experience in health care in Nigeria and is one of the HMOs executing Nigeria s new National Health Insurance Scheme (NHIS). Hygeia has contracted 19 clinics and hospitals for the Health Insurance Fund program where the scheme beneficiaries can obtain their medical services. The clinics are selected on the basis of a medical due diligence of clinics carried out by PharmAccess and Hygeia. In November 2006 Hygeia and the providers, with assistance from PharmAccess, developed upgrading plans for 14 of the clinics. These are currently being implemented. Within the program, funding is allocated for improvement of the physical infrastructure. In Kwara State the Governor has allocated funds from the State budget for two clinics, amounting to $ 75,000 per clinic, to rehabilitate them up to the required standards. In February 2007 PharmAccess and Hygeia organized the first medical and administrative training for the medical directors, nurses, pharmacists, laboratory technicians and administrative staff of all health facilities involved in the program. In the coming period, Hygeia will increase the numbers of enrolled persons in Lagos and in Kwara State. In the meantime, Hygeia is working closely with PharmAccess to further upgrade the health facilities and improve and expand the level of care, enabling provision of good quality health care for those who did not have access before Health Expenditures If asked, a layperson could most likely tell you that health expenditures would be higher in rich countries compared to poor countries. This fact has been well documented using data from around the world and is one of the main challenges faced when trying to address the disproportionately large disease burden that poor countries face. 9 Health expenditures also make up a bigger share of a GDP in richer countries. In addition, health expenditures, which are made up of the government and private outlays, tend to consist of a heavier government share in richer countries. This implies that in poor countries, private payments dominate. Prepaid payments (insurance) as share of private 9 Newhouse (1977) and van der Gaag and Stimac (forthcoming, 2008). 11

15 payments are also relatively higher for richer countries meaning that out-of-pocket payments make up a very large share of private payments for individuals in poor countries. This fact has dire consequences for poor individuals in such countries. Evidence shows that households without health insurance suffer severe financial consequences after experiencing negative health events. Among other things, the relatively high vulnerability to negative health events, the lack of government spending on health care and not having health insurance results in further impoverishment and even death for many poor individuals. 10 In this section, we place Nigeria on the chart, relative to other countries in Africa with respect to health expenditures. We examine total health expenditures as proportion of GDP, government health expenditures (GHE) as a proportion of total health expenditures (THE), per capita government expenditures, and the proportion of prepaid payments making up private health expenditures (PHE); all in relation to per capita GDP. In the following section, we will do the same for all of the Nigerian States, putting into context our state of focus - Kwara State Overview Nigeria Between 2000 and 2004 there were some shifts in the composition of health expenditures in Nigeria. First, THE as a percentage of GDP increased from 4.3 to 4.6 percent. There was a decrease in GHE as percentage of THE from 33.5% to 30.4% and an increase in PHE as a proportion of THE by almost 5%. Out-of-pocket spending decreased while prepaid and risk-pooling plans went from 5.1% to 6.7% of private health expenditures a 31% increase. External resources as a percentage of THE decreased by one-third from 16.2% to 5.6%. While the increase in prepaid plans is a positive change for the Nigerian health sector, government resources dedicated to health are extremely low and as can be observed in Figure 3.2 below, private health spending represents the largest proportion of THE in Nigeria. In 2004 private expenditures were equal to nearly 70% of THE. Prepaid plans represent around 5% of total health spending. 10 WHO reports 150 million individuals impoverished as a result of out-of-pocket health expenditures. World Health Statistics Report,

16 Figure 3.2: Composition of Nigerian Health Expenditures % (393 Million Naira in 2004) Private Prepaid Plan (Insurance), 5.0 Government Expenditure, 30.4 Private Out of Pocket, 64.6 Source: Authors' calculations based on WHO/WHOSIS Nigeria in the context of Africa In Figure 3.3, per capita THE (in log terms) in African countries for 2004 is graphed with respect to GDP per capita (in log terms) demonstrating the above known fact that poor countries have lower health expenditures per capita. Nigeria s THE are pretty much consistent with the health expenditures in African countries with similar GDP health expenditures although there are some exceptions such as Sierra Leone and Tanzania. To put this in context, Nigeria s THE are equal to $45 (PPP) annually per capita while a richer country like Namibia, has a THE of $344 (PPP) per capita. The THE share of GDP equals around 4.5%, placing Nigeria below the African mean of 5.35%. 13

17 Figure 3.3 Total Health Expenditures per Capita in Africa South Africa Botswana Seychelles Mauritius 7 Swaziland Namibia Cape Verde Gabon Equat. Guinea 6 5 Zimbabwe Rwanda Sao Tome and Uganda Principe Lesotho Guinea Kenya Ghana Burkina Faso Cameroon Malawi Côte d'ivoire Togo Senegal Zambia Mali Gambia C. African Rep. Tanzania Mozambique Benin Sierra Leone LiberiaNigeria Chad Angola Guinea-Bissau Madagascar Comoros Niger 3 Eritrea Ethiopia D em. Rep. Burundi of the Congo 4 6 Congo LnGDP per Capita 10 lnpercapitathe Fitted values Source: Authors' calculations based on WHO/WHOSIS While less stark as the previous graph, the relationship between government health expenditures (GHE), as a proportion of total health expenditures, and GDP per capita is positive, implying that richer countries, as discussed above, spend more on health as a percentage of GDP. As seen in Figure 3.4, GHE as percentage of THE in Nigeria, place it well below other countries with similar GDP per capita. The only countries worse off relative to their GDP per capita are Cameroon, Cote d Ivoire, Gambia, Guinea and Togo. In fact, Nigeria is among the top ten African countries in terms of the proportion of private spending relative to government spending. It is apparent from this graph that not only are government resources allocated towards health limited in Nigeria but household bear a large burden for health expenditures. 14

18 Figure 3.4 Gov't Health Expenditures as % of THE in Africa Malawi Sao Tome and Principe Lesotho Angola Mozambique Liberia Madagascar Sierra Leon e Rwanda Comoros Zambia Burkina Faso Niger Ethiopia Benin Mali Congo Zimbabwe Tanzania Kenya Eritrea Senegal Ghana C. African Rep. Chad Uganda Guinea-Bissau Nigeria Gambia Dem. Rep. of the Congo Cameroon Burundi Côte d'ivoire Togo Seychelles Cape Verde Equat. Guinea Namibia Gabon Swaziland Botswana Mauritius South Africa 2.5 Guinea LnGDP per Capita 9 10 Ln Gov't Health Expend. as % Total Health Expend. Fitted values Source: Authors' calculations based on WHO/WHOSIS There is a distinct correlation between government health expenditures per capita and per capita GDP. Nigeria falls in the far left and bottom quadrant of the graph indicating low per capita government health expenditures. On a per capita basis, individuals are receiving less than many other countries with the same or lower GDP per capita. 15

19 Figure 3.5: Per Capita Gov't Health Expend in Africa Botswana Seychelles 6 South Africa Mauritius Swaziland Namibia Cape VerdeGabon Equat. Guinea Rwanda Lesotho Zimbabwe Burkina Faso Malawi Kenya Gambia Uganda Ghana Angola Liberia Zambia Mozambique Mali Tanzania Benin Sierra Cameroon Madagascar Leone Senegal C. African Rep. Togo Chad Comoros Niger Côte d'ivoire Ethiopia Nigeria Congo Guinea Eritrea Guinea-Bissau Dem. Rep. of the Congo Burundi Sao Tome and Principe LnGDP per Capita 9 10 lnpercapitaghe Fitted values Source: Authors' calculations based on WHO/WHOSIS For its level of GDP per capita, Nigeria has relatively high prepaid and risk-pooling expenditures are percentage of private health expenditures at 6.7%. Only three Sub- Saharan African countries with lower GDP per capita have a higher proportion of prepaid spending on health relative to total private spending. Those countries which stand out as outliers are Cape Verde which has very low prepaid health spending relative to its GDP per capita and Namibia and South Africa which, while they consistently have higher prepaid spending with higher GDP, have extremely high prepaid health expenditures compared to their Sub-Saharan African neighbors around 77% for both. 16

20 Figure 3.6: Prepaid as % Private Expenditures in Africa Namibia South Africa 4 2 Malawi Niger Madagascar Côte d'ivoire Nigeria Kenya Tanzania Togo Senegal Zimbabwe Ghana Swaziland Botswana Mauritius 0 Ethiopia Burkina Faso Rwanda ZambiaMozambique Mali Chad Uganda Cape Verde -2 Benin LnGDP per Capita 9 10 lnprepaidprivate Fitted values Source: Authors' calculations based on WHO/WHOSIS In summary, consistent with findings from around the world, total health spending in Nigeria is low along with its GDP. Nearly 70% of all health spending is private and on the flipside, the proportion of total health spending from government is low. The country has relatively high pre-paid expenditures for its level of GDP but this shadows differences between the poor and non-poor where the poor are both less likely to be insured and more likely to be vulnerable to health risks. These findings indicate that overall, Nigeria has a relatively large amount of resources that could be tapped into in the private sector as individuals are already paying large amounts for health care out-ofpocket. In section 5 we analyze out-of-pocket spending in the context of health shocks 17

21 with a more detailed look at the state level. First, however we will examine private vs. government health spending as well as some basic data on infrastructure by state. 4. State-level Health SectorAnalysis 4.1. Health Care Facilities In the Figure 4.1 below we observe a scatter plot of health facilities per 10,000 individuals relative to log per capita consumption by state in Nigeria using data from The states above the line are better off meaning that there are fewer individuals per health care facility. There is a trend towards more health facilities per capita as per capita income increases although some states e.g. Bayelsa and Ebonyi have few health facilities per capita despite being among the richest states. The state of Bauchi and the FCT are the states with the most health facilities per capita. Kwara State is among the poorest of the states but is relatively better off in terms of number of health facilities compared to some states - it is among the top ten states with most health facilities per 10,000 individuals. Lagos is another state with higher per capita consumption but lower than average health facilities per capita. 18

22 Figure 4.1: Health Care Facilities per 10,000 Indiv. by State in Nigeria 4 FCT Nassarawa Bauchi 3 2 Kogi Kwara Kebbi Plateau Benue Taraba Niger Kaduna Ondo Abia Osun Oyo Imo Enugu Edo Anambra Ogun Cross_rivers 1 Jigawa Yobe Sokoto Zanfa Gombe Adamawa ra Lagos Katsina Borno Kano Delta Ekiti Akwa ibom Rivers Ebonyi Bayelsa Ln Per Capita Consumption Health Facilities Per Tenthousand Fitted values Source: Authors' calculations based on Nigeria Living Standards Survey (NLSS) 2003/2004 and NBS Social Statistics in Nigeria 2005, Federal Republic of Nigeria Utilization of Health Care When individuals visit a health care facility when ill or injured, they have a choice about what type of facility to utilize. This choice is most often constrained by both geographic and economic constraints. In Table 4.1 below, we see that the type of facility most often used in Nigeria are the government facilities, which comprise of federal, state and local government facilities equaling near 52 percent of all health care utilization. Among the government facilities the most commonly used are the state government facilities representing nearly 30 percent of all health care use. Individuals in quintile 5 used government facilities in 45 percent of the cases and 60 percent did among those seeking care in the poorest quintile. Private facilities are used in nearly 40 percent of all cases overall but for those in quintile 1 they were used in 32 percent of the cases relative to 19

23 nearly 50 percent for those in the richest quintile. Other facilities are used 7% of the time and more often for the poor. This could include such health facilities as traditional healers or even pharmacies. Among all income groups, this category is most commonly used among those in the third quintile. Table 4.1: Type of Facility Visited When Ill Federal Gov't State Gov't Local Gov't Religious Industrial Private Other Total Non-Poor Poor Quintile Quintile Quintile Quintile Quintile Total Source: Authors' calculations based on Nigeria Living Standards Survey (NLSS) 2003/2004. As can be seen in Figure 4.2 below, there is a clear relationship between the use of private versus public health facilities and per capita income (consumption). The poorest states, Jigawa, Kogi, Kebbi, and Yobe have among the lowest use of private health facilities relative to public health facilities. Surprisingly, use of private facilities is relatively high in Kwara State. Only a handful of richer states show a lower utilization of private facilities. Besides the private health establishments in the state, there are the University of Ilorin Teaching Hospital, three specialist hospitals, six general hospitals, six rural health centers, 15 basic health clinics and seven district health units. 20

24 Figure 4.2: Private/Public Health Care Facility Use By State in Nigeria 4 Anambra 3 Abia Imo Lagos Edo Bayelsa Enugu 2 Benue Ebonyi Oyo 1 0 Jigawa Kwara Kebbi Yobe Kogi Akwa ibom Ogun Rivers Ondo Delta Nassarawa Plateau Cross_rivers Kaduna Gombe Bauchi Niger Osun Sokoto Taraba Borno Ekiti Zanfara Katsina FCT Adamawa Kano Ln Per Capita Consumption privatepublicratio Fitted values Source: Authors' calculations based on Nigeria Living Standards Survey (NLSS) 2003/ Health Shocks and Risk-Pooling Evidence is clear that health shocks can have severe and long-lasting consequences especially for poor households, both through income loss and high medical expenditures (e.g. Beegle et al., 2008; Fox et al., 2004; Gertler and Gruber, 2002, Wagstaff, 2007). Health risk is one of the severest risks confronting poor households. Even ignoring the personal misery it brings, illness can cripple a poor household s earning capacity. Sick individuals can no longer contribute to household income. On top of that, households must allocate resources to provide care within the family and cover the expenses of treatment. Data suggest that more than 150 million people globally suffer financial catastrophe every year due to out-of-pocket health expenditures. The surge of HIV/AIDSrelated illnesses and deaths only exacerbates this problem. In the absence of access to 21

25 credit or health insurance, households are forced to resort to alternative coping strategies. However, for low-income households the depletion of savings, assets, or human capital may lead to a further eroding of their already poor asset base (Morduch, 1995, Dercon, 2002). For example, several studies suggest that HIV-related health shocks and deaths lead to an increase in child labor and a reduction in schooling (Ainsworth et al., 2005; Beegle et al., 2006). Health insurance potentially mitigates these effects through coverage of medical expenditures and enhancing early treatment Out-of-Pocket Health Expenditures overall trends In the tables below we compare out-of-pocket health expenditures by poverty status and consumption quintile. 12 As we discussed above, out-of-pocket health expenditures can represent a large and sometimes catastrophic burden on a household. An overall trend on OOPs is that consultations and medications are the most costly to individuals relative to other health related expenses. However for the non-poor hospitalization is on average more costly than medications. Another notable pattern from Table 5.1 is that the nonpoor spend far more than do the poor out-of-pocket on health care. The is true for all categories of out-of-pocket spending but with the largest difference in out-of-pocket spending on hospitalization where the poor spend on average 78 Naira per year per capita compared to 2034 for the non-poor. Those in the top consumption quintile pay ten times what individuals in the bottom consumption quintile on hospitalization. This raises concerns that poor individuals needing hospital care are either not seeking care due to prohibitive costs or are receiving care which may be sub-standard in terms of quality. 11 From Gustafsson-Wright, Janssens and van der Gaag, Out of pocket expenditures are calculated from the NLSS consumption data. 22

26 Table 5.1: Annual Per Capita Out-of-Pocket Health Expenditures (NGN) Consultations Hospitalization Medication Transport Total Non-Poor Poor Quintile Quintile Quintile Quintile Quintile Total Source: Authors' calculations based on Nigeria Living Standards Survey (NLSS) 2003/2004. The following table compares average out-of-pocket health spending to average per capita consumption. The bottom three quintiles spend between 7 and 9 percent of their mean per capita consumption while the wealthiest quintile spends on average 19 percent of their income on out-of-pocket health expenditures. Table 5.2: Annual Per Capita Health Expenditures (NGN) as Percentage of Per Capita Consumption Total Per Capita Health Expenditures (NGN) Mean Per Capita Consumption (NGN) % of Per Capita Consumption Non-Poor Poor Quintile Quintile Quintile Quintile Quintile Total Source: Authors' calculations based on Nigeria Living Standards Survey (NLSS) 2003/ Out-of-Pocket Health Expenditures by state We observe similar patterns when comparing OOPs by state (see Figure 5.1). Per capita out-of-pocket health expenditures increase with the wealth of a state as measured by per capita consumption. Individuals in poorer states spend less out-of-pocket on health care. Kwara State has a mean per capita out-of-pocket health expenditures of 2780 Naira for 23

27 the total population and 895 Naira for the poor. Out-of-pocket health expenditures are higher in Lagos Naira overall and 1453 for the poor - but Lagos is also a richer state. Figure 5.1: 10 Per Capita OOP Health Expenditures by State in Nigeria Imo 9 8 Kogi Kwara Yobe Enugu Rivers Cross_rivers Edo Abia Ebonyi Anambra Taraba Benue Lagos Ogun Delta Akwa ibom Bayelsa Adamawa Katsina Plateau Nassarawa Oyo Kaduna FCT Gombe Osun Ekiti Bauchi Sokoto Kano Borno Ondo 7 Jigawa Kebbi Zanfara Niger Ln Per Capita Consumption Ln Per Capita OOP Health Expend. Fitted values Source: Authors' calculations based on Nigeria Living Standards Survey (NLSS) 2003/2004. The proportion that out-of-pocket health expenditures represent as part of total per capita expenditures helps to highlight the potential catastrophic impacts that health expenditures may represent to a household. Health expenditures represent 14 percent of total per capita expenditures in the country as a whole. The state with the largest proportion of out-ofpocket health expenditures is Kogi, with 31% and Imo follows closely with nearly 30%. Kwara, is ranked 5th with 21% of per capita expenditures dedicated to out of pocket health costs. The per capita OOPs in both Kogi and Kwara are a cause for great concern given that both states are among the poorest in the country. In Lagos, the proportion spent on health is nearly 19% which also places it among the top ten. 24

28 Table 5.3: Annual PC Health Expenditures as % of PC Total Expenditures Top Ten States State % Kogi Imo Adamawa Taraba Kwara Enugu Rivers Cross Rivers Lagos Katsina Source: Authors' calculations based on Nigeria Living Standards Survey (NLSS) 2003/2004. Figure 5.2: Ratio of OOP PC Health Expend. To Total PC Expend. By State.3 Kogi Imo.2 Kwara Adamawa Taraba Katsina Lagos Plateau Benue Gombe Nassarawa Enugu Cross_rivers Rivers Ebonyi Delta Edo.1 Jigawa Yobe Sokoto Kaduna Akwa Ogun ibom FCT Oyo Abia Anambra Bayelsa Kebbi Kano Borno Ekiti Ondo Osun Bauchi Zanfara Niger Ln Per Capita Consumption Ratio of PC Health Expend. to PC Total Expend. Fitted values Source: Authors' calculations based on Nigeria Living Standards Survey (NLSS) 2003/

29 5.3. Hygeia Community Health Plan The Hygeia Community Health Plan of the Health Insurance Fund targets 10,000 market women and their families in Lagos (total target group 40,000 persons) and 7,500 farmers and their families of the rural Shonga community in Kwara State (total target group 75,000). The annual premiums actually paid by individuals enrolled are 800 Naira per person in Lagos and 200 Naira per person per year in Kwara State. The benefit package provides coverage for the most common medical problems found among the target groups and includes primary care, limited secondary care and medication, including HIV/AIDS treatment. Table 5.4: Low Cost Health Insurance Packages offered by Hygeia in Kwara and Lagos 1. Community Health Package Lagos Yearly Fee Market Women Lagos Hygeia package Real price Market Women Lagos Hygeia package Naira Euro 800 5,29 a person a year ,88 a person a year 2. Community Health Package Kwara Naira Euro Package Hygeia Kwara 200 1,18 a person a year Real price Standard insurance packages Hygeia for middle and higher income Standard Insurance package Hygeia ,12 a person a year Silver Insurance package Hygeia ,88 a person a year Gold Insurance package Hygeia ,24 a person a year As noted in the previous sections, OOPs on health care are extremely high in both Kwara and Lagos states. Among all states, Kwara has among the highest OOPs in the country with health expenditures representing over one-fifth of total per capita expenditures. Average per capita out-of-pocket health expenditures in Lagos are 4730 Naira and in Kwara State, 2800 Naira. 13 For the poor however, they are considerably lower, as can be seen in Table 5.5 with 1453 Naira in Lagos and 895 Naira in Kwara State. For the poor, 13 Note that these data are from 2003/2004, in the years to follow Nigeria experiences high inflation rates according to IMF data from the period

30 this represents up to 11 percent of income in Kwara and over 13 percent of income in Lagos. The poorest quintile in each state spends 798 and 510 Naira for Lagos and Kwara respectively. The difference between the first and last quintiles, in the proportion of total expenditures that health expenditures represent, are much more dramatic in Kwara State than in Lagos. Table 5.5: Mean Annual Per Capita Out-of-Pocket Health Expenditures and as % of Per Capita Consumption PC Health Expend. KWARA STATE PC Health Expend. LAGOS STATE PC Consum % PC Consum % Non-Poor Poor Quintile Quintile Quintile Quintile Quintile Source: Authors' calculations based on Nigeria Living Standards Survey (NLSS) 2003/2004. A comparison between the two tables shows that the premium in the Hygeia package is almost 300 Naira less than what an individual in the poorest quintile is paying on average out-of-pocket on health in Kwara State and 1500 Naira less for somebody in the 2 nd quintile (see Table 5.6 below). If the health insurance covered what the individual is currently paying for out-of-pocket for health care, this would imply an average decrease in per capita health expenditures as percentage of per capita consumption of around 5% for an individual in quintile 1 and 12% for an individual in quintile 2. Alternatively this could potentially indicate scope to increase Hygeia premiums. In Lagos the Hygeia premium is almost exactly equal to the average OOPs for the first quintile so there would be little or no change to expenditures but for the second quintile the premium would cost 1200 Naira less than the average individual is currently spending out-of-pocket on health. Individuals would be spending 10 % less of their income on health. 27

31 Table 5.6: HCHP Premium as % of Per Capita Consumption KWARA Premium Paid PC Consum % Premium Paid LAGOS PC Consum % Poor Quintile Quintile Source: Authors' calculations based on Nigeria Living Standards Survey (NLSS) 2003/ Conclusions This report has sought to highlight some of the main points of relevance surrounding the health care sector in Nigeria with a focus on differences by state and with a particular emphasis on Kwara State, the state of interest in the potential expansion of the Hygeia Community Health Plan (HCHP). Below we summarize our main findings and provide recommendations to consider for program expansion Summary of Nigerian Health Sector Health indicators in Nigeria are below what would be expected for a country with its level of GDP. HIV prevalence has skyrocketed over the last 10 years to reach an estimated 5 million individuals. The impacts on households, the children left as orphans and relatives left to care for them, and the economy as a whole are difficult to fathom. Maternal mortality is the highest in the world and child and infant mortality represent astonishing numbers one million children under the age of five dying every year. Socioeconomic and regional differences suggest great inequality in access to health care and preventive treatment only 10 percent of rural children receive their needed immunizations before their first birthday. Total health expenditures per capita are low as in most poor countries but they are even lower as a share of GDP than the African mean. Private expenditures make up 70% of total health spending placing Nigeria among the 10 top countries in private share of 28

32 health spending and par with countries such as Bangladesh. 14 Only five percent of total health spending is prepaid spending. This implies that out-of-pocket spending makes up 65% of total health spending in Nigeria, a fact that paints a dismal picture for Nigeria. Global findings show that far more people suffer financial catastrophe as a result of health care when out-of-pocket payments represent more than 15% of total health spending. In fact OOPs are the main factor leading to financial catastrophe even when considering availability of health services and inequality. Evidence suggests that millions globally suffer financial catastrophe every year due to out-of-pocket health expenditures. Nigeria s enormous population contributes greatly to this global figure Summary of State-level Analysis Out-of pocket payments are higher in richer states as we saw in Figure 5.1. However, the proportion that per capita out-of-pocket payments represent as part of per capita total consumption follows the opposite trend. Individuals in poorer states spend a larger portion of their total per capita expenditures on health care out-of-pocket. Our second pertinent finding for Kwara State has one of the highest proportions of out-of-pocket spending relative to total spending per capita, with over one fifth of per capita consumption (income) going to health care in the form of OOPs. Lagos is also among the top ten highest spending states for out-of-pocket health care as a portion of capita expenditures. Among the poor in these two states, out-of-pocket spending represents 11 and 13 percent of income in Kwara and Lagos respectively. We find a positive but weak correlation between the number of health facilities per 10,000 individuals and the mean per capita consumption in a state. An important finding was that Kwara, despite being one of the poorest states, has an above average number of health facilities for the population. This means that Kwara is better set up than other states with similar per capita consumption in terms of infrastructure. Overall in Nigeria, in over half of all cases when health care is sought, individuals use government health facilities. While the non-poor use private health facilities more frequently than public health facilities relative to the poor, even among the non-poor are government facilities 14 Pauly et al