The Health Maintenance Organisations(HMOs) in Nigeria, are resisting the format of the recapitalisation exercise and mandatory health insurance coverage of residents by only states health insurance scheme, NATIONAL ECONOMY learnt.
This is even as they have described the operational guidelines of the National Health Insurance Act (NHIA), as a final nail in the coffin.
The Nigerian government signed into law the new National Health Insurance Act (NHIA) 2022 on 19 May 2022. The NHIA replaced the National Health Insurance Scheme Act of 1999, which failed to enrol more than 10 per cent of the population of the country.
However, HMOs have pointed out some lapses in the operational guidelines of the Act that could stifle their operations in carrying out their mandate.
For instance, they pointed to Section 15(4) of the Act which states that; “A private health insurance scheme or plan shall be required as a condition for registration and licensing by the Authority to deposit with a Bank accredited by the Authority an amount of money in an interest-yielding account that the Authority shall prescribe as security for its members.”
Similarly, the chairman, Institute for Healthcare Finance and Management (IHFM) Limited, Dr. Ladi Awosika, has decried the 20 per cent annual turnover as stipulated in the National Health Insurance Act (NHIA), even as he has called on the federal government to review the operational guidelines of the Act.
Awosika observed that the paid-up capital of the HMO has no direct relationship with the health risk profile of a private health insurance scheme and it should not be used as a lever to hedge the risk of failure of the private health insurance scheme.
Should the NHIA decide to use the capital base, then it should not be by an arbitrary 20 per cent of paid-up capital, the chairman said, adding that, the method is valid only if it is tied in an actuarially determined way to the risk profile of the health insurance scheme and its carrier, the HM0.
“The NHIA should not just state a security deposit requirement through a black box approach where the stakeholders are not privy to the mechanism of the determination. Since the Act provides for a mandate to review the level of the security deposit, it cannot be stated arbitrarily. There must be transparency on which risk management and actuarial methods are used in determining it using a white- box approach,” he further explained.
Health Insurance is a mathematically designed product in terms of risks; such issues as statutory reserving require the engagement of available and defendably sound actuarial science and risk management methodologies, the chairman stated, even as he revealed that one way to do this is through an appropriate Risk-based Capital requirement, which is a statutory minimum level of capital that is based on the size of membership of the HMO and the inherent riskiness of its assets and operations.
“Another way may be the innovative use of Value-at-Risk methodologies. The NHIA should provide an actuarial white paper on how important regulatory aspects like security deposit requirements were arrived at. This is the global best practice among regulators of health insurance. Solvency and Liquidity Ratios, which are the Insurance Industry metric of viability and sustainability are more meaningful measures than Statutory Deposits.
“Solvency relates to the surplus of assets over liabilities, whilst Liquidity relates to the ability of a company to pay debts as they fall due in the ordinary course of business for a period of 12 months.
“Clarification will need to be made as to whether the HMO is free to place the deposit in higher- yielding vehicles within the designated banks rather than mere deposit accounts. The deposit should still be subject to the HMO’s treasury management activities since the Act in Section 15(8) sees it as the asset of the private health insurance scheme,” he pointed out.
The NHIA 2022 required that, for HMO to retain business, they must capitalised up to N400 million for national, N200 million for state and N100 million for zonal operators respectively.
However,, the chairman of Hallmark Health, Mr. Eddie Efekoha, had highlighted the difficulties faced by practitioners and operators in the healthcare management sector, pointing out that, like other industries, the sector is dealing with rising operating costs as a result of the local currency’s depreciation, which drives up treatment costs. These days, the majority of medications purchased from pharmacies are dollarized, and most patients cannot afford them when converted to Naira, he observed.
Efekoha called on government to reconsider its policy redirection on recapitalisation as obtained in the new NHIA Act passed into law in 2022 during the leadership of ex-president, Muhammadu Buhari.
“The current operating environment is not only challenging, highly demanding, but it does not support growth or sustenance of the business. It is strongly believed that it is not yet time to increase capital base for HMOs, when, indeed, most of them are annually declaring losses and burning capital, nor does it help improve the market and create needed awareness when private players are restrained to limited coverage,” he said.
Another threat to healthcare access, is the regulatory environment where private HMOs are having businesses being threatened by government scheme, Efekoha said, adding that, “while we support the pronouncement to make health insurance mandatory for all Nigerians, people should not be compelled to patronise only the government schemes, thus, leaving private players to scramble for top-up scheme or plans. If the sector therefore must grow, government role must be that of creating an enabling environment whereby the services of operators are bought by enrollees are indeed delivered seamlessly.”
Meanwhile, the Healthcare providers under the auspices of the Association of General & Private Medical Practitioners of Nigeria (AGPMPN) have said the health insurance in the country is in sham, even as they called for a total reform of the scheme in Nigeria.
The healthcare providers are making the call on the fact that they claimed they are the ones subsidising healthcare of Nigerians. ‘We buy expensive drugs to treat patients, yet, we don’t get paid for what we have spent,’ they lamented.
The general secretary, AGPMPN, Dr. Debo Adebiyi, while speaking with NATIONAL ECONOMY, said the HMOs are not being honest as they are not paying the claims of the healthcare providers as at when due.
‘Even when they pay the claims, they will slash the money, to the loss of the healthcare providers. We have been shortchanged from the beginning,’ he explained.
The NHIA mandates every state in Nigeria and the Federal Capital Territory to establish and implement a State Health Insurance and Contributory Scheme to provide health care for their residents.
Adebiyi averred that the States health insurance scheme are worst in terms of payment of claims, adding that, “A state like Lagos state is paying N360 per enrollee per month. What can N360 do for us? The cost of anti malaria drug is above N700, yet, Lagos state is paying N360 for a month, where a patient can come to access treatment three to four times in a month. If the mother is not sick, the husband or the children are sick. We are running at a loss. We are struggling. There is no way, you expect Nigerians to get quality healthcare services with this amount of money.”
He, however, called on the management of the NHIA, HMOs and state insurance agencies to face reality. “They know the truth; they know what they need to do. They are only playing politics about it. Let’s start by sitting together to discuss this situation. We need to be well represented at the policy stage,” he added.
In its reaction, the management of NHIA, has however advocated that there is need to have strong HMOs. “Accountability is very important, if we must achieve Universal Health Coverage for all Nigerians. The HMOs must pay claims as at when due. I will also appeal to HMOs to come together under one umbrella, bring out all their issues, and communicate to us, through the right channels.
“The NHIA is an Act, signed into law and it is meant to be implemented. The management of the NHIA will critically look at the issues raised and make changes where needed,” it stated.
