Healthcare financing in Nigeria: Between Profit and Public Good (4)


The Nigerian government intends to use CBHI to cover people employed in the informal sector and in the rural areas (Adinma & Adinma, 2010). It has been piloted on a small scale in three states (Anambra, Lagos and Kwara) (Ayeleso, 2011). About 110 communities across the country have been identified to benefit from this and there are about 100 others that have approached the NHIS to roll out the scheme in their communities.

Healthcare financing in Nigeria: Between profit and public good (3)
Comrade Olubunmi Akinola, Assistant Gen Secretary, Ogun State NANNM.

The scheme is contributory, in that individuals are expected to make regular financial contributions of N150 per head into a pool. The scheme’s sustainability is however often threatened by low enrolment as a result of skepticisms by the community in the organisers or managers of the scheme, attractiveness of the benefit package, affordability of the premium, and the quality of the healthcare delivery (Onoka et al., 2011).

This has led to equity issues in the community-based health insurance scheme. For instance, despite the trifling amount of premium paid by the enrollees in the Southeast Nigeria, scheme enrolment was very low and contributions were observed to be retrogressive (Onoka et al., 2011).

Priority of public good

As earlier mentioned, the basic goals of healthcare financing systems are to keep people healthy, treat the sick and protect families against financial ruin from medical bills (Anyasor, 2017}. It has also being argued that the objectives of health care financing are to make funding available; ensure appropriate choice and purchase of cost-effective interventions; give appropriate financial incentives to providers and ensure that all individuals have access to effective health services; achieve equity and efficiency in use of healthcare spending; ensure that essential healthcare goods and services are adequately provided for; and ensure that the money is spent wisely so that the Millennium Development Goals MDGs could be achieved (Uzochukwu, 2013; Soyibo et al, 2005).



It is clear from the above that healthcare is and should be run as a public service and not a business. The expenditure in healthcare services should be seen as investments in the economy of any nation and the return on investments is to be obtained from a healthy populace especially a workforce that exhibit reduced number of revenue lost to illnesses or ill-health. Healthcare services like any other public services should not be run with the mindset of profit making as they are a prerequisite to the improvement of human right.


Problem of privatisation

The demand for privatisation or public-private partnerships (PPP) within the health sector from some quarters does not have any intention for public good but to advance the personal or selfish interest of “putting the resources of the larger public into the pockets of a few elites”.

One valid argument for privatisation and PPP is that the private sector is more efficient than the public sector. However, the falsehood behind this argument has been exposed. For instance, a global survey found that “privatised sectors perform significantly worse” than telecom companies remaining in state hands (PSIRU, 2014).

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Privatisation or public private partnership does not necessarily lead to greater technical efficiency or effectiveness in providing services. Though it aims for cost-effectiveness, this often results in lower level of service or pay-cuts for workers, job insecurity and job losses – all of which have their own stifling effects on the wider economy (Godrej, 2015).

Godrej further posited that privatisation has been thoroughly scrutinised; there are numerous studies, surveys and, indeed, surveys of surveys of its effects. The consistent conclusion in all, however is that there is no evidence of greater efficiency. So, the best outcome one can hope for is that private-sector ownership or involvement is no worse than what the public sector provides – hardly a turn-up for the books.

The largest study of the efficiency of privatised companies looked at all European companies privatised between 1980 and 2009. It compared their performance with companies that remained public and with their own past performance as public companies. The result showed that the privatised companies performed worse than those that remained public and continued to do so for up to 10 years after privatisation.

Even in the super-competitive telecoms sector, where customers have benefited from lower costs and increasing variety of services over the years, this result holds.  A global survey found that “privatised sectors perform significantly worse” than telecom companies remaining in state hands (PSIRU, 2014). Considering healthcare now, in the US, where healthcare spending is at its peak, with private spending on healthcare exceeding public spending, basic health outcomes are worse than in Cuba – which spends a fraction of the US amount per person in a totally public healthcare system (PSIRU, 2014).


Truth behind privatisation

The real idea of privatisation is “profit before people” and it is about restoring rate of profit, curbing the power of the people, accumulation by dispossession and reallocating the common wealth for appropriation by the one percent (Baba Aye, 2017}.

According to a 2012 report by the United States Institute of Medicine, “30 cents of every medical dollar goes to unnecessary healthcare, deceitful paperwork, fraud and other waste. The $750 billion in annual waste is more than the Pentagon budget and more than enough to care for every American who lacks health insurance… Most of the waste came from unnecessary services ($210 billion annually), excess administrative costs ($190 billion) and inefficient delivery of care ($130 billion)” (Godrej, 2015).


Also in Britain, creeping part-privatisation of the National Health Service through outsourcing has led to similar “penny wise, pounds foolish” outcomes. One example: in Cornwall, the private contractor Serco, which provided call-centre cover for out-of-hours GP services, decided to economise by replacing clinicians with call-handlers without medical training, who followed a set of computerised cues to make decisions about ambulance call-outs. This resulted in a very expensive four-fold increase in ambulance call-outs with the cost to be borne, of course, by the taxpayer (Simms, 2013).

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According to Barr (2007) public private partnerships that go beyond disease specific objectives into health service delivery to patients have been without skepticism and opposition. “These partnerships should be regarded as social experiments; they show promise but are not a panacea”. It is presumed by PPP proponents that health outcomes will improve by putting the health care sector in a competition atmosphere. Yet, literature suggest that this is not necessarily the case (Boardman & Vining, 2012). And if it were to be true, the question remains: better health outcomes for who? Who are the beneficiaries of PPP efforts? Contentions on rising medical fees due to PPP arrangements suggest that poor patients will not benefit from the enhanced infrastructure and services (Swertvaegher, 2015).

According to Swertvaegher, the potential contributions of PPPs lie in the improvement of dilapidated health facilities and an increase of available technology and equipment. Yet, these do not address the greatest defaults of the system and therefore should not be prioritised. Priorities do not lie in specialised health care facilities in urban centers. A more effective referral system, with a strong primary care basis, with rationalised health spending and an adequate workforce, are the priorities. Even worse than contributing to the real needs of the health system, PPPs might hold the risk of potential aggravation of the deficiencies that burden the system.

Firstly, preventive care should be prioritised over curative care. Spending on primary care will eventually generate better returns than wasting on curative care. Yet, this is where the money lies and it hardly attracts the “for-profit” private sector as improved infrastructure on the other hand, offers opportunities even before service delivery begins.


Healthcare financing by any responsible government should be targeted at benefitting the populace. Tax-based revenue funding, exemptions and a well-managed health insurance scheme are financing models that can attain the goals and objectives of a healthcare system. Out-of-pocket payments and calls for privatisation are solely targeted at profit-making, which is not a goal of the healthcare system.

The overall objective of a health system is service delivery for the enhancement of public good, while the driving force behind PPPs and privatisation is maximisation of profit, which in turn, results in higher cost and reduced access as a result of inability to afford services. Rather than look into PPPs and privatisation initiatives that will take healthcare within the reach of the masses, governments should focus on primary healthcare, which serves the largest proportion of the population who do not have access to the private health sector.

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Dinyar Godrej (2015). Myth 5: The private sector is more efficient than the public sector.

PSIRU, Public and private sector efficiency, May 2014,

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