Health Insurance in Africa: Sustainability in Focus

Published Feb 13, 2023

Eskinder Eshetu Ali1, 2, 3 (BPharm, BA, Msc, PhD), Daniel Erku2, 3, 4 (BPharm, PhD), Tienie Stander5 (MD, MBA), and Peter Agyei-Baffour6 (PhD, MA, PGD, BA)

1 Assistant Professor of Social and Administrative Pharmacy at the Department of Pharmaceutics and Social Pharmacy, Addis Ababa University, Ethiopia

2 ISPOR Ethiopia Chapter

3 Centre for Research and Engagement in Assessment of Health Technology (CREATE), Addis Ababa, Ethiopia

4 Centre for Applied Health Economics, School of Medicine and Dentistry, Griffith University, Australia

5 Managing Director of VI Research FZ LLC, United Arab Emirates

6 Associate Professor, Department of Health Policy Management & Economics, School of Public Health/College of Health Sciences/KNUST, Ghana.

Many health systems in Africa are generally characterized by high burden of out-of-pocket payment by patients at the point of care and increased exposure of clients to catastrophic health payments. However, there are recent moves by many African countries to improve their health financing systems and institute health insurance in a bid to ensure universal health coverage. This topic was discussed at ISPOR Africa Network Webinar in November 2022, where experts from Ethiopia, Ghana and South Africa shared country experiences and best practices from these countries, which are at different stages of implementing health insurance and discussed on mitigating strategies for the challenges that may be faced in the process of implementing health insurance.

Dr Daniel Erku moderated the webinar and shared his comparative assessment of HTA and discussed on what Ethiopia (and other African countries) can learn from countries with similar health systems.

Dr Erku discussed, in his introduction of the webinar, that with the increasing insurance coverage in many African countries comes the need for a systematic approach of selecting the most cost-effective healthcare technologies and interventions to support coverage and reimbursement policy decisions. Decisions must also be made around health system structure in general, including the scope of the health system, system priorities, pharmaceuticals, and health benefit packages to be offered. This requires the application of explicit sets of criteria to systematically synthesize evidence on clinical and cost-effectiveness as well as budget impact of health technologies. Dr Erku pointed out that reforms on priority setting approaches within the context of rational decision making on reimbursement by health insurance agencies – including institutionalising HTA – are sensitive to context, reflecting institutional settings, historical decision-making approaches, and politics. Thus, when formulating, adopting, and implementing HTA policies and practices, it is important to examine the institutional context and power dynamics between various stakeholder groups (e.g., interest groups, beneficiaries, bureaucrats and political leaders, non-state actors and partners). Further, sustainable improvements in the performance of key HTA-related initiatives requires not just on-demand technical assistance and knowledge transfer at individual level, but a stronger technical and operational systems to carry HTA work forward into the future.

Dr Eskinder Eshetu Ali presented on the status of health insurance implementation in Ethiopia. He started with a brief introduction on how Ethiopia, being a country of over 115 million population, follows a solidarity-based approach to health insurance. He went on to explain the impact a steady economic development in the past decade had its dividends in the health sector. The country follows a social health insurance (SHI) and community-based health insurance (CBHI) approaches for citizens in the formal and informal/agricultural sectors of the economy, respectively. The contribution of the private insurance sector accounts for less than 3% of the national health expenditure.

The success stories of CBHI system were summarized. Specifically, there were over 43 million CBHI Members with beneficiaries. More than 850 Woredas/districts (the lowest administrative units in the country) were covered by CBHI, accounting for over 78% of the approximately 1100 Woredas of in the country. It was also noted that > 1.3 billion birr were mobilized in CBHI contributions in 2020 and more than 326.6 million Birr was spent in the form of government subsidies in the same year. The contributions were from 5,485,661 premium-paying households. The government also enrolled for free 1,459,123 households considered indigents.  The major lesson learnt in the CBHI’s success depended on political commitment in that better performance were seen in Woredas with better engagement of the political leadership. However various challenges including shortage of medicines and supplies, absence of electronic record keeping mechanism and adverse selection were important challenges identified in the program implementation. So far, the country has not managed to realize the SHI system.

Dr Tienie Stander presented on the history and current system of health insurance in South Africa and discussed what the rest of the continent can learn from the health financing system in South Africa and what countries could do differently based on the challenges of the system. Dr Stander pointed out that when looking at the history of South Africa and comparing it to global security systems, the health system was characterized by a social assistance arm and a private sector. There were no social insurance schemes as is seen in many other countries. This implied that a small percentage of the population had access to privately insured healthcare, while the majority had access to some healthcare, free of charge and funded by taxes. This obvious gap and inequity were addressed by progressive policy changes until, today, a National Health Insurance System was officially adopted as the vehicle for access to equitable healthcare for all citizens.

As with any universal health coverage system, the balance between the population covered, what benefits are provided and what costs are covered remains an important debate. Healthcare financing, therefore, is an important component of this policy. While the 2022/2023 health budget is estimated at US$ 16 billion, the NHI budget is estimated to reach US$ 32 billion per annum.  To finance this, tax revenue should contribute approximately US$ 16 billion, tax credits US$ 1.7 billion (reallocation of private medical insurance tax credits), and payroll tax US$ 3.1 billion. The deficit might be funded via a surcharge on personal income tax (to be introduced). The latter remains a contentious subject as the tax revenue base in South Africa is low with only a small proportion of the population being liable for personal tax. Dr Stander said that health delivery will focus on primary care and using existing public and private healthcare facilities and capacity. The role of private insurance under an NHI system remains another contentious issue Dr Stander pointed out. It is foreseen that NHI will offer and be responsible to provide access to a basic benefit package to all citizens exclusively, i.e., that private insurance will not be allowed to offer services covered under this package. It is foreseen that private insurance will offer only top-up insurance, above and beyond the NHI basic benefit package. The latter is cause for concern due to the risks of anti-selection, risk pool average age, affordability and ultimately sustainability of the private insurance schemes. Lastly, it is envisioned, Dr Stander said, that HTA will form an important part of evaluating access to technologies that are covered by NHI.

Finally, Dr Peter Agyei-Baffour shared the experiences from a relatively new nationwide health insurance system in Ghana and outlined the lessons learnt in the implementation process and what other African countries can learn from this experience.

In 2003, Ghana implemented a National Health Insurance Scheme (NHIS) to minimize the financial hardship from the previous policy where clients paid before accessing health care, otherwise known as “cash and carry”. Ever since then NHIS has been progressing, but like other programs, this is not without some implementation challenges. A cursory view of the Ghana’s NHIS shows some lapses in the current payment systems; Fee-for-Service (FFS) and Diagnostic Related Groupings (DRG) and call for a review and possible reforms. Other challenges include weak pharmaceutical supply chain, poor coverage of the poor and the vulnerable, quality of care challenges, lack of human resource capacity, pervasiveness of moral hazards, underutilization of information communication technology systems and ‘under the carpet payment’ in some health facilities. Currently, reforms are underway, and these include strengthening compliance audit and risk management, consolidating premium accounts, creating claims processing centers, going to scale with electronic claims, call for review of exemption policy and categorizing premiums/benefits (for instance, Gold, Platinum, etc.) new serialized prescription forms, and others. It is believed that a strong political commitment is required to set up an independent regulator to improve governance of the NHIS. It is worth emphasizing that Ghana’s NHIS is a home-grown initiative with local leadership which is being implemented through experiential learning and adaptation. The scheme so far has improved health seeking behavior of subscribers/patients with over 90% subscribers in both private and public health facilities. Over 80% of internally generated funds of public health facilities are derived from the NHIS. Notwithstanding the challenges, the high public confidence in the NHIS with bi-partisan political will and support, healthy collaboration, cooperation, and support of the Ministry of Health present conducive conditions for the sustainability of the Ghana’s National Health Insurance Scheme.

In his concluding remarks, Dr Erku reiterated on the role of priority setting methods in supporting systematic and transparent decision making, ensuring sustainability of health insurance systems whilst allowing for the specifics of the local context.


To view the full webinar recording, please visit here.

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