Health Insurance: Why We Should Care

The disturbing number of Nigerians who die daily due to lack of funds to access proper medical care is a nightmare that many are praying to wake up from. The scenario of watching a relative suffer and be denied medical services because some huge bills could not be paid is usually pathetic and demoralising. A worse scenario is when the working member of the family is the one who needs urgent medical attention and the other members cannot be of help.

The life expectancy of the country is low and about 20 per cent of children die before the age of 5, according to reports from the World Health Organisation (WHO). Environmental pollution, effects of heavy hours of traffic, fake drugs, rise in mortality, and migration of health care professionals to other countries are among the challenges faced by the nation. 

Nigeria is known globally for its health system challenges. In 2005, the WHO ranked Nigeria 197th out of 200 nations. Life expectancy was put at 48 years for males and 50 years for females; while Healthy Life Expectancy (HALE) for both sexes was put at 42 years. In HALE estimation, Nigeria only ranked higher than five countries; Sierra Leone, Afghanistan, Zimbabwe, Zambia and Lesotho.

The WHO report further stated that Nigeria accounts for 10 per cent of global maternal mortality figure, with 59,000 women dying annually from pregnancy and childbirth. It added that for every maternal death, 30 others suffer long-term disabilities while 40 per cent (about 800,000) of global obstetric fistulas occur in Nigeria. 

With the challenges facing the uncertainties of life, health experts believe that there could be no better time than now to protect ourselves against such horrible but avoidable situations by getting health insurance for oneself and family members. Insurance is a form of risk management primarily used to prevaricate against the risk of a contingent, uncertain loss. It is basically the fair transfer of the risk of a loss from one entity to another, in exchange for payment. Health insurance is the insurance against the risk of incurring medical expenses among individuals. 

Medical bills have the prowess to leave one in debt and render one incapable of paying other bills. Health insurance policies cover the cost of medical treatments. Medical coverage for ones accident, emergency, or surgery - especially if it involves seeing a specialist or follow-up visits - can cause the insurance coverage to pay for itself. 

In some countries, dental insurance, which protects policyholders for dental costs, is often part of an employer’s benefit package, along with health insurance. The health insurance company is the insurer that is expected to pay the insured coverage against any disease or accident. The amount charged for a certain amount of insurance coverage is called the premium.

The transaction involves the insured, the person or entity buying the insurance policy. This entity assumed a guaranteed and known relatively small loss in the form of payment (the premium) to the insurer (the company selling the insurance) in exchange for the insurer’s promise to compensate the insured in the case of a financial loss.

Varying concerns

As the cost of medical care rises due to improvement and frequent health care technology innovation, and as medical practitioners advance in research and try to improve the quality of healthcare, the cost of health insurance is also increasing.

However, the challenge is that generally, health insurance premium tend to increase more rapidly, when compared to the increase in the salary of workers.

The premium is never really fixed and it can be changed by the company, depending on the change in the health insurance policy of the company or any development by the government. Usually, a health insurance company has the right to accept or deny the application. If the health insurance company feels that, an individual is vulnerable to more ailments than it can stand for. It can refuse to provide the cover and can refuse to renew a contract, which is often done yearly.

Although, health insurance policies are usually set up to protect an insured person from adverse financial conditions they may face in the eventuality of a serious illness or hospitalisation, it is advisable that one makes a proper comparison between various companies that offer health plans before buying into a health insurance policy. As determined by one’s financial state, it is advisable to buy the health insurance policy from some credible insurance company to guarantee better treatment.

With the increasing competition in the subsector, health insurance companies are now coming up with more comprehensive and cost effective policies, in a bid to cater to the personalised needs of the customer.

Akinjola Olugbemi, a staff at Hygeia Health Maintenance Organisation (HMO) said having health insurance coverage is good for the rainy day.

“Falling ill is something you don’t plan for, you don’t know when and what nature it would be. When it comes, you may not be financially buoyant and you may desperately need health care services. If you were under an insurance package, this would have helped out because the premium would have been paid for the year. All you need to do is take your card to the hospital, which would be given to you while paying the yearly premium, and then receive treatment without paying a dime,” Mr. Olugbemi said.

He buttressed the fact that insurance is very useful and important as it helps individual access treatment they may otherwise not have been able to enjoy. “For example, the Caesarean Section (C&S) could cost up to N600, 000 in some hospitals, yet you can get it done without paying extra cost once you are under an insurance plan that covers that,” he said. 

Usually, a plan covers six individuals; the principal, spouse and four children under the age of 18.

Mr. Olugbemi decried the low awareness level of health insurance in Nigeria saying many Nigerians are still not aware of the importance of health insurance. “I don’t think many people are so enlightened here in Nigeria about the importance of insurance coverage,” he said.

In the meantime, health insurance can be directly purchased by an individual, gotten through an employer, or through the national social insurance programme. Health insurance plans provided by an employer where total premium is borne by the company is generally cheaper when compared to plans if purchased by employee. This plan however has many weaknesses. Workers would be unable to pay their portion of the premium for policies provided by their employers in case of lay-off or resignation. It would mean losing health coverage for oneself and family.

Lydia Olushola, a creative director and fashion consultant, said when her former company, which enrolled its staff under a health insurance scheme had financial issues and had to lay some of its staff off, she did not know that her health care plan, which was covered till the end of the year, would also be halted.

Mrs. Olushola said, “I went to the hospital for some check up and I was confident, because my health insurance card was valid till the end of the year. I showed them my card which I’d used before, only for me to be told that I was no longer on the health insurance roll of the company. It was then that my loss of job really dawned on me.”

“I think working in a place where health insurance programmes are offered is a plus. I remember a colleague of mine, he got an offer while we were still at work, even though we already had financial challenges, he still turned the better offer down, because there was no health insurance plan,” she said.

Tola Oluwafunso, who used to work in a bank, said the company was not registered in any hospital for health insurance but health allowances were among the annual packages the bank offered its staff. It is up to individuals to decide if they were going to sign up personal health insurance coverage or not.

“If my salary package is reasonable enough, I might have a special account to meet eventualities; so health insurance may not be a major factor when am considering job offers. But if the salary is not much, health insurance might be of great importance to consider,” Mr. Oluwafunso said, emphasising that health insurance is very important. “In the western world, it is a must. In fact, the government in the region take it up as a priority. Every citizen has a national insurance, which focuses on your health treatment. It is to guide against eventualities.”

Employers normally offer very few plans under health insurance, restricting the choice of suitability for the employees. However, not all employers even offer their staff such opportunities. Some self-employed people or workers whose employers do not offer such policies mostly purchase individual health insurance policies. The advantage of an individual plan is that an employer does not bind you. You can always change jobs or even start your own work without the risk of losing the insurance cover.

In Nigeria, apart from private insurance schemes, the government also provides some measure of health insurance scheme, under the umbrella of the National Health Insurance Scheme (NHIS). The NHIS is a corporate body established under Act 35 of 1999 by the Federal Government of Nigeria to improve the health of all Nigerians at an affordable cost. The NHIS Act is the statutory authority for the Scheme’s benefits programmes as well as sets the general rules and guidelines for the operation of the Scheme.

A number of factors motivated the desire for a national health insurance project. Some of the factors include the generally poor state of the nation’s healthcare services, the excessive dependence and pressure on government provided health facilities, dwindling funding of healthcare in the face of rising costs, poor integration of private health facilities in the nation’s healthcare delivery system and overwhelming dependence on out-of-pocket expenses to purchase health. 

Participants on the scheme are required to register with a Health Maintenance Organisation (HMO) and pay a premium to them. The employer pays 10 per cent of the employees’ basic salary while the employee contributes five per cent of his or her basic salary. 

The HMO would then link them up with a number of service providers (clinics) in their neighbourhood out of which they will choose their preferred clinic. The insured is at liberty to change the chosen health centre if at any point he or she is not satisfied with its services.  In the event of any health issue, the insured or dependants will report at the chosen health centre and would be treated without having to pay any fee, apart from the initial premium paid to the HMO. 

How successful this scheme has been is another issue though. Some medical associations have questioned the credibility of the services rendered under the NHIS scheme. They argued that a situation where consultations, prescription, laboratory investigations, physiotherapy and dispensing of drugs are carried out by the same person is not in the best interest of the patient and that it is ‘unethical and exploitative’.

Experts say health insurance is extremely important to protect against huge medical expenditure when one falls ill. Adding the risks up, the money saved in medical bills is often well worth the up-front costs of the insurance policy. As life is very precious, it is just naturally expected that one must not compromise on the cost of having a health insurance policy.

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