Ghana’s health insurance got accolades across the world, and was considered a standard in its early years, giving some hope that with adoption, other African countries would easily achieve Universal Health Coverage. The scheme, which several delegates from Nigeria were sent to understudy, is now struggling to live up to its once lofty reputation. Nancy Ampah, CEO, Nationwide Medical Insurance, a private commercial health insurance company in Ghana, in this interview with Caleb Ojewale, discussed the many challenges confronting the sector, and how Nigeria can avoid similar mistakes.
What has been your experience so far as a private company operating in the health insurance space in Ghana?
I will say that the private health insurance industry is still relatively young and very small. There are about twelve or thirteen private health insurance companies in Ghana. Initially, most of us operated as a private mutual insurance company, so there was no commercial aspect to it. However, we were actually soliciting for clients and all that so in 2014 or 2015, the National Health Insurance Authority (NHIA), which is the regulatory body, brought in new guidelines and so most of the companies converted to private commercials.
Prior to that, there were about thirty (health insurance companies), but with the directive to go commercial, a few fell off, so we ended up with just about twelve. If you put all our membership together, we are still under 300,000 possibly even 250, 000 or there about in terms of lives we are covering.
We play mostly in the formal sector so we have corporate institutions buying health insurance for their employees, and dependants of their employees. If you take the formal sector in Ghana, it is about a million. So, if private health insurance is covering just about 250,000, that is a very small percentage; considering the figure of coverage also includes dependants. If there are 250,000 lives under private health insurance, about a third of them will be principals, which are the employee. This implies we are covering fewer than 10 percent of the formal sector, so there is room to grow.
We have not come into the informal sector yet, which is much larger than the formal sector. To go into the informal sector, we need technology; to register people, to collect the money etc. In the corporate sector, when there is issue with a bank, you can always go back to them, because you know where to find them. But when it comes to individuals, we can’t easily trace. Because we don’t have a proper address system, it becomes a bit difficult, so we need some kind of technology that will protect both the insurer and the insured. We realized not many of us are going into the informal sector. Nationwide is now trying to go into the informal sector. We had to fine tune our products, go back and forth. Finally, we are ready to go into the informal sector.
The NHIA has about 48 percent coverage currently, but it is not as efficient as it should be. We have providers who haven’t been paid for a long time and all that but they are trying, I mean, some of the debts have been paid.
It gives us both opportunity and a threat. Opportunity because people are used to it and it is not working well, sensitization is good but it’s not working as it should, so there’s an opportunity for a private person to step into it and make it work well. On the flip side, because it’s not working well, people don’t even want to touch it. It depends on how as a company, one will be able to turns things around.
It is obvious there is an opportunity to come in, offer something better and make it worth their while, so, what have you been exploring and looking to do in that line?
One major thing we are exploring is using mobile money to pay the premiums. Secondly, we are looking at micro health insurance where people can break their payments into monthly, weekly or daily, instead of paying for a whole year upfront.
There is also a question people keep asking, which is a bit ridiculous, since in this part of the world, insurance is not a way of life. They ask, if I pay and do not fall sick, what happens to my money? Or they say, I don’t usually fall sick, so I’d be paying and won’t get anything. The insurance culture (in this part of the world) is not the best, so, it takes a lot convincing to get them. And of course, health insurance was introduced almost as a free product because we use the social health insurance in Ghana. People pay the equivalent of $2, up to about $10 as premium for the whole year. So, it is mostly subsidized by the state where we are using taxes.
The funding comes from the National Health Insurance Levy; included as 2.5 percent VAT on most of the items we buy, and then 2.5 percent of the Social Security and National Insurance Trust (SSNIT) as well. If you are a worker, you pay 5.5 percent and the employer pays 13 percent, which gives 18.5 percent and out of that, 2.5 percent is deducted to fund NHIS.
Tax is how the health insurance is really funded, not the premiums because it is nothing to write home about. So, again, if you have someone who has to pay two to ten dollars a year and then you actuarially determine premiums which are like minimum of $15 a month, then you really have to do some convincing for them to buy into it. That is where the major problem is.
On the flipside, exposure helps, because people who have lived abroad and come back often understand the dynamics. If you take the companies that willingly buy health insurance, most of them are the blue chip companies or multinationals. However, we are gradually also getting some local companies coming on board, but the average SME is still sceptical.
Apart from that, the way the NHIS is structured because they take 2.5 percent of your SSNIT, if you are working in the formal sector and want to join NHIS, you don’t pay any premiums. If they are already taking 2.5 percent of your SSNIT, why then would a company still take a private policy? Therefore, it is not attractive.
Also, the law as we have it now, says everybody resident in Ghana shall belong to the NHIS. So, the private is nice to have, but it is not a must, rather, the NHIS which is mandatory by law.
Health insurance companies in Nigeria complain of NHIS being both regulator and provider, is that same in Ghana?
We have the same situation here, because the NHIA is mandated by law to run the NHIS, and at the same time, regulate the private health insurance industry. So, you’ve got a player-referee situation here, but that’s the way the law is.
Do you foresee a scenario where it could be made mandatory to pick either government or private?
It was like that before it was reviewed, but as for whether we will go back to that, I can’t tell. The ideal situation could be likened to how pension administration is done. At first, there was only SSNIT taking care of pension, but now we put up the National Pensions Regulatory Authority (NPRA). They have been giving the private sector the chance to operate pension so we now have it in two tiers.
The first tier is compulsory government, and all the pension trustees around handle the second tier. Therefore, if we could apply that to health insurance, we could have a government insurance that covers primary healthcare and emergency services, and a second layer which then becomes private (also mandatory), to supplement what the government would do. Because, as it stands now, since I work and pay SSNIT, whether I can afford to pay or not, I would still register free on NHIS and the government is overburdened with the thing.
So, if we take the pension approach where we could have the base being government, and then put the private on top of that as the second tier, then it can cover critical areas, this is the way I think will be best.
Increasingly, government is finding it difficult to pay the bills. It is overburdened, so they need to find a way out. It is not working the way we want, and again, the government hospitals have no choice but to do NHIS. But increasingly, the private hospitals are coming out of it. Once you go to a government hospital, or even a private one, yes you would get a consultation, you may not get all your labs done, then they write you a prescription and you get the drugs.
Initially, and even till now, there are pharmacies that are supposed to be supplying on NHIS, but also no longer supply due to non-payment, sometimes for as long as 18 months. It creates a bit of problem for the private sector, because now you owe a provider for more than 30 days and he is ready to stop his services. This is because they do not want you to go as far as the government did. There is a lot pressure on us to ensure we are not only paying, but also on time.
The industry itself is not growing. We have been at this 200,000 range for a very long time, so what happens is that, you are with Nationwide Insurance now, you utilise services, your premium goes up, and you quit nationwide then move to the next company. So we are kind of recycling the same people, not growing the industry per se. That is another problem we are dealing with.
Generally, the private sector is more efficient in running health insurance since companies work for profit, and this can only be achieved when they are efficient.
What do you think Nigeria learn from Ghana’s health insurance?
I used to work at Ghana’s National Health Insurance Agency (NHIA), when teams from Nigeria visited Ghana to understudy what we had. When we started, Ghana was the beacon. We seemed to have gotten it right, but, from 2013 when sustainability issues came, we are no longer the shining star.
What do you think you got right at the beginning?
I do not know whether we got it right. When we started, – the premiums like I said were nothing to write home about – and we are using tax funding, with the number of enrolees low. But once the numbers increased, the tax could no longer sustain them. People aged 18 below as well as 70 and above get free healthcare, those in between, who work in the formal sector are also still free. Anybody having a baby also got free care, so there was a lot of frees.
As for the informal sector in the middle, whether you could afford to pay or not, certain could be gotten for free, like maternal care, yet the premiums being paid were not realistic. They became a bigger chunk since informal is more than the formal sector. Once you got more people in the informal sector registering for almost nothing, the state could no longer sustain it, and that is what went wrong.
You get the taxes from formal sector, the indirect tax from NHIL but it still could not sustain all the freebies in the middle. In the beginning, it seemed right, but it was like a disaster waiting to happen and it was forecasted by a few donor agencies. It was bound that by 2012/2013, if Ghana did not find alternative source of funding, it was not sustainable, and sure enough, it happened. As to whether we really got it right in the beginning, I do not know.
Do you think the problem could be tied to low tax revenue?
If the NHIS is to be funded by tax, then the tax net needed to be widened. Again, our minimum benefits package is very generous. It covers about 95 percent of health conditions in Ghana, including major things like heart. In the beginning, and at least on paper, it covers a lot of things.
Now, people are getting just Panadol because the providers are refusing to supply hospitals. However, if they were being paid, they would have supplied it. For instance, the price of Panadol on the open market is 1GHS, but NHIS is paying 20 Pesewas. Even at the 20 Pesewas, government does not make payments for like 12 months, so they are no longer going to supply. As for consultation, you train the doctor, so he will talk and give you prescription, but as for where you get the medication, that will be your problem.
It was not sustainable from the word go, but it looked good. As we went along, the faults started showing and that is where we are now. So, really, I don’t know what Nigeria can learn, but they can at least not make the same mistakes we are making. I think the government cannot carry everybody; let those that can pay do so.
Recent research by IFC/World Bank shows there are about 60 percent of people in Ghana who could actually pay for healthcare, but government was subsidising. So, that money they could have paid, is locked up, not open to private or government. If 60 percent could pay, why pay for them?
So, maybe Nigeria should not make the same mistake as Ghana in thinking it can support health insurance with taxes, and very low premiums. I think they should determine the premiums actuarially. Healthcare is expensive, I do not know about Nigeria but in Ghana, everything is imported, which makes healthcare very expensive. This makes it difficult to sustain it. If we are able to get an industry that produces some of the drugs, then it will be a different ball game. But, as long as we are importing everything and we don’t want to pay realistic premiums for it, there is no way it will work, and the state cannot carry everybody.
Our tax system is poor. Since it is not wide enough, we end up taxing the same formal sector people and it does not help much. I think Nigeria should not make the same mistake. For me, I still believe the two-tier approach will be better because, at least it is working with pensions. There is even a third one, which is optional, the Providence Fund. The first two are statutory, while the third is optional. If we put the same approach to health, we will get results. I do not know what Nigeria will learn from this, but at least, do not make the same mistakes. Again, on the healthcare provider side, we need people to control cost from that side it is not easy. We cannot keep increasing premiums, so costs need to be controlled at that side. However, if you look at the NHIS, you do not control the cost so much that you end up compromising quality. That has to be controlled as well.
