Africa’s Health-Insurance Initiatives Gain Momentum

The Dutch Experiment

The private health-insurance sector in Africa received a boost when the government of the Netherlands announced support for private health cover through the establishment of a US$128-million fund. According to the U.K. Financial Times, the initial phases of this initiative will include subsidising premiums by up to 95%, thereby targeting the low-income groups in the region. The scheme—developed by an NGO (non-governmental organisation), Pharma Access—would involve access to primary healthcare with the help of a local healthcare provider. Importantly, the scheme will include HIV/AIDS treatments, the source adds. The fund is to be made operational in four countries; namely, in Nigeria, Uganda, Namibia and Rwanda.

Micro-health insurance

A growing phenomenon in Africa's rural set up is micro-health insurance. The system is particularly popular in West Africa, where more than 200,000 people across 11 countries have signed in, according to the New York Times. The micro-system works on the basis of a fewer than 100 members forming a scheme and designating a local healthcare provider to deliver services. The concept involves direct price negotiations with the provider, thereby doing away with third-party mediators. The scale of the operations may be small, but community groups are merging to form larger organisations that facilitate higher bargaining power while negotiating price plans. Countries that have successfully implemented the scheme include Benin, Burkina Faso, Cameroon, Côte d’Ivoire, Ghana, Guinea, Mali, Nigeria, Senegal, Tanzania, Togo and Uganda.

Government Intervention:

Governments in the region have recognised the need for social health insurance, but implementation has been too slow. Officials in Nigeria, Kenya and Ghana are at various stages of implementing social health insurance and these countries are potential large markets for private-insurance providers. In Nigeria, the government has implemented the first phase of its social-insurance scheme, while Ghana is facing a slow uptake, which is raising concerns. Problems in uptake are due to the low-income citizens who find their contribution of 20% to the NHIS (National Health Insurance Schemes) difficult to pay. Inadequate healthcare infrastructure adds further to the strain of persuading locals to join the scheme. These are some of the problems, which are shared by the private insurance and reflect the fundamental reasons for the low coverage of insurance in the region. Late last year, health ministers across the region attended a health-financing standards meeting aimed at addressing the issue of health insurance in their countries.

Outlook and Implications:

Barring South Africa, which is still the largest private health-insurance market in the region, the sector has not yet fully blossomed in most other parts of Africa. Private health insurance is still a small market, catering for expatriates and employees in large private-sector companies. According to the Organisation for Economic Co-operation and Development (OECD), sub Saharan Africa constitutes just six per cent of the overall non-life insurance market in the developing world with the highest coverage rate of 18% found in South Africa and 5-8% coverage in Zimbabwe (August 2005 figures). One of the main factors for the low coverage in the region is healthcare financing, high-risk disease burdens such as HIV/AIDS and the absence of a fully equipped healthcare infrastructure. In fact, most countries in the region have only about one per cent of their population under health insurance.

The private insurance market has also had all sorts of problems besides the healthcare infrastructure and high disease burdens. A case in point is the Kenyan market that witnessed the collapse of major insurance firms, due to heavy debt burdens and low patient numbers. Lack of monitoring and regulation has often resulted in low patient confidence. The Dutch initiative and the micro-insurance experiments are expected to provide impetus to the battered insurance market. As far as the pricing and reimbursement (P&R) of drugs is concerned, the government schemes have tended to include generics, largely due to the low-cost structures. But still there is no clear policy on P&R regulations. Signs of resurgence will also fuel greater demand for drugs and help to establish greater healthcare delivery in the region.

Related Articles:

• Ghana: 2 March 2006: Health Authorities Concerned Over Slow Uptake of Mutual Health Insurance in Northern Ghana
  
  
• sub-Saharan Africa: 22 November 2005: Health Ministers in Africa Meet to Harmonise Health Financing Standards
  
  
• Nigeria: 8 June 2005: First Phase of National Health Insurance Scheme Launched in Nigeria
  
  
• Kenya: 17 March 2005: Kenyan President Re-Affirms Commitment to Social Insurance
  
  
• Ghana: 18 October 2004: Ghana Targets Health Insurance Coverage of 80% of Illnesses