Health insurance: Nigerian struggle with rising medical costs

By Chijioke Iremeka

As household incomes continue to shrink and the cost of healthcare rises, access to quality medical treatment is becoming increasingly difficult for millions of Nigerians, particularly low-income earners who depend heavily on out-of-pocket payments.

According to Eurostat, an official website of the European Union, household out-of-pocket payment means a direct payment for healthcare goods and services from household primary income or savings, where the payment is made by the user at the time of purchasing the goods or using the services.

For many families, falling ill is no longer simply a health concern; it is a financial crisis. The cost of consultations, medicines, laboratory tests, hospital admissions and other essential services can quickly consume household income, forcing patients to delay treatment, seek cheaper alternatives or, in some cases, go without care altogether.

For the World Health Organisation, health insurance is a prepaid, pooled financing mechanism where individuals make regular contributions or payments before falling ill, rather than paying the full cost of medical care at the exact time of service.

The global health body said this system eliminates direct user fees, providing vital financial risk protection, adding that financial protection is at the core of universal health coverage and is one of the final coverage goals of health financing policies.

This, it said, aims to eliminate financial barriers to accessing needed care and protect people from healthcare payments that compromise their ability to meet basic needs or substantially reduce their capacity to afford other goods and services.

“Globally, the share of the global population experiencing financial hardship due to out-of-pocket health spending, defined as exceeding 40 per cent of a household discretionary budget, fell from 34 per cent in 2000 to 26 per cent in 2022.

“Despite this progress, an estimated 2.1 billion people still faced financial hardship in 2022. Of these, 1.6 billion were pushed into or further impoverished by direct healthcare costs. Financial hardship remains highly unequal: among the poorest, three out of four face financial hardship due to healthcare costs, compared with one in 25 among the wealthiest in 2022,” WHO stated.

However, Sunday PUNCH reports that protecting people from financial hardship requires reducing reliance on out-of-pocket payments at the time of care and strengthening prepayment and pooling mechanisms, such as government financing.

On July 13, 2026, The PUNCH reported that the number of policyholders under the National Health Insurance Authority had climbed to 22.03 million following the accelerated rollout of the country’s mandatory health insurance policy, signalling that Nigeria’s drive towards achieving Universal Health Coverage had gained significant momentum.

The Director-General of the NHIA, Kelechi Ohiri, announced this milestone at the Annual General Meeting of the Nigerian Association of Insurance and Pension Editors in Lagos, noting that the sharp 35 per cent year-on-year growth reflected a growing nationwide acceptance of health insurance and the Federal Government’s resolve to provide affordable healthcare to all Nigerians.

Speaking on the shift from planning to action, Ohiri stated that the agency had transitioned from mere policy formulation to delivering measurable operational improvements across the country in line with the Federal Government’s health sector reform agenda.

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“The progress recorded so far demonstrates that sustained collaboration among the Federal Government, states, healthcare providers, Health Maintenance Organisations, employers, and development partners is beginning to translate reform into tangible results for citizens,” he said.

The NHIA boss noted that the transition from the former National Health Insurance Scheme to the newly empowered NHIA had successfully driven the recent 35 per cent spike in coverage.

Ohiri added that the current phase of the health reform had heavily integrated targeted social safety nets for vulnerable groups, expanding maternal and newborn healthcare to support over 48,500 pregnant women, advancing the Vulnerable Group Fund, and deploying enhanced care protocols for pensioners and retirees.

Also, the Managing Director and Chief Executive Officer of SUNU Health Nigeria Limited, Dr Moyosore Olomola, said Nigeria’s quest to achieve UHC was being slowed by weak enforcement of health insurance regulations and poor compliance by some healthcare providers.

He said despite significant reforms introduced by the NHIA, operational bottlenecks and the conduct of some healthcare providers continued to undermine public confidence in the health insurance system and slow enrolment.

According to him, while the NHIA had demonstrated a commitment to expanding health insurance through reforms such as the 2025 tariff review, implementation challenges continued to prevent those reforms from delivering the desired impact.

“I want to be clear, the NHIA under its current leadership has shown a genuine commitment to expanding coverage, and the 2025 tariff reforms alone reflect a level of regulatory boldness that the industry had been waiting years to see. The groundwork has been laid.

“Our concern is that structural and operational bottlenecks on the ground are preventing that policy ambition from translating into enrolment numbers at the pace Nigeria needs,” Olomola said.

He said discussions with lawmakers highlighted funding gaps, inadequate premium structures for informal sector workers, uneven commitment by state governments and persistent provider practices that discourage Nigerians from trusting the health insurance system.

Olomola described the conduct of some healthcare providers as one of the biggest threats to expanding health insurance coverage.

“Perhaps our most urgent concern was provider behaviour at the point of care. Providers are going outside regulatory controls to deny services to enrolled beneficiaries and demand huge financial deposits from HMOs as a condition of rendering care.

“When an enrollee arrives at a hospital and is turned away or made to pay out of pocket despite being on a valid scheme, it destroys trust in the entire system,” he said.

Olomola urged the National Assembly to support stronger legislation that would empower the NHIA to sanction erring providers through suspension, delisting and public disclosure.

According to a survey titled “The Impact of Health Insurance Policies on Catastrophic Health Expenditures in Nigeria,” by Olalekan Olawale, published in the World Journal of Advanced Research and Reviews, catastrophic health expenditures remain an enormous problem of financial instability for households in Nigeria despite the introduction of health insurance policies.

The research, which assesses the impact of health insurance policies, especially the NHIS, on catastrophic health expenditures in Nigeria, shows that while health insurance has ensured some financial protection, coverage is still limited, particularly in the informal sector, which makes the incidence of CHE remain high.

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It stated, “Policy gaps and challenges of implementation, together with inequities in access, are identified as key barriers to accomplishing financial protection. Hence, the study concludes that a large proportion of Nigerians suffer significantly in the quest for seeking healthcare.

“It recommends expanding equitable insurance coverage, particularly to vulnerable populations, reducing reliance on out-of-pocket payments, and strengthening policy implementation and monitoring.”

The Lancet, an international weekly general medical journal founded in 1823 by Thomas Wakley, indicates that out-of-pocket payments are a major challenge in Nigeria, where patients have to pay on the spot for medical services instead of having them covered by health insurance.

“You have to make a deposit before we can treat the patient” is what many patients and their relatives are greeted with when they enter healthcare facilities in Nigeria. Hospitals, public or private, demand upfront payments. There is an over-reliance on out-of-pocket payments in Nigeria. About 70 per cent of Nigerians are living in poverty.

“Out-of-pocket payments can make households and individuals incur catastrophic health expenditure, and this can exacerbate the level of poverty.

“Studies in Enugu and Anambra States in Nigeria showed that the incidence of catastrophic health expenditure among households (at a 40 per cent threshold of non-food expenditure) was 14.8 per cent and 27 per cent, respectively,” The Lancet stated.

The journal noted that such a source of healthcare financing negatively affects people’s living standards and welfare, saying that more than 90 per cent of the Nigerian population is uninsured despite the establishment of the NHIS in 2006.

It noted that less than five per cent of Nigerians in the formal sector were covered by the NHIS. Only three per cent of people in the informal sector were covered by voluntary private health insurance, stating that uninsured patients were at the mercy of a non-performing health system.

“Out-of-pocket payments for healthcare services are a very big challenge in Nigeria. Governments and decision-makers need to come up with policies to address this problem. Health insurance needs to be expanded to cover people in both the formal and informal sectors.

“Private health insurance has to be made mandatory, while the community-based health insurance scheme needs to be scaled up across the country. Out-of-pocket payments affect the ability of households and individuals to meet basic needs and push many below the poverty line.

“International organisations concerned about poverty and universal health coverage in low-income and middle-income countries, including Nigeria, need to assist these countries in generating adequate resources for the improvement and strengthening of health systems performance,” The Lancet further stated.

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