The National Health Insurance Authority Act (NHIA), 2022, was signed into law in May 2022 by President Muhammadu Buhari. The NHIA repeals the National Health Insurance Scheme (NHIS) Act. The new Act makes health insurance compulsory for all public and private sector organisations employing at least five staff. Informal sector workers and Nigerian residents come under the purview of the law for mandatory health insurance coverage.
Some key features of the new law, which every employer and employee should pay attention to are discussed below:
1. Insurance Schemes
The National Health Insurance Authority Act recognises the following types of Health Insurance Schemes:
State Health Insurance Schemes: The Act requires States and the Federal Capital Territory to establish Health Insurance Schemes to cover all residents. It should be noted that prior to this Act, some states and the FCT had already established health insurance schemes. The Act further gives legitimacy to these schemes and requires states yet to establish their own schemes to do so. Although, the Federal Government may not compel states to create their own schemes, there’s an incentive that compels states to do so. This is access to the Basic Healthcare Provision Fund, which is managed by the Federal Government. The Act further requires employers to register themselves and their employees with the health insurance schemes within their states. This however does not stop employers from procuring private health insurance plans for their staff.
In Lagos State, employers are required to register with the Lagos State Health Management Authority (LASHMA) and obtain a Corporate Identification Number (CIN). The CIN is a pre-requisite for procuring policies from Health Maintenance Organisations (HMOs). This requirement is however yet to be enforced. Lagos residents are also required to register with the Lagos State Residents Registration Agency (LASRRA) and obtain a resident number prior to completing their individual registrations with LASHMA.
Private Insurance Schemes: Employers and individuals will continue to have the option of buying health insurance plans from HMOs. This comes as an additional option to the State Health Insurance Schemes, which are now mandatory. Most employers already provide health insurance for staff through the HMO plans.
Vulnerable Groups Insurance Scheme: The Act commendably makes provision for vulnerable Nigerians to access healthcare. Vulnerable groups according to the National Health Insurance Authority Act are: children below five years, pregnant women, the aged, physically, and mentally challenged and the indigent. The Act requires State governments and the FCT, through their health insurance schemes to provide healthcare coverage for these groups. It requires that it be done through the Basic Healthcare Provision Fund and other sources, without the payment of premiums by these categories of persons. The Act also makes provision for the establishment of a Vulnerable Group Fund.
2. Mutual Health Associations and Third-Party Administrators
These are two new classes of players in the health insurance space that have been recognised by the Act. These are Mutual Health Associations (MHAs) and Third-Party Administrators (TPAs).
Mutual Health Associations: These are akin to cooperative schemes. They are accredited to negotiate with healthcare providers and purchase services for their members. The Act also requires them to ensure prompt remittance of contributions from their members to the State Health Insurance schemes. They are basically meant to bridge the gap between communities and organised groups and the State Health Insurance Schemes.
Third Party Administrators: The Act defines TPAs as organisations with the expertise to administer all or a portion of the insurance claims process, premium collection, enrolment, and other administrative functions. They are private companies whose scope of responsibilities within the health insurance scheme will also include quality assurance, to ensure enrollees get appropriate care from service providers. HMOs may also play the role of TPAs.
The health insurance scheme in each state and the FCT is expected to define premiums payable by enrollees. Formal sector contributions will be jointly made by employers and employees. On the other hand, informal sector workers will pay individually. Contributions to the scheme remain exempt from taxes.
In conclusion, while the intention of the Act, which is to ensure universal health coverage is laudable, state governments across the country need to roll out their health insurance schemes to ensure this universal coverage is achieved. Financing of the Basic Healthcare Provision and Vulnerable Group Funds also needs to be steady and sustainable.
Another creation of the Act, which may be controversial is the mandatory requirement for private organisations to register and contribute to State Health Insurance Schemes. This becomes an additional operating cost for organisations who are already subscribed to private health insurance plans. Moreover, State Health Insurance Authorities like LASHMA, have invariably been made operators and regulators at the same time, by the Act. These State Health management Authorities will therefore be competing with HMOs, while also exercising regulatory oversight on them.