A new accounting system for the health sector

Repeatedly, the World Health Organisation has warned that Nigeria has one of the worst health indices in the world and is classified among the organisation’s high-mortality developing countries as having high levels of mortality for children under five and for adult males aged 15 to 59. Recent reports show that Nigeria’s total expenditure on health still hovers around 5% of Gross Domestic Product (GDP) and the density per 1000 of nurses and doctors is 1.70 and 0.28 respectively.

This falls short of what obtains in most Least Developed Countries (LDCs), for instance of East and Southern Africa with an average ratio of 7.2%.

Simply and squarely, the main issues are how we ensure that quality doctors and other health workers are available and equally that quality medication is delivered to the people when needed. Put differently, how do we ensure adequate remuneration for these health workers so as to stem the current brain drain and how do we finance other aspects of healthcare delivery?

The WHO and scholars alike have since identified a concise programme of National Health Accounts (NHA) as central to a national development-geared healthcare delivery system. No wonder, it took a professor of economics as health minister in the person of Eyitayo Lambo to take the initiative when he launched the Nigerian NHA, way back in 2003.

But then, foresighted as he may have been, Lambo’s NHA only addressed by the National Health Insurance Scheme (NHIS) that comes mainly under the Social Security Expenditure on Health (SSHE). The SSHE includes outlays for purchases of health goods and services by schemes that are mandatory and controlled by government. Such social-security schemes that apply only to a selected group of the population, such as public sector employees only, are also included here.

Even though the NHIS touches on some aspects of the NHA, details of the latter which are lacking in Nigeria’s NHIS easily expose the shortcomings of our health insurance programme. For example, under the General Government Expenditure on Health (GGHE), there is supposed to be an appreciable ration (relative to total government spending) of outlays by government entities to purchase health-care services and goods. This comprises the outlays on health by all levels of government, social-security agencies, and direct expenditure by MDSs (Ministries, Departments and Agencies) and public firms. Expenditures on health include final consumption, subsidies to producers, and transfers to households (chiefly reimbursements for medical and pharmaceutical drugs bills). It includes both recurrent and investment expenditures (including capital transfers) made during the year. Besides domestic funds it also includes external resources (mainly as grants passing through the government or loans channeled through the national budget). Apart from the fact that for you, this ration is appalling, there are no known records of reimbursements on health expenditures.

Another item is the Total Expenditure on Health. This is the sum of general government health expenditure and private health expenditure in a given year, calculated in national currency units in current prices. It comprises the outlays earmarked for health maintenance, restoration or enhancement of the health status of the population, paid for in cash or in kind. Do we have a system in place to keep records of private sector health expenditure such that it can be related to that of the public sector?

Then there is the very important Private Health Expenditure (PvtHE) which is defined as the sum of expenditures on health by the following entities:

Prepaid plans and risk-pooling arrangements which refers to the outlays of private insurance schemes and private social insurance schemes (with no government control over payment rates and participating providers but with broad guidelines from government); 

Firms’ expenditure on health refers to the outlays by private enterprises for medical care and health-enhancing benefits other than payment to social security or other pre-paid schemes;

Non-profit institutions serving mainly households (NGOs): outlays of those entities whose status do not permit them to be a source of financial gain for the units that establish, control or finance them. This includes funding from internal and external sources;

Household out-of-pocket spending (OOPs): the direct outlays of households, including gratuities and in-kind payments made to health practitioners and to suppliers of pharmaceuticals, therapeutic appliances and other goods and services. This includes household direct payments to public and private providers of health-care services, non-profit institutions, and non-reimbursable cost-sharing, such as deductibles, co-payments and fees for services.

A proper focus on healthcare delivery must devise a system that recognizes these items, institute them and keep adequate records and returns on them.

Chuba Keshi