HEALTH INSURANCE UPTAKE AND FINANCIAL PROTECTION: EVIDENCE FROM NATIONAL HEALTH INSURANCE AUTHORITY AND FEDERAL MEDICAL CENTRE ABUJA

CHAPTER ONE

INTRODUCTION

1.1 Background to the Study

Health insurance remains a key tool to achieve universal health coverage (UHC), lower out-of-pocket expenditure and offers financial protection to the households to access health services without creating catastrophic health costs. However, health spending in Nigeria has been predominantly out-of-pocket to pay for health services, representing about 70–75% of total health expenditure, and placing heavy financial strain on households and the poor who are ill and undergo costly treatment and often their families, while at the same time purchasing life-saving medicines is difficult (Onwujekwe et al., 2022). To meet this challenge, the National Health Insurance Scheme (NHIS) was created in 2005 under the NHIS Act of 1999 to provide insurance against health risks and resources from people who are insured. But after 20 years of operations, only a small fraction of the Nigerian people had been registered with the scheme, thereby exposing the majority to the risk of health costs (Adamu et al., 2024).

The Nigerian government was very much aware of the shortcomings of the old scheme and on 19 May 2022, the NHIA Act was enacted to replace the NHIS Act. The NHIA Act represents an unprecedented shift in the health financing system in Nigeria and undercuts its traditional popularity by extending the mandate for all citizens and legal residents of the country to take health insurance, actively creating a Vulnerable Group Fund to cater for the health insurance needs of about 83 million Nigerians who are poor and vulnerable, and granting states autonomy to implement their own social health insurance agencies (Adekeye & Agboola, 2022). Since its inception, the NHIA has experienced a 40% increase in enrolment of health insurance members, from 16.7 million to 19.2 million persons in 2024 (Nigeria Health Watch, 2025). But true coverage is far short of the targeted universal coverage.

The NHIA accredited service providers include tertiary institutions like the Federal Medical Centre (FMC) Abuja. These facilities are paid capitation fees as well as fee-for-service for services performed for enrolled members. In July 2024, the NHIA instituted an interim measure of a 60% increase in capitation payments and a 40% increase in fee-for-service payments (Nigeria Health Watch, 2025) which were subsequently followed by 93% and 378% increases respectively in July 2024. The financial incentives are designed to encourage health systems to work with higher volume of insured clients and improve the quality of care they deliver under this program.

Despite such change, insuring remains challenging, as many people are unaware, skeptical of the insurance system, structurally excluded (lack of avenues to access insurance), geographically excluded (lack of access points to enrol), or believe that the benefits offered are suboptimal. Research on the determinants of health insurance uptake as well as financial protection among beneficiaries of the NHIA, especially those using services at FMC Abuja is still limited. The study examined health insurance enrolment and financial protection effects of beneficiaries and non-beneficiaries of the National Health Insurance Scheme who visited the FMC Abuja as a partner hospital in the NHIA.

1.2 Statement of the Problem

Availability of universal health coverage demands the ability of everyone to access health services without prematurely falling into financial difficulty. However, in Nigeria, millions of households each year fall into poverty due to out-of-pocket health expenditures. Even though the NHIA Act 2022 has paved the way for a transformative change, there is a low health insurance coverage rate. The NHIA says the number of people enrolled grew to 19.2 million in 2024, but less than 9% of Nigeria's estimated 220 million people, which is much lower than the 50% by 2025 target stated in the National Health Sector Renewal Initiative (NHSI).

Questions abound at partner hospitals such as FMC Abuja, where patient population is large and varied, on the rate of uptake of insurance (door to door) among patients, how far patients experience less financial hardship when they are insured as compared to uninsured patients, and what factors determine whether patients enrol in the NHIA and remain active users of the insurance. Evidence is also limited as to the impact of the new capitation and fee-for-service reimbursements that were implemented in 2024 have had meaningful effects on the quality and availability of services for insured members at partner hospitals. Therefore, the aim of this study was to alleviate the above knowledge gaps by undertaking primary data collection and analysis at FMC, Abuja.

1.3 Research Questions

This study is guided by the following research questions:

1. What is the level of health insurance uptake among patients accessing services at FMC Abuja?
2. To what extent does NHIA enrolment provide financial protection to beneficiaries compared to uninsured patients at FMC Abuja?
3. What are the sociodemographic and health system factors associated with health insurance uptake among patients at FMC Abuja?
4. What barriers and facilitators influence health insurance enrolment and retention among patients at FMC Abuja?
5. How do insured patients at FMC Abuja perceive the quality and coverage of benefits under the NHIA scheme?

1.4 Objectives of the Study

1.4.1 General Objective

The general objective of this study is to examine health insurance uptake and financial protection among patients accessing services at Federal Medical Centre Abuja under the National Health Insurance Authority scheme.

1.4.2 Specific Objectives

The specific objectives are to:

1. Determine the level of health insurance uptake among patients at FMC Abuja.
2. Assess the financial protection outcomes of NHIA enrolment in reducing out-of-pocket health expenditure at FMC Abuja.
3. Identify sociodemographic and health system determinants of health insurance uptake among patients at FMC Abuja.
4. Investigate the barriers and facilitators to health insurance enrolment and retention among patients at FMC Abuja.
5. Evaluate patient perceptions of the quality and comprehensiveness of benefits under the NHIA scheme.

1.5 Significance of the Study

This study has several noteworthy aspects. On the policy side, evidence of determinants of NHIA uptake, and financial protection effects of the NHIA at a flagship tertiary institution will guide policy guidance on NHIA implementation guidelines, uptake strategies, and NHIA benefit packages. The study's empirical findings pertaining to barriers to enrolment will benefit the Federal Ministry of Health, NHIA's management, as well as State Social Health Insurance Agencies (SSHIAs) especially for informal sector workers and vulnerable groups.

The study also offers data and insights into the extent to which the new payment mechanisms for capitation and fee-for-service payment are creating the desired incentives for providers joining FMC Abuja as a partner hospital. Findings on patient protection will also feed into the debate about the economic argument for health insurance coverage in Nigeria. The study contributes to the existing literature on social health insurance in sub-Saharan Africa and brings Nigeria-specific evidence to bear on regional UHC debates.

1.6 Scope of the Study

The study is confined to the Federal Medical Centre Abuja as a partner hospital under the NHIA framework in the Federal Capital Territory. The study population includes patients attending outpatient and inpatient services at FMC Abuja, comprising both NHIA-enrolled and non-enrolled individuals. Thematically, the study covers health insurance uptake, financial protection outcomes, and barriers to enrolment. The study period covers 2022 to 2024, capturing the transition from NHIS to NHIA and the implementation of the revised reimbursement rates.

1.7 Limitations of the Study

The study is limited to a single tertiary facility, which may not be representative of the experiences of patients at primary or secondary care facilities where the majority of NHIA-enrolled members access services. Self-reported out-of-pocket expenditure data may be subject to recall bias. Social desirability bias may affect responses related to insurance status and health-seeking behaviour. Additionally, confidentiality considerations may limit access to facility-level insurance claims data. These limitations will be addressed through the use of validated data collection instruments, triangulation of facility records with patient interviews, and appropriate sampling strategies.

1.8 Definition of Terms

Health Insurance Uptake: The process by which eligible individuals enrol in and maintain active membership in a health insurance scheme, measured by current enrolment status and duration of coverage.

Financial Protection: The extent to which health insurance coverage shields households from catastrophic health expenditure and medical impoverishment arising from out-of-pocket payments.

National Health Insurance Authority (NHIA): The statutory body established by the NHIA Act 2022 to promote, regulate, and integrate health insurance schemes in Nigeria with the aim of achieving universal health coverage.

Capitation Payment: A payment mechanism under health insurance where a fixed amount per enrolled person is paid periodically to a health care provider, regardless of the number or nature of services provided.

Out-of-Pocket Expenditure: Direct payments made by individuals or households to health care providers at the time of service use, excluding insurance reimbursements and pre-payments.

Catastrophic Health Expenditure: Health payments that equal or exceed 40% of a household's non-subsistence income, commonly used as a threshold for assessing financial risk protection.

Universal Health Coverage (UHC): A situation in which all people receive the health services they need without suffering financial hardship, a core goal of the Sustainable Development Goals target 3.8.

REFERENCES

Adamu, D. A. (2024). The National Health Insurance Authority of Nigeria and implications for universal health coverage. International Journal of Health Policy and Management, 13, e8012. https://pmc.ncbi.nlm.nih.gov/articles/PMC12082677/

Adekeye, O., & Agboola, K. (2022). The new National Health Insurance Act of Nigeria: How it will insure the poor and ensure universal health coverage. Population Medicine, 4(December), 33. https://doi.org/10.18332/popmed/157139

Bolarinwa, O. A., & Kuupiel, D. (2022). The Nigeria National Health Insurance Authority Act and its implications for universal health coverage. Nigerian Postgraduate Medical Journal, 29(4), 281–287. https://doi.org/10.4103/npmj.npmj_216_22

National Health Insurance Authority (NHIA). (2022). NHIA Act 2022: Financial access to healthcare for all Nigerians. NHIA. https://www.nhia.gov.ng/

Nigeria Health Watch. (2025). Nigeria's shifting health insurance landscape: Why faster progress cannot wait. Nigeria Health Watch. https://articles.nigeriahealthwatch.com/nigerias-shifting-health-insurance-landscape-why-faster-progress-cannot-wait/

Onwujekwe, O., Ezumah, N., Mbachu, C., Ezenwaka, U., & Ajaero, I. (2022). Health financing reforms in Nigeria: An analysis of the opportunities and challenges. BMC Health Services Research, 22(1), 1–12. https://doi.org/10.1186/s12913-022-07568-0

World Health Organization (WHO) & AFRO. (2022). WHO supports Nigeria in operationalizing the National Health Insurance Authority Act 2022. WHO Regional Office for Africa. https://www.afro.who.int/countries/nigeria/news/who-supports-nigeria-operationalizing-national-health-insurance-authority-act-2022