By Tonny Odokonyero

Tony odokonyero Official

In pursuit of establishing comprehensive healthcare financing in Uganda, the government recently developed a National Health Insurance (NHI) Bill, aimed at operationalizing a National Health Insurance Scheme (NHIS).

It is evident across the globe (including parts of Sub-Saharan Africa) that an effective NHIS is paramount for Universal Health Coverage (UHC). Uganda’s policy environment is supportive of the scheme, and the agenda is espoused through the bill, which is expected to make the long-awaited NHIS to materialize.

Membership in to the proposed scheme will be for: public servants; those employed and resident in Uganda; and those in employment with employers having at least five employees. In addition, community based health insurance will also form part of the scheme. Specifically, all indigent persons are expected to be beneficiaries. However, the definition of indigence is still very broad and there is no well laid down criteria for identifying indigent persons. This is a loophole that may lead to manipulation and abuse of the scheme.

Regarding the community health insurance, some would expect it to fully cover informal sector workers. However, the informal sector is not explicitly addressed in the NHI. As such, the informal sector is therefore not adequately catered for, and yet it employs majority of the workforce.

The expectation is that initially, the government may or should plan to subsidize informal sector until such a time when the people in the informal sector or self-employment are clearly identified e.g. through linkage to national identification databases. Given the lack of clarity on insurance for persons employed in the informal sector, this begs the question whether government is ready to implement the NHI to ensure universal health coverage.

In this case, as government covers healthcare costs for informal sector players in the short to medium term, those in the formal employment will most likely be covered using their own contribution. The risks of “moral hazard” problems are minimal, given that the formally employed are very unlikely to decide to move out of employment with the motive of eschewing the insurance contributions, since the insurance statutory monthly deduction is just 4% of their net salary (this presents a high opportunity cost).

According to the latest National Household Survey (2016/17), the size of Ugandan labour force is 10 million and about 60 percent of the labour force operates in the informal economy. From these statistics, NHI contribution by the formally employed can potentially finance healthcare for about 8.8 million people (i.e. the formally employed including their dependants) out of projected total population. This leaves the total number of people in informal employment (including their dependants and possibly indigents) at approximately 30 million.

Using a conservative spending figure of $34 per capita public spending on healthcare per year to deliver universal coverage (estimates from the Commission on Macroeconomics and Health), it implies that the government should plan to finance healthcare to the tune of about 3,672 billion shillings (approximately 1.02 billion US$) to cover the informal sector (perhaps including indigent persons).

This requires more than doubling the current public spending on health of 1,824 billion shillings. However, due to rising healthcare costs, the recommended average for developing countries is a spending of at least US $86 per person per year (Chatham House estimate).

If this higher recommended threshold of $86 is considered, the government of Uganda should plan to finance healthcare to the tune of UGX 9,288 billion shillings (about 2.6 billion US$). This projected spending necessitates raising the budget for healthcare by about five times from the current level. Massive additional financial resources are thus needed for universal coverage, and the level of public funding required for universal coverage will only subside with effective strategies to capture informal sector players to ensure that they contribute to the NHIS.

Accordingly, if the goal of universal health coverage is to be achieved through NHI as a driver —with coverage of both the formal and informal sectors—financial resources for health need to be expanded in the short to medium term, via massive resource mobilization for healthcare.

However, financial resources alone are not sufficient to deliver the NHIS - a strong institutional framework must be established to play complementary role.

Key institutional issues that must be streamlined in the short run include; strengthening support supervision and monitoring to ensure quality healthcare delivery for all; establishment of a NHI information system that links beneficiaries to services offered and checks probable false claims and cost escalation from accredited healthcare providers; institutional linkages between the scheme and relevant state agencies (such as; National Identification and Registration Authority, National Social Security Fund, and Uganda Revenue Authority); developing clear criteria to identify indigent; and devising mechanisms to bring informal sector players on board to contribute.

The Writer is a Researcher at Economic Policy Research Centre (Uganda), SPEED for Universal Health Coverage.

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