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World Bank study finds Ghana’s health insurance system heading to bankruptcy in 2013

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As early as next year, 2013, Ghana’s National Health Insurance Scheme (NHIS) could go bankrupt, a World Bank study has found.

According to the report, “the system has serious structural and operational inefficiencies and is on a trajectory to go bankrupt as early as 2013.”

The report observed that for the NHIS to expand enrollment and become sustainable, more public resources will be needed.

It warned that “the system is too inefficient to absorb significant new resources, however; without major reforms, some of which lie outside the purview of the NHIS, it is difficult to argue for major increases in funding, particularly given Ghana’s fragile macroeonomic/fiscal situation.”

The NHIS was established under Act 650 of 2003 by the government of Ghana to provide basic healthcare services to persons resident in the country through mutual and private health insurance schemes.

The World Bank study however is based on data collected three years ago in 2009. The report titled ‘Health Financing in Ghana’ was released this week.

Urging reforms, the report calls for fundamental reforms to coverage rules, the basic benefit package, provider payment, and cost control to ensure efficient use of resources and bring expenditures into closer alignment with available resources and Ghana’s future fiscal space.

The report addresses five key areas including demographic and epidemiological trends in Ghana; the configuration of Ghana’s health system, the functions of health financing, and the goals of health systems; and Ghana’s health financing system; It assesses the performance of Ghana’s health system by comparing its health outcomes, inputs, health spending, and financial protection with comparator countries; Based on this assessment and the significant body of Ghana-specific health policy literature, it analyzes the strengths and weaknesses of Ghana’s health system, providing a baseline for reform; And assesses the sustainability of the NHIS in the context of Ghana’s future fiscal space, based on revised macroeconomic information positioning Ghana as a lower-middle-income country.

The report also yields four key messages among others.

According to the report Ghana’s health financing system is going in the right direction based on
international good practices.

“There is a clear movement away from supplyside subsidies toward demand-side financing, the revenue sources of the NHIS are diversified and progressive, and substantial resources are allocated to ensure coverage of vulnerable groups,” it says.

The NHIS appears to have reduced financial access barriers to health care, increased utilization, and been pro-poor, although some equity issues remain. It is functioning as a new unified health purchaser with a maturing strategic purchasing function that, although not yet adequately exploited, has the potential to be a force for change and modernization in service delivery, it adds.

It however finds that as a share of GDP, total health spending in Ghana is slightly below
average for a lower-middle-income country; public spending is about average, it says.

Despite this spending, the under-five mortality rate and maternal mortality ratio are higher than in comparator countries, the report observed.

The report acknowledged that modest increases in government expenditure on health will be possible as a result of economic growth and improved revenue collection measures, adding that as a result of the earmarked National Health Insurance Levy (NHIL) and social security contributions, the health sector (and the NHIS in particular) will likely get at least its share of any new revenues, and slightly more as Ghana evolves to a middle-income country and expands its share of GDP allocated to health.

The reported noted some challenges to the country’s health system as the population grows.

“Population growth and structural changes will strongly affect Ghana’s health financing needs as well as its ability to meet those needs. Ghana’s population will increase by almost 40 percent by 2030—but the number of people 65 and older will increase by 90 percent,” it said.

The ratio of health professionals to patient ratio in Ghana was also cited by the report as a challenege to the health system.

The report said Ghana has fewer physicians and health workers per capita than other countries with comparable income and health spending. It also has a serious shortage of specialists.

“The burden of disease will continue to shift from communicable diseases to noncommunicable diseases and injuries. In the medium term, Ghana will have to deal with the dual burden of disease, which will impose significant costs on the health system,” the report said.

The report revealed that, the fact that an estimated 70–90 percent of Ghana’s labor force works in the informal sector and that most firms are very small provides significant challenges to both revenue collection and enrollment in the NHIS.

Describing the  performance of Ghana’s health system as mixed, the report noted that consumer satisfaction is high, and access appears to have improved, including for the poor.

“Total health spending as a share of GDP is slightly below the global average for countries at the comparable level of income, however; Ghana has fewer hospital beds and health workers and worse under-five and maternal mortality outcomes than comparator countries; and health spending increased less rapidly than spending in most African counties between 1995 and 2009,” it said.

According to the report, since 2004, public health spending increased 11 percent faster than GDP and 15 percent faster than government revenues.

“Despite these increases, the share of the government budget dedicated to health is below the 15 percent Abuja target, as it is in many other African countries,” it said.

See the full report here.

By Emmanuel K. Dogbevi

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