How Does Health Insurance Work?

A Man pays taxes in Canada. Every December, he prints out his payslips, gets them stamped by the company and takes them to Canada. There he declares how much tax he has paid in Nigeria already, and the Canadian tax office does a quick calculation and tells him how much extra to pay. He’s not a Canadian citizen, but his family are resident there. His taxes ensure they have access to amenities and, most importantly, health insurance. His daughter is due to undergo surgery on her spine and he was shocked when her doctor told him there would be no additional bills. His taxes covered everything.

In Nigeria today, there is a fledgling demand for insurance- property, business, life. Health insurance is a sensible and effective way of managing medical bills and making sure provision is made for a rainy day. Public amenities that our taxes would fund are either underfunded, or simply incompetent. Health insurance seems to be a quick “stop-gap”. However, unverified reports state that less than ten percent of the Nigerian population is registered under one health insurance scheme or the other. Most Nigerians who are covered by one health plan or the other are so because their employers mandatorily provide these plans. Health insurance remains an option for only the minority due to factors such as financial difficulties, unavailability of health facilities and lack of awareness.

Health insurance providers in Nigeria largely render their services to companies but there are some of them who offer private insurance. The National Health Insurance Scheme (NHIS) is a social health insurance program that counts among its objectives “protecting families from the financial hardship of huge medical bills” and “ensuring equitable distribution of health care costs among different income groups”. It provides insurance for companies which have not less than ten people in their employ. It also is the official health insurance provider for civil servants under the federal government. Other private agencies which provide insurance for both companies and individuals.

When a company registers with a health insurance provider, they pay the provider a certain amount of money (called a premium) annually, which is deducted from the salaries of their employees. The provider (generally called a Health Maintenance Organization) in turn pays the hospital for the services rendered to their clients. The clients are then issued insurance numbers/identity cards which they use to access health care when they need it. One HMO is usually affiliated with numerous hospitals, so the individual chooses the hospital on their HMO’s payroll that best suits their requirements. Individuals can also get health insurance without being part of a company, although this is more expensive and not all HMOs provide it. The individual pays the HMO a premium annually, the amount depending on what plan they can afford.

The extent of a health insurance cover depends on how much the clients pay. The NHIS for federal government employees provides the same cover for all individuals under it irrespective of their contribution from their salary. For example, a low-level employee who contributes as low as N200 monthly will enjoy the same benefits as someone who contributes as much as N10, 000. For the private HMOs, however, the covers vary according to how much each individual contributes. There are covers for only the most basic of health services like lab tests and certain drugs. Other covers spread to consultancy fees and minor procedures. Yet other covers pay for pretty much anything but cosmetic surgery.

Some corporate health insurance packages allow for more than one user under one plan (usually four extra people), while some restrict their benefits solely to the member of staff whose insurance it is. For the private packages, there are either individual or family packages, the flexibility of which is determined by the health insurance provider.

A person’s health insurance remains valid as long as premiums are paid. There are usually periods of grace between a deadline and a subsequent payment, but this is at the discretion of the HMO.

Why Should You Sign Up For Health Insurance?

It makes financial sense.No one prays for misfortune, but if you ever need medical attention, you want to be certain you will get it. Signing up with the NHIS, for instance, gives you access to medical attention across over 3000 hospitals in the country. If you carry the card always with you, even when you’re unconscious (after falling victim to an accident or what not), a participating hospital can provide medical attention without worrying about who will foot your bill.
It’s not that expensive. Health insurance banks on the fact that everyone won’t fall ill at the same time. And so there’s power in numbers. The more people who sign up, the more money available to save lives. And for as little as it costs to recharge your phone, some mobile phone operators are offering health insurance up to N80,000 in a year.

In a nutshell, health insurance works. At best, you could save your life/that of your family. At worst, you would be contributing a little to a pool of funds that could help save somebody else’s.