‘Health insurance regulatory environment needs a complete overhaul’
Leke Oshunniyi is the chief executive officer and director AIICO Multishield Healthcare Nigeria. In this interview with BusinessDay’s OBOKOH ANTHONIA, he talked about the country’s health insurance industry. Excerpts:
What are the events and circumstances that led to the establishment of AIICO Multishield?
Comparable with many similar undertakings, the circumstances were multi-factorial. As you may have deduced from our introductory discussions, my background is in medical practice. The practice I worked for was very innovative, and sometime in the mid-eighties, we struck a health insurance agreement with the Nigerian subsidiary of an American company to provide medical cover for a whole year, for about 200 employees for the sum of N50, 000. To put that amount into perspective, that could have bought 4 luxury saloon cars at the time. In line with the longstanding convention in the USA, the company wanted to budget for health, rather than leave staff healthcare as an open-ended expense item as was and still is the practice with many corporations here.
We were able to run the programme successfully in the first year and subsequently. The net effect was that all the top practitioners in the practice became lifelong advocates of health insurance. Since we were all active in the Association of General and Private Medical Practitioners of Nigeria (AGPMPN), we were able to collaborate with other frontline private medical practitioners and the Nigerian Medical Association to convince the then Minister of Health, the late great Professor Olikoye Ransome-Kuti to initiate protocols for national adoption. The process was exceedingly slow, but by the mid-nineties, it was obvious to industry watchers that the enactment of a decree to regulate the operations of the fledgling health insurance industry was imminent. Added to that, was the accelerating global trend of incorporating health pooling mechanisms (or health insurance) in health funding strategies.
AIICO Multishield was one of several HMOs incorporated during this period in anticipation of the official flag-off of the industry in Nigeria. It is pertinent to note that we started operations in 1997, two years before the enactment of the Decree (now Act) 35 of 1999. We are happy to be celebrating our 20th Anniversary this year.
As one of the foremost Health Insurance providers in Nigeria, do tells us about Multishield’s achievements and contributions to healthcare in the country?
We were licensed as one of the 8 pioneer health maintenance companies in Nigeria. Since then, we have been at the forefront of innovations in the industry. The provision of Managed Care for Youth Corpers in their service year was one of our corporate initiatives which was adopted by the NYSC Directorate and operated for several years until funding for the project was stopped.
AIICO Multishield was also the first HMO to digitalise enrollee access to healthcare and the management of the benefit packages. Being a subsidiary of the insurance giant, the AIICO Insurance Plc, we have been able to roll-out bundled or combined life and healthcare products for the benefit of thousands of our customers.
If you look at page 103 of the Economic Recovery and Growth Plan document of the Federal Republic of Nigeria, you will find mentioned under Programme 32 (Roll out of Universal Health Coverage), the item “Scale up Mobile Health Insurance to provide coverage for the poor”. I am very proud to say AIICO Multishield Ltd was an integral part of the team that conceptualized and operated Mobile Health Insurance, a global first.
How has policy-making and execution by regulators influenced operations in the industry?
Everything leads back to the regulatory environment. Which brings us to the question – What makes Good Regulation? In his seminal paper on the subject written in 2007, Stavros B. Thomadakis summarised the attributes of good regulation as follows:
The first attribute is that there is a shared agreement within the regulatory and policy communities and with key stakeholders on the generic attributes of good-quality regulation. Secondly, there is timely feedback on how regulatory regimes are performing in practice, relative to these attributes. Thirdly, there is the capacity to evaluate the feedback – to sort the wheat from the chaff – and a willingness to act when the situation requires it, based on empirical evidence and sound judgment. Our regulatory environment in the industry is in need of a complete overhaul. Only then can we begin to discuss policy-making and execution by regulators.
As an industry expert, please provide an overview on the Health & Managed Care market in terms of the value-chain, sectoral development, industry premiums, and market size?
The health value chain is quite extensive, including: provision of healthcare, training of health workers, financing of care, manufacturing of pharmaceuticals/consumables and their distribution and retailing.
If you take sub-sectors of the health value chain, financing of care probably accounts for about 10 per cent of the entire value chain, whilst provision accounts for 50 per cent and training 10 per cent. The remainder is shared by the other sub-sectors. The premiums for the private managed care component in Nigeria average about N30, 000 to N40, 000 per annum. At the current exchange rate, this equates to about $100 per annum. Yet most of our therapeutics and consumables are imported. In comparison, the average annual premium for health insurance in the USA hit $10,345 in 2016, a hundred-fold difference. Furthermore, less than 4 per cent of approximately 180 million Nigerians are enrolled with a health plan.
On a global scale, it has been estimated that Sub-Saharan Africa (SSA) bears up to a disproportionate 24 per cent of the global disease burden, but struggles with 3 per cent of the world’s health workers and less than 1 per cent of the world’s finance. Divide these figures by a factor of 4, which is the approximate population ratio of Nigeria to the whole SSA, it gives you an idea of the long road we have to travel.
What is your evaluation of the Healthcare Industry in Nigeria today vis-à-vis the country’s counterparts in the West African region and in Africa?
I am not conversant with the policies in our Francophone neighbours, but the efforts of our Anglophone neighbour, Ghana, have been well publicized. Ghana appears to be much more determined to achieve Universal Health Coverage than we are, even though the regulatory statute was passed into law in 2003, a full four years after the Nigerian equivalent; indeed they came to Nigeria to learn about the industry. What Ghana did, included the establishment of a schedule of contributions from workers and the setting aside of 2.5 per cent of the price of certain goods as part of Value Added Tax (this accounts for 70 per cent of the funding). Little wonder then, that Ghana has a health insurance enrolment compliance of over 40 per cent of the population. Incredibly, Ghana’s performance in this regard is beggared by the achievement of Rwanda with which has achieved 96 per cent health insurance coverage in a few short years.
What impact has the recent economic recovery had on the Health Insurance and Healthcare Industry in Nigeria?
The economy is on the path to recovery; it has not yet recovered, and may not reach 2014 levels for a few years. Economists will tell you that medical businesses tend to be agnostic of business cycles and models of Government. However, what we have seen locally is that the economic downturn has meant people are less likely to pay premiums and more likely to resist increases thereof. Also the cost of care delivery by providers has skyrocketed. HMOs have been caught in the middle of these two effects of the recession.
What are the current trends prevalent in the industry?
There is stagnation in the industry. The efforts of the HMO umbrella body, the Health and Managed Care Association of Nigeria (HMCAN), under the leadership of our chairman, Tunde Ladele, have been geared towards the repeal and re-enactment of Act 35 of 1999. Perhaps due to a lack of experience or insincerity on the part of the authors of this piece of legislation, it was an unsound statute from the day it was passed. HMCAN has worked tirelessly for a modification of the law since the day it was enacted. It is reflective of our aggregate attitude to health in Nigeria that there has been such little progress in over 18 years. In the meantime the Pension Act was passed in 2004, amended in 2014, and there are indications that a further modification is in the offing. The past few years have been a period of learning, and we hope that lessons learnt can be incorporated into a new law which will usher in an era of exponential growth in the industry.
Where do you see the industry in the near to medium terms in terms of competition, growth and development?
Without the appropriate legal framework, issues of growth and development will remain moot points. As for competition, without a new law, there would be a bitter struggle by operators to capture the patronage of the less than 4 per cent of the population enrolled. A price war could well ensue, and the outcome, even for the victor would be pyrrhic.