Bridging trust gap in Nigeria’s health insurance

I wrote an article recently and dropped the link on my LinkedIn page, and I got comments that attracted my attention. The comments that attracted my attention mostly bordered on the missing trust in the health insurance space of Nigeria.

According to Insurance Journal, low retail penetration can be partly explained by the low level of awareness and trust in insurance, as well as the absence of strong financial literacy across large parts of the population. Of course we can say comfortably that this extends to all kinds of insurance in Nigeria, including health insurance.

Why is there a trust issue in the health insurance space of Nigeria? I have sojourned in this industry for over a decade now, and I can say, the trust issue is real.

There have been cases of providers being owed by Health Maintenance Organisations in Nigeria for many months and even years, up to the point of serious litigations and out of court settlements.

If providers are not properly paid for all care rendered to enrollees who paid the HMOs premium to access care and avoid out of pocket payments at the point of care, then the ripple effect is that they will experience bad service at the provider facilities. That is expected because the providers are incapacitated by inadequate funding that can be traced to significant levels of bad debts they record from HMO transactions they have per time.

When providers cannot adequately care for the enrollees who have paid for this service, the few enrollees who are bold enough to pay for health insurance products definitely will find it hard to renew their health insurance policies per time. After all, why should they pay for bad service in the first place?

When you reach out to HMOs to find out why they have such a huge problem of cash flow that they cannot pay hospitals appropriately, they say enrollees do not always want to pay premiums that are commensurate with the financial risk they are bearing per time. When you check closely, they also have a point. That, to me, is not usually the major reason for defaulting in claims payments, at least from experience, but I quite understand that is a factor to consider. Most defaulting HMOs are so just because of bad management. Period! My opinion though, based on experience.

Enrollees can only pay what is available to pay. If the propensity to buy an insurance product is low due to adverse economic conditions, the uptake level for health insurance products, like every other insurance products, will be low! With 40 percent of Nigerians living below poverty line, it is quite understandable why the disposable income to even purchase health insurance products is not available.

All these interconnected issues have led to a cascade of multiple failures at different stakeholder levels — from enrollees not being able to pay the right price for health insurance products they need per time, to HMOs failing to pay providers their claims at due dates, to enrollees suffering the backlash of poor access to care at the provider facilities.

Each stakeholder aforementioned now has trust issues, perhaps with the HMOs more at the receiving end of it all — revenue lines dropping relatively when compared with the rate of national population increase. Providers also sometimes do not trust enrollees. The latter sometimes do not trust that what they have been promised as benefits by the HMOs are accessible with ease, and with no guile.

Another trust issue in the health insurance space of Nigeria is that between HMOs and providers. This can be in terms of claims fraud or even HMOs denying, outright, legitimate claims from providers. This is a huge topic to write on some other time. For reasons bordering on poor data collection at a central level, it is almost like groping in the dark to know the extent to which providers and HMOs make losses on this.

For now, let us consider the trust issues between providers and HMOs a myth, but surely one that needs to be demystified as soon as reasonably possible. At individual levels, HMOs and providers certainly work on this by putting control systems in place to mitigate fraud risk on both sides. This risk cannot be eliminated, but at least it can be mitigated.

How do we bridge this trust gap? Perhaps there should be a cascade of multiple intervention at all stakeholder levels as well. My interventions here are not exhaustive, but I will pick key points to note when thinking of solving this problem.

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