By EHON, Idialu Anthony Ph.D.
Expanding health insurance coverage through mandatory state-level Social Health Insurance Schemes (SHIS) is a transformative pathway toward achieving Universal Health Coverage (UHC) and improving health care financing in Nigeria. Given the persistent underfunding of the health sector and the high out-of-pocket health expenditures—currently over 70% of total health spending—SHIS provides a sustainable and equitable mechanism for mobilizing domestic resources. By making enrolment mandatory for all residents within a state, especially the large informal sector that often falls outside of traditional insurance coverage, the risk pool is broadened, and cross-subsidization becomes more viable. Mandatory SHIS ensures that the young and healthy contribute alongside the elderly and sick, thereby improving the financial sustainability of the schemes while reducing catastrophic health expenditures that drive households into poverty.
To ensure widespread enrolment and implementation, states must legislate and enforce policies that mandate SHIS for all workers, including those in the informal economy. This can be achieved by integrating health insurance enrolment into existing social and civil registration systems, such as voter registration, driver’s licensing, national identity card programs, and tax filings. Additionally, linking access to certain government services or benefits (e.g., agricultural subsidies, business registration, or market stalls) to proof of health insurance enrolment can further drive compliance. State governments can also partner with trade unions, artisan cooperatives, market associations, and religious institutions to conduct mass sensitization, collective enrolment drives, and premium collection, thereby bringing community ownership and cultural relevance to the program.
Innovative financing mechanisms are essential for scaling up SHIS. States can establish Health Equity Funds to subsidize premiums for the poor and vulnerable, financed through earmarked taxes such as levies on alcohol, tobacco, and luxury goods, or deductions from consolidated state revenues. Collaborations with international donors and development partners can also provide initial seed funding or matching grants to kick-start SHIS in resource-constrained states. Furthermore, leveraging digital payment systems, mobile money platforms, and agent banking networks can make it easier for informal sector workers to pay their contributions in small, flexible amounts. These digital tools increase financial inclusion and minimize the administrative burden associated with premium collection and fraud management.
Transparency and accountability are crucial for public confidence in SHIS. States must establish autonomous Health Insurance Agencies governed by a multi-stakeholder board that includes government officials, civil society, private sector representatives, and enrollees. These agencies should operate transparently with regular audits, open procurement systems, and clear reporting mechanisms on fund utilization and health outcomes. States should also adopt standardized benefit packages that guarantee a minimum level of essential health services, including maternal and child health, communicable disease control, and basic surgical procedures. While states may tailor services to local epidemiological profiles, ensuring a baseline of uniformity promotes equity and inter-state portability of benefits.
The success of SHIS depends largely on the quality and availability of health services. Therefore, states must concurrently invest in strengthening the capacity of primary health care centers, upgrading infrastructure, staffing facilities with trained personnel, and ensuring consistent availability of essential drugs and diagnostics. Accreditation of both public and private health providers under SHIS should be based on clear quality standards and performance metrics. Incentive systems such as capitation payments, fee-for-service with ceilings, and performance-based financing can motivate providers to deliver efficient, client-centered care. Integrating SHIS with digital health tools like electronic health records and telemedicine can also improve continuity of care, reduce leakages, and enable better health system planning.
Ultimately, mandatory SHIS at the state level offers Nigeria a decentralized yet harmonized framework to finance health care sustainably and equitably. With Nigeria’s federated structure, empowering states to design and implement health insurance schemes tailored to their contexts while aligning with national UHC goals is critical. The Federal Government can play a coordination role by offering policy guidelines, minimum benefit standards, financial incentives, and technical assistance. By embracing innovation, political will, and community participation, Nigeria can turn SHIS into a powerful engine for health system reform, financial risk protection, and the realization of universal health coverage for all Nigerians.
