The fundamental difference between an insurance scheme and a public health fund lies in their scope and structure of benefits. An insurance scheme is designed to provide specific, limited coverage based on the contributions of its members. Conversely, a public health fund operates on a broader scale, aiming to provide universal health services without necessarily tying benefits to individual contributions.
THE CORE PROBLEM: UNLIMITED COVERAGE
Globally, insurance schemes are built on a delicate balance between contributions and payouts. For NHIMA, contributions are primarily sourced from formal sector employees and their employers, supplemented by voluntary contributors. However, the absence of defined limits on benefits has disrupted this balance. Members and their dependents can access healthcare services without restriction, creating a scenario where outflows far exceed inflows.
This dynamic is akin to managing a stream where water trickles in slowly while people drink without restraint. Without setting boundaries on how much water can be drawn, the stream risks running dry. Similarly, NHIMA faces the challenge of ensuring its financial resources can sustain its growing obligations.
By offering unlimited benefits, NHIMA risks transitioning from an insurance scheme to a public health fund. This shift necessitates substantial and consistent government funding—resources that are not readily available given Zambia’s current economic climate.
Addressing this challenge requires clearly distinguishing NHIMA’s role as an insurance scheme and aligning its operations with sustainable principles. Implementing caps on benefits, refining its funding model, and prioritizing efficient resource allocation are critical steps to ensure its longevity and effectiveness.
Insurance schemes worldwide are built on a delicate balance of contributions and payouts. For NHIMA, contributions flow in steadily, primarily from formal sector employees and their employers, along with voluntary contributors. However, the absence of a cap on benefits has created an unsustainable dynamic. Essentially, members and their dependents can access healthcare services without defined limits, leading to a scenario where more money flows out than comes in.
This situation can be likened to managing a stream where water trickles in at a slow pace while people drink without restriction. Without controlling how much water can be drawn, the stream runs the risk of drying up. Similarly, NHIMA is now faced with the challenge of ensuring that its financial resources are adequate to meet its growing obligations.
DISTINGUISHING A SCHEME FROM A PUBLIC FUND
The fundamental difference between an insurance scheme and a public health fund lies in the scope and structure of benefits. An insurance scheme is designed to provide specific, limited coverage based on the contributions of its members. In contrast, a public health fund operates on a broader scale, providing universal health services without necessarily tying benefits to contributions.
NHIMA, as it stands, risks blurring this line. By offering unlimited benefits, it is moving closer to functioning as a public health fund, which requires substantial and consistent government funding—a luxury not readily available in Zambia’s current economic climate.
RECOMMENDATIONS FOR FINANCIAL SUSTAINABILITY
To ensure NHIMA remains a viable insurance scheme, strategic measures must be implemented:
1. SET ANNUAL OR MONTHLY COVERAGE LIMITS:
- Establish a ceiling on how much a member can claim in a given period, whether monthly or annually. This will help control expenditure and ensure equitable access to resources.
2. DEFINE COVERED SERVICES:
- Specify the types of services covered under NHIMA. For instance, high-cost treatments or elective procedures could be excluded or subjected to co-payments.
3. INTRODUCE TIERED BENEFITS:
- Differentiate benefits based on contribution levels. Members contributing more could have access to higher coverage limits, while basic coverage can be maintained for lower-tier contributors.
4. SPECIAL PROVISIONS FOR VULNERABLE POPULATIONS:
- Provide defined benefits for non-contributors, such as the elderly, under a separate funding mechanism. This ensures that the most vulnerable populations are not excluded while maintaining the financial integrity of the scheme.
5. ENHANCE REVENUE STREAMS:
- Broaden the contributor base by incentivizing informal sector participation and exploring alternative funding sources, such as earmarked taxes or donor funding.
6. STRENGTHEN GOVERNANCE AND MONITORING:
- Implement robust systems to monitor claim patterns, detect fraud, and ensure efficient resource allocation.
NHIMA’s vision of universal healthcare is commendable and aligns with Zambia’s aspirations for achieving equitable health access. However, its current financial struggles underscore the need for reform. By redefining its structure to incorporate limitations and focusing on its role as an insurance scheme, NHIMA can regain its footing and continue to serve the Zambian population effectively. Without these changes, the risk of overburdening the system remains high, ultimately jeopardizing the scheme’s future.
The time to act is now. Policymakers, stakeholders, and the public must come together to support reforms that will ensure NHIMA’s sustainability and success in the long term.
Author is Mr. Zanga Musakuzi, a Renowned
Pharmacist, Entrepreneur, Innovator and CEO of Medsearch Zambia