President of IMANI Centre for Policy and Education, Franklin Cudjoe, has described as flawed, a proposal by the Chief Executive of the struggling National Health Insurance Authority to tax certain commodities as a means of generating revenue to run the scheme.

The NHIA boss, Dr. Samuel Yaw Annor has proposed that commodities such as sugar, cigarette, alcohol, among others, should be taxed in order to augment funding from VAT and SSNIT in the running of the scheme. But IMANI boss Franklin Cudjoe disagrees with the move saying such a move is bound to fail.

According to Franklin Cudjoe, having taxes increased on sugar, alcohol and cigarette to broaden the financing models of the health scheme he described as ”collapsing” will not help sustain the scheme.

The two main funding sources, i.e. contributions from VAT and SSNIT, fall short of the needed funds to effectively run the scheme. Government has therefore been looking at ways of generating additional revenue to fix the ailing scheme with several proposals including an additional 1% taxing of the salaries of workers in the formal sector. But many have kicked against such proposals describing them as unfair and unrealistic.

Chief Executive Officer of the National Health Insurance Authority, Dr Samuel Yaw Annor has suggested that one crucial way of sustaining the challenged NHIS is to tax and tax sugar, alcohol and cigarette.

“There was need to increase the Scheme’s current financing model from 30 dollars 86 dollars per person per year to have a basic healthcare system or to 100 dollars per person per year to have a premium healthcare system in Ghana. He said the NHIA had proposed various financing models to government such as increasing the VAT component to 3.5 per cent, a health tax on cigarette to treat smokers, taxes on alcohol and sugar to cater for sugar diseases amongst others to shore up funds for the Scheme” he said.

But Mr. Cudjoe disagrees with the call insisting that sustainable access healthcare could be achieved in Ghana by focusing the NHIS on the poorest while allowing those with formal employment to be enrolled on private health insurance schemes.

Amongst other suggestions, Mr. Cudjoe says “in the short term, an upward review of the premiums and the reduction of the exemptions is necessary. NHIS suffers from high payment arrears since the levies do not go directly to the health authorities. To address this, there is the need to automate the transfer of funds to avoid delays

There are numerous regulatory barriers to entry for private health insurers, which should be reduced to increase competition within the sector. Further, innovations in payment technology should be leveraged to create innovative payment solutions for those without access to traditional bank accounts.”

Read full statement below

IMANI’S” REFORMING THE NATIONAL HEALTH INSURANCE; PATHWAYS TO SUSTAINABLE HEALTHCARE FINANCING”- SEPTEMBER 2017
The Chief Executive Officer of the National Health Insurance Authority has since the beginning of the year suggested that one crucial way of sustaining the challenged NHIS is to tax and tax sugar, alcohol and cigarette. “Dr Samuel Yaw Annor, the Chief Executive Officer of the NHIA, said there was need to increase the Scheme’s current financing model from 30 dollars 86 dollars per person per year to have a basic healthcare system or to 100 dollars per person per year to have a premium healthcare system in Ghana. He said the NHIA had proposed various financing models to government such as increasing the VAT component to 3.5 per cent, a health tax on cigarette to treat smokers, taxes on alcohol and sugar to cater for sugar diseases amongst others to shore up funds for the Scheme”-. (http://www.nhis.gov.gh/News/need-for-more-taxes-to-fund-nhis-%E2%80%93-dr-baah-4145)

Do we really need to increase taxes or apply solutions that truly defines pathways for an unburdened health scheme? See some ideas below

Health financing systems are a major factor challenging the provision of equitable and quality health care in Ghana. The National Health Insurance Scheme (NHIS), initially introduced in Ghana as an alternative to direct out-of-pocket (OOP) financing to improve access, faces considerable challenges, not least its financial sustainability.

The Problems

? Although Ghana stands by its commitment to the Abuja Declaration, which requires signatory countries to allocate 15% of public spending to health, the past six years have seen a growing underfunding of the health sector by the government with an average spending of 12%.

? As at the end of June 2016, active membership of the National Health Insurance Scheme stands at 11,164,673 representing 41% coverage. However, after over a decade of implementation, the scheme has faces a financial crunch caused by growing income inequality, population changes and the rise of non-communicable diseases

? The total accumulated debt the NHIS owed to service providers was estimated to be GHS 1.2 billion, with arrears of payments of at least 12 months as at April 2017.

?Children, informal sector workers and exempt group make up more than 80% of total membership yet often contribute little or nothing to the state in the form of tax and premium payments. This puts the scheme adequately under genuine strain. Also, previous attempts to increase membership, especially against the background of slow economic growth, and low tax revenue mobilization have worsened the situation2

Suggested Solutions

? Sustainable access healthcare could be achieved in Ghana by focusing the NHIS on the poorest. Those in formal employment should be encouraged to move into private health insurance schemes.

? With over 10 million Ghanaians with no health insurance cover, there is also an opportunity to expand insurance coverage through the greater use of private health insurance schemes. Currently, these are mainly used by formal employees but there is also demand for private insurance schemes to cater for the informal majority and low-income earners.

?Currently, the two main funding sources (VAT and SSNIT contribution) of the scheme fall short of their potential. Therefore, widening the tax base and social security nets by reducing bottlenecks in business registration and tax payment would go a long way to improve the finances of the scheme.

? However, in the short term, an upward review of the premiums and the reduction of the exemptions is necessary. NHIS suffers from high payment arrears since the levies do not go directly to the health authorities. To address this, there is the need to automate the transfer of funds to avoid delays

? There are numerous regulatory barriers to entry for private health insurers, which should be reduced to increase competition within the sector. Further, innovations in payment technology should be leveraged to create innovative payment solutions for those without access to traditional bank accounts.

? In the midst of the woes of the NHIS, there exists a group of private health insurance providers (PHIP), who provide health insurance schemes to some sections of the Ghanaian population. With the right reforms and conducive environment, the PHIPs will be able to extend health insurance to a greater portion of the population, thereby reducing catastrophic out of pocket payments.

? The alternative to the national health insurance system is the private health insurance system. As of July 2017, there were eleven private health insurance companies accredited by the governing body, the National Health Insurance Authority, which also manages the National Health Insurance Scheme. Six offer packages for individuals; the others offer packages as part of a group, family or a corporate group. Premiums range from about GHS 600 to 1,100 per person per year.

? However, there are challenges faced by the private health insurance companies, such as barriers to entry, which discourage entrants into the market and hence limits competition. Barriers include capital requirements, such as the requirement for private mutual health insurance companies to have minimum initial capital of GHS 1 million, as well as sequestering 20% of the capital requirement for the reserve fund. For private commercial health insurance providers, the minimum capital requirement is GHS 5.5 million with 10% required as a security deposit in a Bank of Ghana account.

?These requirements and others have led to the National Insurance Commission calling on insurance companies to merge, stating that there are too many insurance companies with low capacity in the country.

?Lack of reliable and sufficient data on individuals in the country has also affected the ability of PHIPs to expand their coverage. PHIPs also faces the incidence of adverse selection due to the voluntary nature of the programs and the corresponding low numbers of clients thereby leading to high premiums charged and creating artificial barriers for those with low income to access. Also, it has been argued that the private insurance industry will be hard-pressed to offer competitive premiums due to the current company-run health care programs they seem to have adopted.