When Fatima Suleiman, a civil servant in Abuja, fell ill earlier this month, she expected her National Health Insurance card to cover her basic lab tests and consultations.
Instead, she was asked to pay over N15,000 out-of-pocket at a public hospital.
“They told me the plan no longer covers the tests and drugs I needed.
“I was shocked. What’s the point of insurance if I still have to pay everything myself?” She said.
Fatima’s case is not unique.
Thousands of enrollees, many of them, low-income workers, market women, artisans, and even federal civil servants, are finding that their health insurance cards no longer guarantee them access to care.
From private hospitals in Lagos to public clinics in Kano, more Nigerians with valid health insurance cards are being forced to pay out-of-pocket for routine services.
This growing trend shows a deeper problem in Nigeria’s health insurance system, a clear gap between what insurers promise and what hospitals can actually provide.
This is mainly due to outdated payment rates, rising inflation, and delays in payments from Health Maintenance Organizations (HMOs).
Many hospitals, already struggling financially, are now rejecting certain insurance plans or cutting down on the services they offer, leaving patients to bear the cost.
This shows a major problem in Nigeria’s health insurance system: too much focus on increasing enrolment and keeping premiums low, and not enough attention to service quality, realistic pricing, and sustainability.
Health experts say the problem lies in how many of Nigeria’s health insurance plans are structured.
“The system prioritized access, getting more people enrolled, but ignored the rising cost of healthcare and what providers actually need to stay afloat,” said Dr. Ojo Sikiru, a public health physician based in Lagos. “We’re now paying the price.”
Health Maintenance Organizations (HMOs), in charge of managing enrollees’ care under the National Health Insurance Authority (NHIA), operate on fixed budgets.
Although NHIA recently increased capitation fixed yearly payments to healthcare providers per patient by 93% and fee-for-service rates by 378%, hospitals say the money still falls short.
With inflation and rising costs of medical equipment, tests, and drugs, many hospitals say they are left with two choices: absorb the loss or stop accepting the affected plans.
With inflation and rising costs of medical equipment, tests, and drugs, many hospitals say they are left with two choices: absorb the loss or stop accepting the affected plans.
The result of paying out-of-pocket despite being insured is a silent breakdown of Nigeria’s health insurance system. In some cases, entire HMOs have been blacklisted by hospitals. In other areas, health providers offer minimal care to enrollees, basic consultations without essential drugs, lab tests, or specialist referrals.
“Some hospitals now say, ‘insurance patients only on Tuesdays,’ or they give you fewer drugs than needed. It’s a two-tier system: cash patients get full care, insured patients get leftovers,” said Dr.Ojo.
With more than 70% of health spending in Nigeria still coming directly from individuals’ pockets, the weakening of insurance coverage could reverse years of progress in healthcare policy.
The insurance framework prioritizes enrolment numbers that look functional on paper but break down at the point of care.
Under the NHIA structure, public sector employers at the federal level are required to contribute 3.25% of an employee’s consolidated salary, while the employee contributes 1.75%, making up a total of 5%.
In the organized private sector, employers are expected to pay 10% and employees 5%, amounting to 15% of the employee’s basic salary.
Even though these contributions seem enough on paper, they often don’t guarantee the quality of care.
As a result, many health providers, especially private hospitals, are quietly pushing back. Some now reject certain HMOs entirely, while others limit the services they offer to insured patients.
In the first quarter of 2022, N16 billion was disbursed to health facilities to ensure access to quality services.
Another N16 billion was disbursed in the second quarter of 2022.
In 2024, the Federal Government of Nigeria, through the National Health Insurance Authority (NHIA), disbursed a total of N23.92 billion.
In the fourth quarter of 2024, the Federal Government approved the disbursement of N12.9 billion through the Basic Health Care Provision Fund (BHCPF) to the NHIA, National Primary Health Care Development Agency (NPHCDA), Nigeria Centre for Disease Control (NCDC), and National Emergency Medical Services and Ambulance System (NEMSAS).
While recent health reform announcements promise more funding and digital transparency, analysts say the challenge goes beyond allocation; it lies in how efficiently the funds are used, how promptly they reach providers, and whether tariff reviews match economic realities.
Dr. Ifeanyi Okey, who works at a private clinic in Benin, said the economic pressure on small health facilities has become unbearable.
“We used to accept over 10 HMOs, but now we work with only two. Many of the others owe us for months, and the tariffs are from another era. How do we pay our doctors, our nurses, our rent?” he said.
He added that many clinics now offer only basic services under insurance plans, referring patients elsewhere for tests or drugs not covered.
Mrs. Rosemary Daniel, a matron at a public hospital in Lagos, said the facility is under pressure to meet patient expectations despite meagre reimbursements.
“People come in angry, expecting free care because they have insurance cards. But the truth is, our pharmacy shelves are half empty, and we can’t run tests without diesel for power,” she explained.
She said the hospital sometimes treats emergency cases and bills them later, causing tension between patients and staff.
Dr. Lekan Ewenla, CEO of Ultimate Health HMO, also flagged a critical structural issue: the mismatch between capitation payments and enrollee volume at primary care facilities.
He noted that unless providers meet the recommended enrollee volume, capitation payments may be inadequate to sustain service delivery.
“In the health insurance program, there are two levels of risk managers. The primary healthcare facility serves as the risk manager at the first level, receiving 65% of the capitation, that’s the premium paid upfront to manage the health risks of enrollees,” he explained.
According to Dr. Ewenla, the model assumes that each facility will be responsible for at least 2,500 enrollees in order to pool risks effectively. But in practice, many facilities are assigned far fewer, sometimes as low as 1,400 people, making the system financially unsustainable.
“If a facility is only managing 1,400 people instead of the recommended 2,500, it becomes difficult to bear the risk reasonably. The money may look adequate on paper, but when the volume isn’t there, it quickly becomes inadequate,” he said.