New options: Attempting to address the shortfall in the health insurance scheme’s funding

Established in 2004, the National Health Insurance Scheme (NHIS) was Ghana’s first step towards a sustainable system of universal health care. In order to provide a social safety net for the most vulnerable segments of the population, the scheme initially targeted lower-income residents, with the intention of expanding coverage to the entire population with time. In the decade since the introduction of the NHIS, remarkable strides have been made in bringing minimum levels of health care to the most vulnerable groups in the country. However, the expansive programme has faced funding gaps over the years.

System Structure

The scheme draws its funding from a variety of sources, including a 2.5% levy on imports, regular distributions from the social security apparatus and direct allocations from Parliament. Additionally, some participants pay annual income-based premiums ranging from GHS7.20 ($1.86) to GHS48 ($12.38). However, according to the World Health Organisation, as of 2010 nearly 70% of current participants fell below the income threshold, exempting them from premium payment obligations.

The NHIS reported that it had 10.1m active members in 2013, or 38% of the population. This represented a 3% increase over 2012. While the 3% growth in enrolment translated into a 7.1% rise in premium payments, premiums accounted for only 3.4% of total revenue in 2013 and covered 3.1% of total expenditures. The bulk of revenues were sourced from the National Health Insurance Levy (NHIL) on imports, which contributed 66.9% of revenues and covered 64.9% of expenditures for the year. Other major sources of revenue included the social security transfer and investment income, which represented 20.0% and 4.7% of revenue, respectively. Some 78.5% of expenditures were allocated to health care claims. Operational and administrative expenses claimed an additional 13.3%. The balance was allocated to interest, depreciation and intra-governmental transfers.

Funding Costs

Most recent figures show the scheme covers 11.2m Ghanaians, with projections to reach 11.9m by the end of 2016, which would mark a 6.25% rise in enrolment over 2015. The expected costs for 2016 hit GHS2bn ($516m), but forecast revenues are only estimated at GHS1.67bn ($431m).

Increasing annual deficits have been recorded by the NHIS since 2009. The funding shortfalls have led to reports of service providers waiting months for reimbursement. As a result, many providers have returned to the system demanding payment prior to administering treatment. This practice, which predates the establishment of the NHIS, is referred to locally as “cash and carry”. These occurrences have greatly undercut the scheme’s goals of providing reliable and timely health care to the poor and other disadvantaged populations. The NHIS has approached parliament with a request for additional funds to fill the budget shortfall. This comes at a difficult time for the government, which is focused on cutting costs and expanding revenue as part of its programme of fiscal consolidation (see Economy chapter).

Committee Review

The financial difficulties have raised questions over the sustainability of the scheme. To address the persistent revenue problems and modernise the system, then-President John Dramani Mahama appointed a seven-member Independent Technical Review Committee in 2015 to identify the challenges, propose solutions, and assign responsibility and timelines for action. A draft report of recommendations was completed in June 2016 and submitted to parliament for review.

The exercise found a number of red flags, the most pressing of which was the fact that, according to the committee’s report, the NHIS had “almost no expenditure management process in place”. This hampered the ability to identify and understand the factors that are leading to persistent cost overruns. This has in turn had a number of knock-on effects. First, the NHIS is not taking advantage of the purchasing power inherent to a single-payer system. The report called for the NHIS to use its position to negotiate more attractive prices for goods and services, especially with regard to drug purchases. Second, the report recommended the exploration of other cost-containment measures, such as reimbursement ceilings, pre-authorisation for expensive procedures and potentially a cost-sharing model for subscribers, among others.


The committee also recommended a more dramatic overhaul of benefit provision. It suggested the NHIS establish a two-tier scheme. The first tier would not require participants to hold an active membership to NHIS to gain access to a defined basket of primary health care services. This basic level of care would be available to all residents and could be obtained by walking into a clinic and presenting a form of identification proving residency, similar to the UK’s National Health Service. Those who seek care beyond the basic-level offerings would be required to present an active NHIS health care card to access the programme. The committee’s report did not detail the projected costs for this arrangement.


While expenditure controls formed a major part of the report, there were fewer recommendations for revenues. The country’s push towards greater austerity in government spending limits diversions from the state budget’s general fund, while the increasing rate of inflation and depreciating cedi restricts the scope for raising additional levies on citizens. As a result, in remarks during the official launch of the report, Kwesi Amissah-Arthur, Ghana’s then-vice-president, called on the NHIS to work with the private sector to explore new forms of financing to further complement government support.

Maximising private sector involvement while keeping the system affordable for all citizens will be the NHIS’s priority as it seeks to expand coverage and ensure financial long-term sustainability. Examples of innovative financing that the committee could explore include licensing agreements with health care providers that grant exclusive rights to administer certain services or operate in certain regions; auctioning the exclusive right to collect and process premium payments to one or two financial institutions; or offering premium levels of service to higher-income individuals or to corporations that are willing to pay for this service for their employees.

Path Forward

Through the establishment of the NHIS in 2004, Ghana has embarked on a path towards universal health care that few countries of its income level have achieved. However, the scheme has grappled with fundamental fiscal shortfalls. The 2016 report from the Technical Review Committee developed a vision for the future, addressing many of the structural concerns. Although the cost-cutting measures laid forth in the report will go a long way in addressing the scheme’s financial difficulties, the NHIS is now faced with the challenge of mobilising the private sector to meet the needs of the public.