Insured but Uncovered: Why Health Insurance Is Failing Millions of Nigerians

When Fatima Suleiman, a civil servant in Abuja, visited a government hospital recently for routine lab tests and medication, she assumed her National Health Insurance Authority (NHIA) card would cover the bills. Instead, she was shocked when asked to pay over N15,000 out-of-pocket for basic care.

“They told me my plan no longer covers the tests and drugs I needed. I thought insurance was supposed to protect me from exactly this kind of expense,” Fatima said, clearly frustrated.

Her experience is far from isolated. Across Nigeria, a growing number of citizens are discovering that being insured doesn’t mean being protected. From Lagos to Kano, enrollees with valid health insurance cards are being turned away, under-treated, or forced to pay cash for services they believed were covered. The disconnect between what insurance schemes promise and what patients actually receive is creating a quiet but widespread health crisis.

At the heart of the problem is a national insurance system stretched thin by outdated pricing models, rising inflation, and delayed payments from Health Maintenance Organizations (HMOs). While more Nigerians have signed up for health insurance in recent years, the quality and availability of care under those plans are rapidly declining.

Hospitals, both private and public, are caught in the middle. Many are rejecting some insurance plans altogether, while others drastically limit the services they offer insured patients. In some facilities, enrollees are told they can only be seen on certain days of the week. In others, insured patients are offered fewer drugs, restricted consultations, or are referred elsewhere for basic tests.

Health professionals argue the system has focused too much on boosting enrolment figures while ignoring the financial realities of modern healthcare. Dr. Ojo Sikiru, a public health expert in Lagos, explains that many insurance plans were designed years ago and haven’t kept up with inflation or rising medical costs.

“The system was built to expand access, but it didn’t account for the increasing cost of healthcare delivery. Hospitals are now expected to provide quality care with outdated budgets. That’s unsustainable,” Dr. Sikiru said.

Earlier this year, the NHIA adjusted its capitation and fee-for-service payments — increasing the fixed annual capitation by 93 percent and raising service fees by 378 percent. Still, many healthcare providers argue it’s not enough. Medical equipment, pharmaceutical supplies, and even basic utilities like diesel for power generation have become significantly more expensive. As a result, facilities must either absorb the losses or stop offering some insurance plans.

Patients are feeling the impact most. What should be a safety net has turned into a financial trap. Enrollees who once believed they had coverage are now paying out-of-pocket for services they thought were guaranteed. Some hospitals have blacklisted entire HMOs for non-payment. Others treat insurance patients like second-class citizens, offering them basic care while prioritizing cash-paying clients.

The financial burden on individuals is growing. According to recent statistics, more than 70 percent of healthcare spending in Nigeria still comes directly from people’s pockets. The deterioration in insurance coverage threatens to undo years of progress in public health policy and universal health coverage.

The structure of Nigeria’s health insurance model may be part of the problem. Under the NHIA guidelines, federal government workers contribute a combined 5 percent of their salaries to health coverage — 3.25 percent from the employer and 1.75 percent from the employee. In the private sector, the contributions rise to a total of 15 percent. On paper, this looks sustainable. In practice, it is not translating into reliable care.

Hospitals are increasingly pushing back. In Benin, Dr. Ifeanyi Okey, who runs a private clinic, says he used to accept over 10 HMOs but now only works with two. Many of the others have accumulated months of unpaid bills.

“The tariffs they offer don’t reflect today’s costs. It’s not realistic. We can’t pay staff, buy drugs, and keep the lights on with those rates,” he said.

At a public hospital in Lagos, Matron Rosemary Daniel shared similar frustrations. “We want to treat everyone, but our hands are tied. The pharmacy is often half-empty. We can’t run basic tests without fuel to power the lab. Patients come in expecting free treatment and leave angry.”

Even more worrying is the structural imbalance at the primary care level. According to Dr. Lekan Ewenla, CEO of Ultimate Health HMO, the system assumes each primary care facility will serve around 2,500 enrollees, which helps spread financial risk. However, in practice, many facilities only serve around 1,400 people — making it difficult to cover costs.

“When enrollee volume falls below expectations, the capitation model starts to collapse. A single patient needing multiple services can consume the entire monthly budget meant for several people,” Dr. Ewenla explained.

The national capitation rate currently stands at N1,450 per month per patient, with 65 percent of that going to the primary facility. Authorities also raised the fee-for-service rate to N700 per encounter, but doctors warn that without adequate patient volume, the increase won’t solve the underlying problem.

The financial model, Dr. Ewenla argues, must be revised to reflect real-world operating costs and patient behavior. Otherwise, providers will continue to drop insurance plans, leaving patients with fewer options and rising bills.

Despite billions in government disbursements — including over N23 billion in 2024 and more than N12 billion allocated in the last quarter alone — the system continues to struggle. Experts believe the problem isn’t just about money, but how effectively it is used. Delays in reimbursement, poor tracking, and rigid pricing policies mean that even increased funding often fails to reach the patient in time or in full.

For now, millions of Nigerians remain in a precarious position. They hold insurance cards that promise protection but deliver little. Until the system prioritizes sustainability, provider support, and patient outcomes — rather than just enrolment statistics — the promise of universal healthcare in Nigeria will remain elusive.