For decades, the promise of formal health insurance in Nigeria has remained largely out of reach for most citizens. Existing systems have been designed primarily for the relatively small formal workforce, while the vast majority of Nigerians remain excluded. Although policy documents frequently describe ambitious plans for universal health coverage, the reality is that more than 80% of Nigeria’s workforce earns a living in the informal economy as market traders, artisans, smallholder farmers, transport operators, and digital entrepreneurs. For these citizens, conventional insurance schemes are often neither affordable nor compatible with the unpredictable nature of their incomes.
If Nigeria is to achieve genuine universal health coverage, it must abandon the assumption that insurance models developed for highly formalized Western economies can simply be transplanted into a very different socioeconomic environment. Instead, health insurance should be designed around the realities of informal employment. The government must develop simple, enforceable systems that provide immediate and visible benefits, giving ordinary Nigerians a compelling reason to enrol and remain insured.
The shortcomings of Nigeria’s current public and private health insurance schemes are rooted in their design. Most depend on fixed monthly or annual premium payments, assuming participants receive stable, predictable salaries. For informal workers whose earnings fluctuate daily or weekly, these rigid payment schedules feel less like financial protection and more like another compulsory expense. Administrative barriers further discourage participation. Enrolment often requires navigating complex bureaucracy, producing documents that many informal workers do not possess, and travelling to registration centres that may be far from where they live or work.
Even when people successfully enrol, their experience frequently undermines confidence in the system. Accredited facilities often experience medicine shortages, patients are required to make additional out-of-pocket payments, and many encounter poor service from overstretched healthcare workers. When insured patients are still expected to purchase basic medications, syringes, or supplies from private pharmacies, public confidence quickly disappears. As trust declines, enrolment falls, premiums become insufficient, and schemes become increasingly dependent on government subsidies.
Rebuilding trust begins with redesigning the benefits package. Rather than promising an extensive list of services that cannot be delivered consistently, Nigeria should initially focus on a smaller package of high-impact services that address the greatest financial risks faced by ordinary families. The first priority should be comprehensive maternal and child healthcare, together with effective malaria prevention and treatment. These conditions account for a large proportion of preventable illness and financial hardship. A scheme that reliably provides free antenatal care, safe delivery services, childhood immunisation, and malaria treatment would produce benefits that communities can readily see and appreciate.
The second priority should be protection against catastrophic medical expenses, particularly emergency surgical care. Procedures such as appendectomies, emergency trauma surgery following road traffic crashes, and surgery for obstructed labour frequently push families into severe financial hardship. Covering these high-cost emergencies would demonstrate the practical value of health insurance while protecting households from sudden poverty.
Because most informal workers do not receive regular salaries, traditional payroll deductions or income-based contributions are difficult to implement. Instead, Nigeria should build on existing community institutions. Market associations, transport unions, agricultural cooperatives, and other informal organisations already collect regular dues and maintain strong governance structures. Government could partner with these organisations to integrate affordable health insurance contributions into their existing payment systems.
For Nigerians who are not members of organised associations, digital payment platforms offer another practical solution. Small contributions linked to airtime purchases, mobile money transactions, or other digital payment systems would allow individuals to accumulate health insurance coverage gradually without facing large upfront costs. Enrolment could be further encouraged by linking active insurance status to selected government services and economic opportunities, including subsidised agricultural inputs, microcredit programmes, and commercial licence or market stall renewals. When health insurance becomes closely connected to economic participation rather than simply another financial obligation, voluntary enrolment is likely to increase substantially.
No health insurance programme can succeed if corruption and inefficient provider payment systems continue unchecked. Nigeria’s healthcare system has long struggled with fraudulent claims, unnecessary investigations under fee-for-service arrangements, and under-treatment in poorly designed capitation systems. A more balanced provider payment model is therefore essential.
Primary healthcare facilities should receive risk-adjusted capitation payments that provide predictable operating revenue while reducing incentives for unnecessary services. At the same time, performance-based incentives should reward measurable improvements in patient satisfaction, quality of care, preventive services, and verified health outcomes. Secondary and emergency surgical services should be financed through carefully regulated case-based payments that establish standard reimbursement rates for clearly defined procedures.
Strong accountability mechanisms are equally important. Biometric verification linked to the National Identification Number (NIN) should confirm patient identity at the point of care, reducing duplicate claims, ghost beneficiaries, and fraudulent billing. In addition, real-time SMS or mobile application feedback systems should enable patients to report medicine shortages, absenteeism, informal charges, or poor service directly to regulators. Transparent payment systems combined with direct citizen oversight would strengthen accountability, reduce waste, and help ensure that health insurance delivers on its central promise: protecting Nigerians from financial hardship while providing timely access to quality healthcare.
* AG Ahmed, MD, LLM, Forensic Psychiatrist, Professor and Chair of Psychiatry, College of Medicine, University of Saskatchewan, Canada. https://agahmed.ca/blogs/