ABSTRACT

Out-of-pocket expenditure at point of seeking healthcare services is the major means of financing healthcare in Nigeria, among other financing mechanisms. This is because most households (over 95%) are excluded from the financial risk protection of health insurance. The decision to utilize health services by households implies the decision to pay for them. This has resulted into a situation where households have to sale assets, borrow money or sometimes, forgo the consumption of other essential commodities necessary for their wellbeing, in order to seek healthcare services when they need them. This is especially so, for poorer households and those in the rural areas. This study examined the distribution of out-of-pocket expenditure across socioeconomic groups employing data from the Harmonized Nigerian Living Standard Survey 2008/2009. Using concentration index, Gini index and Kakwani index for the analysis, and also the Lorenz curve and concentration curve were combined to show inequality in health payment across socioeconomic groups in Nigeria. It was found, contrary to most studies in literature, that out-of-pocket payment was a progressive healthcare financing mechanism across income quintile and across geopolitical zones in Nigeria. This implies that poorer households’ share of health expenditure was less than their share of income and vice versa for richer households. The result also revealed that female headed households spent 8% more, on health as a percentage of total income than male headed households. The rural areas were observed to spend approximately 5% more, on health as a percentage of total income than the urban areas. These imposed financial catastrophe on these households as over 40% of their non-subsistence expenditure was devoted rto healthcare. This implies that these households will have to go into debts or sell assets to seek healthcare, thereby jeopardizing households’ livelihood. It is possible that a healthcare system with excessive reliance on out-of-pocket expenditure for financing healthcare at point of seeking health services, will have out-of-pocket expenditure progressive, as found in this study instead of being regressive (where poorer households’ share of total health expenditure exceeds their share of total income). It was therefore concluded that, it is possible that the Nigerian health system is excluding significant proportions of her population from the use of healthcare services on the basis of their not been able to afford the costs of treatments. Hence, the progressivity of out-of-pocket expenditure may have been achieved at great opportunity costs.  It is also possible that poorer households seeks low quality care or rather embark on self medication which may require small portion of their income. It was therefore recommended that there is need to move away from out-of-pocket payment mechanism to health insurance or a subsidized healthcare system. The National Health Insurance Scheme should be enhanced to improve on coverage, with preference given to the poor, rural areas and female headed households.