Strengthen Health Insurance System

Nepal recently experienced devastating floods and landslides due to heavy rainfall, resulting in the tragic loss of over 200 lives and damage to property worth billions of rupees. As one of the world’s most disaster-prone countries, Nepal faces frequent setbacks that impede its economic progress. These natural disasters, combined with the high cost of healthcare, push many families below the poverty line. This article explores how Nepal could ensure quality and affordable healthcare for all its citizens. Countries like the United Kingdom and Sweden provide free healthcare to all their citizens through taxpayer funding. 

However, replicating this model in Nepal is challenging due to its smaller tax base and limited resources. According to the National Health Account 2023, Nepal’s health expenditure increased from Rs. 184 billion in 2018–19 to Rs. 223.4 billion in 2019–20, representing 5.3 per cent and 5.8 per cent of GDP respectively. Despite significant government spending, out-of-pocket expenses remain high. A 2010 study by the World Bank showed that nearly 50 per cent of healthcare costs were paid for by individuals from their own pockets, a figure that has since risen to 57 per cent, according to the Ministry of Health. 

Current scenario

According to the Health Sector Strategic Plan (2023-2030), Nepal’s Universal Health Coverage (UHC) Index stands at around 53 per cent, indicating that almost half the population lacks reliable healthcare access. To address this, the government introduced a family-based health insurance scheme in 2016. As of 2023-24, 28 per cent of the population (8.1 million people) and 38 per cent of families (2.5 million families) were enrolled in the scheme. Of them, 48 per cent have utilised health services, while 62 per cent have renewed their policies. The programme operates through 477 public and community health institutions across all districts. Families pay Rs. 3,500 annually for coverage of up to Rs. 100,000, with additional charges for larger families.

For fiscal year 2024-25, Nepal has allocated Rs 86.24 billion to healthcare out of the national budget of Rs 1,860 billion. However, only Rs 7.5 billion has been earmarked for health insurance. The World Health Organisation (WHO) recommends a 75 per cent tax on tobacco products, but Nepal currently imposes only 16 per cent. Increasing these taxes, along with those on alcohol, sugary foods, and junk food, could generate significant revenue while promoting healthier lifestyles. For example, Nepal collected Rs 6.5 billion in health-risk taxes on tobacco in 2022-23. Doubling this tax could substantially boost revenue. 

Expanding health insurance in Nepal requires broader coverage, collaboration with local governments, and private-sector involvement. Successful models from other countries offer valuable insights. Thailand introduced Universal Health Coverage in 2002, initially requiring a small fee, later abolished to provide free healthcare funded through taxation. Today, 99 per cent of Thais receive free healthcare. Indonesia’s Jaminan Kesehatan Nasional (JKN) programme collects premiums from employees, while the government covers premiums for low-income groups.

In 2022, Nigeria enacted the National Health Insurance Act that obliged all citizens to mandatorily enroll in health insurance, ensuring inclusivity and equity in healthcare access.  It has proposed a robust funding framework that includes contributions from individuals, employers, and the government for the health insurance scheme.

Nepal can enhance efficiency, reduce leakages, and integrate social security with healthcare services. The Social Security Fund covers over 1 million Nepali migrant workers and currently holds Rs 68 billion. The fund could be leveraged to extend health insurance to these families. Introducing a dedicated health tax fund, increasing taxes on harmful products, and allocating 1–2 per cent of income tax revenues to health insurance scheme could secure sustainable funding. Additionally, mandating health insurance for government employees would set a strong precedent.

Out of 30 million population, it is estimated that nearly five million Nepalis are living abroad as migrant workers or students. The government will have to pay premium for nearly 4 million people who live below the poverty line. If the remaining 21 million people mandatorily pay for health insurance, billions of rupees can be collected annually. Resources can also be mobilised through collaboration with institutions like the Employee Provident Fund, Citizen Investment Trust, and Police and Military Welfare Funds. By increasing taxes on environmentally polluting products such as fossil fuels and plastics, over Rs 100 billion could be raised annually.

Health Minister Pradeep Paudel has proposed increasing health insurance coverage to Rs 500,000. Delaying reforms may discourage future governments from implementing essential changes. Effective health insurance is a national necessity. Both short-term and long-term plans should aim to expand coverage, provide free insurance for low-income families, and ensure standardised services. Reducing expenses for overseas treatment by improving domestic healthcare would yield significant savings. A unified delivery system would also eliminate duplication of efforts and improve efficiency.

Nepal must address systemic challenges by increasing investment in healthcare infrastructure ensuring transparency, and incentivising medical professionals to work in rural areas. Streamlining existing health programmes and creating a unified Health Insurance Fund by pooling resources is crucial. Implementing electronic medical records (EMR) and digitalising services can enhance efficiency, improve accountability and reduce fraud. By doubling health investments over the next 5–7 years and demonstrating strong political will, Nepal can fulfill its constitutional commitment to equitable healthcare. An integrated approach involving the government, private sector, and civil society is essential to build a resilient healthcare system that meets the needs of all citizens.

(A former president of NRNA USA, the author is an expert in health services management.)