The Constitution of Nepal defines health as a fundamental right, stating that every citizen is entitled to free basic health services. However, due to high costs, over half a million Nepalis are deprived of primary healthcare. The country has 7,221 public health facilities, including 125 hospitals, 205 primary health care centres, 395 ayurvedic hospitals, 3,870 health posts and 2,626 community health centres and private health institutions. Despite this wide healthcare structure, the system still struggles to provide accessible and affordable healthcare services to the entire population.

The World Health Organization (WHO) reports that poverty increases by 2 percent every year due to high out-of-pocket expenditure (OOP) on health services from the private sector. In Nepal, the OOP constitutes 57.7 percent of the current health expenditure, while the government’s share is only 22.6 percent. Nepal has introduced schemes such as the Social Security Fund, the Employee Provident Fund, and the National Health Insurance Programme (NHIP), as well as enterprise private insurance, free healthcare, conditional cash transfer programmes, and improvised citizen programmes to reduce OOP and improve accessibility. However, the effectiveness of these schemes still remains in question. An appropriate pre-financing mechanism is needed to reduce the uncertainty of health illness and the catastrophic cost associated with healthcare.

Nepal Government introduced the National Insurance Programme in 2016 to comply with the constitution and work towards achieving Universal Health Coverage (UHC) by 2030, a vital aspect of the Sustainable Development Goals (SDGs). UHC ensures access to quality healthcare without financial hardships. The target of SDG8 has two indicators: Coverage of essential healthcare services and financial protection for all.

Low insurance coverage

The NHIP was designed to offer quality care at a minimal cost, guided by legal and policy frameworks to achieve the UHC. It was initially piloted in three districts—Kailali, Baglung and Illam. Despite a favourable policy environment, coverage and retention are not up to the mark, with only 23 percent enrollment and a significant dropout of 25 percent, which is a serious concern. Coverage is uneven, with Koshi province achieving 42 percent coverage while Madhesh lags at 8 percent. The programme also inadequately covers only 26 out of 77 districts of ultra-poor citizens. Although the NHIP aims to cover the nationwide population by 2030, numerous challenges lie ahead.

The NHIP faces several barriers, including epidemiological and geographical limitations, limited risk pooling, stagnant financing, lack of financial sustainability assessment, difficulty in seeking referral services, inadequate local-level empanelment of health facilities, limited digitalisation of the NHIP functions and insufficient government ownership. To improve the NHIP and move towards universal healthcare, Nepal can learn about successful health insurance programmes of other countries.

Lessons from elsewhere

Every country has a different insurance system to achieve universal healthcare goals. Japan uses a single-payer system where the government is the sole payer for healthcare services. By centralising the payment through the government, Japan has control over healthcare costs and maintains high standards of care. It is designed to provide universal health coverage and ensure accessibility of healthcare services to all people.

Singapore uses a hybrid system where individual responsibility is balanced with government support. This approach aims to provide comprehensive coverage while maintaining sustainability and encouraging accountability in healthcare expenditures. Rwanda’s community-based health insurance programme mandates participation, particularly targeting rural and poor populations. The premium rates are progressive, i.e., based on income levels, ensuring the poorer individual pays less.

Thailand has significantly improved health insurance coverage through contributions from civil servants and voluntary participation from those in the informal sector. Civil servants contribute to the system as part of their employment benefits, and for those in the informal sector, voluntary schemes are available, encouraging broader participation. This mixed approach helps to expand coverage and promotes universal health coverage. The United Kingdom has a publicly funded health system that provides medical services to the entire population regardless of socioeconomic status. Nepal can learn from the benefits of a tax-funded system, which offers preventive, promotive and curative health coverage.

Recommendations

The provision of health insurance is in its early stages in Nepal, so revising the benefits package to make it more comprehensive and focusing on enrolling underserved populations in Karnali, Sudurpaschim and Madhesh is essential. Instituting mobile clinics, community-based initiatives and strategic infrastructure development can help overcome geographical barriers and provide equitable healthcare services. Developing a sustainability roadmap, exploring innovative financing mechanisms and increasing healthcare spending should be emphasised to meet international benchmarks. Digitalising NHIP activities can improve efficiency, transparency and service delivery. National surveys to determine the coverage gap are vital in assessing the drop-out rate and increasing sustainability.

Strengthening the NHIP is crucial for Nepal’s goal of achieving universal health care. Addressing the identified challenges and implementing proposed recommendations can enhance the NHIP’s effectiveness, ensuring equitable access to quality healthcare. Addressing disparities in health outcomes and financing mechanisms is also crucial to improving overall population health and ensuring everyone has access to quality healthcare. Improving worker training and supervision and prioritising service provider education, quality assurance, and preventive care could strengthen NHIP care. Enhancing rural healthcare accessibility is also necessary for health insurance.

The government has increased the budget for the insurance programme, but its share of total health sector spending remains low compared to international benchmarks. The World Health Organization predicts that allocating 5 to 6 percent of GDP or 10 percent of the national budget towards healthcare will effectively cap out-of-pocket expenses. Despite this, Nepal consistently allocates below 5 percent of its national budget to healthcare. Increased funding in the healthcare system should be highly prioritised for the successful implementation of the NHIP.

Sustainability issues can be addressed through social health insurance contributions and public-private partnerships. Continuous training and skill development for healthcare personnel can improve the quality of care. Performance-based payments can incentivise healthcare facilities to improve quality and efficiency. Using a mix of different funding methods instead of relying on just one is essential for providing universal healthcare and affordable healthcare services.

A national health financing system should ensure every citizen can access healthcare when needed and protect families from financial catastrophe by covering out-of-pocket expenditures. Comprehensive governance and regulatory reform strategies are required to improve the scope, accessibility, quality, and sustainability of national health insurance coverage.