Nepal's national health insurance program (NHIP) has achieved universal geographic coverage, but the numbers tell a troubling story. Nepal Health Insurance Board (HIB)’s latest annual report reveals that while all 77 districts now participate in the program, actual enrollment and retention rates remain very low. Despite nationwide implementation, only 8.29 million Nepalis, barely 28% of our population, currently have health insurance and even less (5.01 million people representing 17% of the population)are active members. The problem is particularly acute in Madhesh and Sudurpaschhim provinces, where active participation stands at mere 6% and 9% respectively. With an overall renewal rate of only 54%, more than four in ten insured Nepalis are choosing not to continue their coverage.
Nepal's path to Universal Health Coverage hinges on reaching one critical population: informal sector workers (ISWs). Like several other countries worldwide, Nepal aspires to achieve UHC, a goal that requires expanding population coverage as one of its three essential pillars, alongside financial protection and service coverage. The math is straightforward and compelling. ISWs represent over 60% of Nepal's workforce, according to the 2017/18 Nepal Labor Force Survey. If the Health Insurance Board could enroll just half of these workers, national coverage through NHIP would easily surpass 50%, a major leap from today's meagre 28%. But the case for targeting ISWs goes beyond mere numbers. This population includes some of Nepal's most vulnerable citizens, those who need healthcare coverage most yet have the least access to it. ISWs (consisting of street vendors, daily wage laborers and small farmers, among others) face both economic precarity and health risks, making them prime candidates for NHIP.
Nepal's challenge in expanding healthcare coverage to ISWs reflects a broader struggle shared by multiple countries around the world. Kenya, Ghana, and Indonesia, all operating social health insurance schemes similar to Nepal's, face coverage gaps, though at varying levels. Indonesia demonstrates both the promise and persistent challenges of universal coverage. Despite achieving 80-85% population coverage through its national health insurance program (called Jaminan Kesehatan Nasional (JKN)), the country continues to struggle in enrolling informal sector workers into the national health insurance scheme. While this coverage rate is impressive for a program launched just a decade ago, Indonesia had been attempting to provide healthcare coverage through multiple fragmented schemes until JKN's consolidation in 2014. Ghana's experience reveals how momentum can stall. The country’s National Health Insurance Scheme achieved rapid enrollment growth in its first decade after launching in 2003, but coverage has since plateaued at approximately 60% of the population, with active enrollment rates reported even lower. Kenya's trajectory is particularly sobering. Despite over two decades of experience with health insurance, primarily through the National Hospital Insurance Fund, population coverage remains just above 20%.
The challenges encountered by these three countries are well documented in both academic and policy literature. Their experiences offer valuable lessons for Nepal’s NHIP, revealing several ‘low-hanging fruits’ to expand and sustain coverage for informal sector workers.
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First, the Health Insurance Board must enhance awareness of the NHIP through targeted information campaigns. Low enrollment and renewal rates are in part due to limited outreach and inadequate public education. Many people, especially those in poor and rural communities, remain unaware of the program’s existence, benefits, renewal procedures, and timing requirements. Moreover, early promotional efforts overstated the program’s potential, portraying NHIP as a cure-all for all health problems and setting unrealistic public expectations. This created widespread dissatisfaction when promises were not met. Persistent misconceptions, such as confusing health insurance with life insurance, continue to deter enrollment. The Health Insurance Board should implement regular, comprehensive patient education campaigns that deliver accurate, up-to-date information about the program. These campaigns should clarify the benefit package, including time limits for accessing services, explain policies on generic medicines, promote understanding of the referral system, and help manage expectations more realistically, among other key messages.
Second, and relatedly, the Health Insurance Board must make efforts to increase health insurance literacy. For an average Nepali, health insurance may not be as straightforward of a concept to grasp. Informal sector workers, who are often the least educated and predominantly come from rural parts of Nepal, are more likely to struggle with the conceptual understanding of the term. Without targeted educational campaigns that explain insurance principles in accessible terms, including the concept of prepayment and risk-pooling, clarification of what services and medicines are covered under NHIP, and helping people understand that insurance is a protective mechanism rather than a guarantee that premium payments will always be fully utilized, ISWs remain hesitant to enroll in coverage schemes they don't fully comprehend. This limits their participation in NHIP.
Third, the Health Insurance Board must eliminate registration barriers that prevent prospective NHIP enrollees from accessing the program. Prospective enrollees need clear information about registration requirements and available assistance. The Health Insurance Board should provide comprehensive support including help with paperwork completion, precise directions to registration locations, and step-by-step guidance through the entire process.Inadequately trained enrollment representatives create confusion and inconsistencies that damage NHIP's credibility. The Health Insurance Board must standardize registration by establishing uniform guidelines and ensuring all enrollment representatives receive thorough, consistent training across all districts.
Fourth, the Health Insurance Board must strengthen collaborations with local governments and better utilize existing healthcare infrastructure. Female Community Health Volunteers (FCHVs) and elected local representatives are well-positioned to identify households for NHIP registration, but their involvement remains ad-hoc and inconsistent across districts. While some local governments have allocated funds to cover premiums for ultra-poor and vulnerable families (for example in Palpa) these efforts lack consistency and sustainability across districts. Ideally, the Health Insurance Board must replicate successful local government collaborations across all districts.
NHIP faces a range of interrelated challenges. Key among them are poor service quality, weak claims management, difficulties in identifying and targeting the poor, inefficiencies in the referral system, inconsistent medicine supply, limited private sector engagement, issues with premium affordability and collection, and long-term financial sustainability. The program also struggles with adverse selection, as evidenced by the latest annual report, with enrollment skewed toward older individuals who use more healthcare services than the average beneficiary.
Despite its challenges, early evidence suggests that NHIP has been beneficial for patients with chronic conditions such as hypertension and diabetes. Policymakers should resist the urge to pursue 100% coverage as the sole marker of success. While aspirational, global experience indicates that achieving full coverage is nearly impossible under the current social health insurance scheme. Does this mean Nepal should abandon the existing framework in favor of an entirely new approach, such as a tax-funded scheme? Not necessarily. The core challenges facing NHIP (such as poor service quality, weak claims management, and erratic medicine supply) are systemic and unlikely to be resolved simply by adopting a different healthcare coverage model. Rather than pursuing wholesale replacement, a more pragmatic approach lies in pursuing incremental structural reforms. Transitioning to a new scheme, such as a tax-funded scheme, would also impose a significant fiscal burden on the government, one that is likely unsustainable given Nepal’s current GDP per capita.
A more realistic path forward is to aim for steady, measurable progress, such as increasing coverage by 10 percentage points every 5 years while ensuring minimal attrition from the program. Once NHIP reaches its natural limits and coverage plateaus, Nepal can revisit the idea of transitioning to a tax-financed system with automatic universal coverage, akin to Thailand’s model. But that bridge is still far off. For now, the immediate priority must be to strengthen NHIP and expand coverage. Progress rather than perfection should guide the way.
(The author is a health economist and health financing expert with professional experience across multiple countries and regions. He is also the co-founder of Xion Health LLC, a boutique consulting firm specializing in healthcare research, analytics and advisory services. He has a PhD in health economics from Brown University, USA. Opinions expressed in this op-ed are solely those of the author and do not represent the views of his affiliated organizations.)