Lagos charts new path for health financing with landmark private health partnership

Lagos State took a decisive step toward overhauling its health financing landscape on Tuesday with the unveiling of the Lagos Private Health Partnership (LPHP)—a sweeping reform designed to unify the state’s fragmented health insurance ecosystem, deepen private sector participation, and guarantee equitable access to quality healthcare for all residents. The launch ceremony, held at the Civic Centre in Victoria Island, brought together senior government leaders, private health insurers, regulators, financial institutions, and development partners. Their presence signalled a collective acknowledgment that Lagos, with its population of more than 25 million, can no longer afford a health financing system built on disjointed policies, low insurance penetration, and rising out-of-pocket expenditure.

Representing Governor Babajide Sanwo-Olu, Secretary to the State Government, Barrister Abimbola Salu-Hundeyin, described the LPHP as a historic leap toward building a resilient health financing architecture—one capable of shielding families from catastrophic medical bills and restoring confidence in domestic healthcare. According to her, the LPHP is more than a policy innovation; it is Lagos’ declaration that compulsory health insurance cannot remain a paper mandate. It must translate into real coverage, predictable funding, and a transparent system that works for both providers and the residents they serve.

Governor Sanwo-Olu explained—through his representative—that the LPHP emerged from Lagos’ implementation of the National Health Insurance Authority (NHIA) Act of 2022, which he domesticated through an Executive Order in July 2024. That order made health insurance mandatory for every resident and set up enforcement mechanisms to ensure compliance. To guide implementation, the state constituted a multi-stakeholder Technical Working Group. Their recommendations gave rise to both a clear set of operational guidelines and the LPHP—an integrated framework for aligning private sector participation with state policy, risk pooling, digital governance, and accountability checks.

The governor noted that the reform is particularly urgent because over 70 per cent of healthcare encounters in Lagos occur in private hospitals. Yet the private insurance landscape has remained chaotic—marked by price undercutting, poor service quality, opaque contracts, and widespread distrust among enrollees. With LPHP, private providers and insurers now have a unified, transparent operational environment that balances profitability with equity and service standards. The state, he added, has adopted a population-based enrolment model for workers in private organisations, a shift expected to improve risk distribution and reduce coverage gaps.

Lagos State Commissioner for Health, Prof. Akin Abayomi, said the LPHP represents the state’s boldest attempt to break with a decade of fragmented and inefficient private health insurance operations. He outlined the major failures of the old system: enrollees denied care because of low tariffs, HMOs competing on unsustainable pricing, and providers struggling with delayed payments. “This launch marks the end of unhealthy rivalries and the beginning of value-driven competition,” Abayomi declared.

He noted that despite Lagos’ economic power, health financing remains insufficient. Low insurance penetration, workforce attrition, and medical tourism continue to undermine the health sector. The LPHP, he argued, is the strongest tool Lagos has developed to reverse those trends, strengthen health outcomes, and domesticate quality care that residents can trust. A major pillar of the reform is a digital marketplace, where plan enrolment, provider selection, fund flow, claims processing, monitoring, and reporting will be executed with real-time transparency. This digital backbone, he said, will ensure that HEFAMAA enforces standardised plans, quality assurance, and compliance footprints across the entire system. Abayomi added that Lagos will begin full enforcement of mandatory health insurance after a six-month sensitisation window, noting that widespread enrolment is the only way to scale risk pooling and cross-subsidisation.

During his technical presentation, Abayomi revealed that the LPHP will introduce a state-managed risk equalisation and solidarity fund. Under this arrangement, private insurers must contribute 13 per cent of premiums to help cover vulnerable residents, improve emergency response, and sustain the state’s universal health coverage goals. He projected that if 20 million Lagos residents enrol at an average annual premium of N20,000, the state could inject more than N400 billion yearly into the health financing system—a transformative inflow with the potential to drastically expand service access and provider capacity.

Chairman of the Lagos State Health Management Agency (LASHMA), Dr. Adebayo Adedewe, praised the government for its rigorous engagement process and described LPHP as a “credible and overdue response” to long-standing inefficiencies in the insurance space. For healthcare providers, the reform signals long-awaited recognition. The National Adviser on Health Insurance for the Healthcare Providers Association of Nigeria (HCPAN), Dr. Jimi Arigbabuwo, said the LPHP represents a turning point for private providers who deliver most of Nigeria’s care. He urged the state to guarantee fair compensation to reduce medical tourism and stabilise the healthcare workforce.

Financial sector leaders also endorsed the reform. Managing Director/CEO of Sterling Bank Plc, Mr. Abubakar Suleiman, said LPHP aligns with the bank’s HEART agenda and will finally tackle the structural inefficiencies that make healthcare in Nigeria expensive. He said Sterling Bank’s support goes beyond financing, encompassing digital infrastructure that ensures transparency and real-time accountability.