INTRODUCTION 

1.1 BACKGROUND OF STUDY

Out-of-pocket (OOP) expenditure by households was the most important financing agents through which health expenditure sources channel funds to providers for health services in Nigeria and many other low/middle-income countries.1 The world Health organization (WHO) defined Out-of-pocket payment for health care as, „the direct outlay of households, including gratuities and payments in kind, made to health practitioners and supplies of pharmaceuticals, therapeutic appliances and other goods and services whose primary intent is to contribute to the restoration or to the enhancement of the health status of the individual or population groups. It includes household payments to public services, non-profit institutions and nongovernmental organizations. It also include none reimbursable cost sharing deductions, co-payments and fee-for-service, but excludes payments by companies that deliver medical and paramedical benefits whether required by law or not, to the employee and also excludes payment for overseas treatmen'.2 OOP expenditure on health has been observed through the years to be disproportionately higher among most developing countries than the developed ones. For example, 

Nigerian?s private health expenditure as percentage of total expenditure on health in 2008 stood at 74.7%, out of this OPPs expenditure constituted 95.9%3 while the total government expenditure during this same period stood only at 25.3%.3 This suggests that government and privately organized institutions are not making enough investment in the health of the people which is supposed to be a national priority and that much of the burden of health care is bored by individuals and households. 

Out-of-pocket payment for health care is one of the five major ways of financing health care in Nigeria. The others are, government (from all sources including taxes), health insurance (private and government schemes), donor funding from bilateral and multilateral organizations, and NGOs. There is however over-reliance on OPP expenditure as a major source of financing health in Nigeria and in most low and middle income countries. Even though taxation may to some extent be equitable between the rich and poor, payment for health care is however, non-equitable, since both the poor and the rich pay equally for the same health care service in both public and private health facilities.  The 25.3% general government health expenditure (GGHE) as percentage of total health expenditure (THE) is also contributed to by the poor as tax from their lean resources, even though they are often too poor to afford payment for health services, and many of this poor have become impoverished in an attempt to pay for such health care services,4 either by way of the illness itself (most especially chronic ones needing prolonged and frequent absence from work), or by reduced ability to work, and thirdly by the cost of treatment which is often prohibitive to the poor.  Consequent to this, many families are left with no alternative than to seek for discharge from health facility, which are most often against medical advice. As a result of these actions, such patients continue with their ill health, death, or go into impoverishment on recovery if they ever do so. 

They are several and certainly obvious problems with our health care delivery system but, majorly with health care financing. Poor health care financing has contributed significantly to the low patronage of public health facilities. Because the sick often had to pay directly out of pocket at the point of service delivery even though they are almost always unprepared for this kind of sudden expenditure. Unfortunately Nigerian, most especially the poor and middle income earners, do not save for health, possibly because they are not aware of the existence of such schemes or when they do they lack access to this schemes.5

Financing health care is one of the components of the Health system management. It is centered on three interrelated factors. 1) revenue collection, which is the process by which the health system receives money from households and organizations or companies as well as from donors,  2) polling of resources, which is the accumulation and management of revenue in such a way as to ensure that risk of having to pay for healthcare is borne by all the members of the pool and not by contributor individually, and 3) purchasing of interventions, which is the process by which pooled funds are paid to providers in order to deliver a specified or unspecified set of health interventions.6 The objectives of health care financing therefore are to make funds available, ensure appropriate choice and purchase of cost effective interventions, give appropriate financial incentives to providers, and ensure that all individuals have access to effective health service.6  The challenges faced by most low and middle-income countries, such as Nigeria, are those of identifying sources of financing health care and being able to pool these resources together for the general benefit of the citizens. Failure to harness these components of health care financing leads to high poverty incidence and therefore large failure of citizens to utilize available healthcare services.