One of the basic needs of the people of any nation is good health. This incorporates physical fitness, adequate nutrition and food security, high life expectancy, absence of epidemic and endemic disease and efficient healthcare service delivery. Mfon (2005:21) expresses that a nation with an effective healthcare system is a wealthy nation and is development –oriented in the social context. In Nigeria, however, the health situation is a manifestation of malnutrition and low life expectancy for the majority, high incidence of epidemics and endemic diseases as well as inefficient healthcare service delivery.

It is in recognition of the significance of good health system that the Nigerian government has been consistent in its quest for an efficient healthcare delivery to be perpetually established in Nigeria.

It has been emphasized that no meaningful development can take place in the country if the greater proportion of the populace have no access to effective healthcare services and live in squalor and disease. The rapidly growing population therefore need adequate healthcare services for effective physical and intelligence development. Lambo (2006:12) observes that there was a sharp contradiction in the nations healthcare services in the periods of 1960s/70s and 1980s/20002. in the former, healthcare delivery was an effective term of cost and coverage with the government catering adequately for the cost of health services. But since the 1980s, the financing of health services has risen so much that the government has found it difficult to bear the burden in much the sand way was it did in the earlier periods.

Ugbanmadu (2003:24) observes that health services have become a matter of concern to the government given the dividing finances of the government which began in the 1980s.

Thus, when the Obsanjo administration came into being on May, 29 1999 the nation’s health sector was near comatose. Hospitals were in bad shape. Community and inter-sectoral collaboration was minimal. Ugbaja (2007:19) remarks that resources devoted to this vital social services were insufficient. Worst still, there was outright inadequacy of drugs and other consumables in most government health facilities. There was also paucity of qualified manpower in the government hospitals. The available ones were not motivated while facilities and equipment were poorly maintained.

Other lapses of the past included inadequate manpower development to meet modern trend and improper monitoring of  services rendered to the public among others. From inception, therefore, it was clear to Obasanjo’s administration that the sector needed an urgent surgical operation.

Consequently, Oduenyi (2002:42) notes that in October 2003, federal Government organized a national conference on Alternative Healthcare financing in Nigeria. Participants were drawn from private and public health institutions and agencies through out Nigeria. They examined the inadequacies of health service, the casual factors as well as remedies for inadequate health services financing in Nigeria. Interalia, the conference ended with a call for improved health services financing.

Thus, in line with economic reforms in the country, health sector reform gained momentum with adequate health  service financing as its cardinal objective, this resulted in the inception of the National  Health Insurance Scheme (NHIS) on June 6, 2003 by  ex-president Olusegun Obasanjo. The scheme had earlier been launched by the then Head Of State, late General Sani Abacha on 15th  October,1997.