Background <p>Ethiopia has a longstanding history of providing refuge to forcibly displaced people. This commitment to refugee protection is underscored by progressive domestic policies and international commitments the country made to protect refugee rights. However, the country’s reliance on camp-based refugee protection has overshadowed these aspirations. Within these camps, highly regulated service provision and restricted out-of-camp movement limit refugees’ local integration and access to essential services. As a result, refugees have to rely on existing capacities and available services in the camp, including healthcare, even if they are inadequate to meet the growing demands. However, there is limited information on how healthcare service provision in the refugee camp settings reflects the associated policy and the broader context of refugee protection principles in Ethiopia. Through an equity lens, this study explores how structural barriers within camp settings inhibit the translation of progressive policies into practice and perpetuate systemic healthcare inequities.</p> Methods <p>We conducted ethnographic fieldwork including participant observation, interviews and document analysis between March and July 2022. A total of 40 study participants composed of scabies patients, service providers, caregivers, refugee administration and stakeholders at the federal and regional levels participated in the study. We employed an inductive coding strategy and thematic analysis using NVivo software to understand the structural barriers and systemic inequities shaping refugee health in the camp.</p> Results <p>Our findings show that the healthcare provision in Nguenyyiel Refugee Camp faced significant challenges that forced it operate a critical level capacity. As of 2023, over 110,000 refugees relied on a single health centre and health post, staffed by only 38 professionals. In addition, the camp faced insufficient funding, high staff turnover, a lengthy recruitment process, and inadequate facilities. The root causes of these challenges are twofold. They include the lack of a clear strategy to integrate refugee health system into the national health system and the reliance on precarious external funding sources. The lack of sustainable solutions for refugees has overburdened the camp’s services, which can no longer meet the needs of its growing population. As a result, many refugees turn to illegal private pharmacies for help.</p> Conclusions <p>The refugee health system in Nguenyyiel camp faced significant challenges that ran in contrast to global efforts to attain equitable and Universal Health Coverage (UHC). We call for adaptive strategies that include refugee health financing strategies, staff retention, refugee work permits and community engagement in the identification and control of illegal pharmacies.</p>