Reforms: Promise and pitfalls of Social Health Insurance Act

The Social Health Insurance Act, 2023, assented to on October 19, 2023, is on the cusp of full implementation. According to a recent statement by Health CS Susan Nakhumicha, the official launch of this new framework is imminent, paving the way for the rollout of this comprehensive legislation.

The Act is poised to change Kenya’s healthcare system with the introduction of the Social Health Authority (SHA), supported by new legislation and health insurance contributions. SHA will phase out the existing National Health Insurance Fund (NHIF) beginning this month.

The new legislation presents a tripartite strategy for healthcare in Kenya, which involves the creation of three distinct funds under SHA. These funds are designed to work synergistically to improve access to and quality of healthcare.

These include a primary healthcare fund that will deliver services at the grassroots level, colloquially known as 'mashinani', along with level 2 and 3 health facilities. The Social Healthcare Fund (SHIF) is tasked with providing specialised care and other comprehensive services at level 4, 5, and 6 healthcare facilities, in collaboration with selected and contracted healthcare providers. Meanwhile, the Emergency, Chronic, and Critical Illness Fund (ECCIF) aims to guarantee access to emergency treatment and management of chronic and critical conditions across all healthcare facilities.

Among these three funds, SHIF has been the subject of intense debate and has garnered significant attention nationwide, primarily due to its unique funding model. The delivery of healthcare services under SHIF shall be carried out through a risk-sharing and pooling mechanism.

Utilise contributions

As a result, the fund shall utilise contributions from every Kenyan household, alongside national and county governments that shall contribute to indigent households and those in lawful custody. The fund shall also receive donations from development partners. Under SHIF, every Kenyan—whether salaried, self-employed, or unemployed—as well as any non-Kenyan citizen residing in the country for more than 12 months shall be required to register and contribute.

With contributions and access to services under SHIF set to commence from October 1, 2024, employees in both private and public sectors must register and contribute 2.75 per cent of their gross monthly income to the fund. Non-salaried households will similarly allocate 2.75 per cent of their annual income, with a minimum monthly threshold of Sh300.

Despite the reforms promised under the Act, certain areas of the legislation still need to be looked into. One such area is the lack of a clear definition of the components that constitute gross monthly salary. This may lead to ambiguity, uncertainty and inconsistency in the calculation of contributions.

The legislation does not provide an exemption for households with private or employer-provided health insurance policies, even if they offer benefits that are comparable to or better than SHIF. The healthcare system has continued to grapple with challenges that disrupt the accessibility and availability of services in public facilities, including recurrent allegations of financial mismanagement and corruption.

Mr Ndirangu is a senior manager within PwC Kenya’s Tax Line of Service.