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President Ruto targets Sh133bn annually from new health insurance plan
President William Ruto’s administration is targeting Sh133 billion in collections from Kenyans every year to fund its ambitious healthcare plan amid public outcry.
The Ministry of Health (MoH) has made the disclosures days after the Court of Appeal lifted a High Court order that had stopped the implementation of the Social Health Insurance (General) Regulations, 2023 that seek to deduct 2.75 percent of gross monthly income from all registered members.
The collections will make the Social Health Insurance Fund (SHIF) — the entity that is expected to replace the 57-year-old National Health Insurance Fund (NHIF) — one of the cash-rich State bodies after the government dropped the initial plan to cap contributions at Sh5,000.
The Sh133 billion will mark a 69 percent growth in the insurance premiums that NHIF has been collecting annually. The NHIF in the financial year ended June 2022 collected Sh78.84 billion under its Sh150 to Sh1,700 contribution for salaried workers and Sh500 for the self-employed.
The MoH’s draft regulations show the government estimates to get Sh56 billion from the informal sector, being nearly 10 times the current average of Sh5.5 billion.
The government is betting on the informal sector retention rate — share of registered members who are actively contributing — increasing from 24 percent to 100 percent.
Informal sector contributions have been set at a minimum Sh300 that will apply for those whose 2.75 percent of monthly income is below this figure.
“Based on the analysis in this report, the proposed Social Health Insurance (General) Regulations are extremely necessary,” says MoH.
Salaried workers are expected to fund the plan to the tune of Sh77 billion while the State will pay an additional Sh45 billion for the needy.
The draft regulations were released mid-October last year and the government has now set February 9 as the last day of receiving public comments to pave the way for the rollout. Dr Ruto had wanted the enhanced deductions to start this month but the court case derailed public participation.
Under the new plan, those with a monthly income of up to Sh30,000 will see a drop of between 3.0 percent and 45 percent in contributions towards funding healthcare but earners of above this amount will pay more.
Those earning above Sh30,000 to Sh100,000 will see a rise in contributions by between one percent and 77 percent. Persons earning above Sh100,000 will see even steeper deductions.
Salaried workers earning Sh100,000 will start paying Sh2,750, up from the current 1,700, representing a 62 percent rise.
Those taking home Sh500,000 will see their deductions rise eight times to Sh13,750 while those with gross pay of Sh1 million will be deducted Sh27,500, being nearly 17 times more than what they are paying today.
The proposed charges will cut further the take-home income for Kenyan workers whose monthly earnings have been hit by the housing tax and increased contributions to the National Social Security Fund (NSSF) amid their own struggles with personal loans in an environment of elevated interest rates.
The draft regulations are supposed to operationalise the Social Health Insurance Act 2023, which will see the NHIF disbanded and a Social Health Authority created in its place to manage three funds — Primary Healthcare Fund, Social Health Insurance Fund and Chronic Illness and Emergency Fund.
The government has been rolling out a universal health coverage (UHC) programme in which it is seeking to provide quality and affordable healthcare for all Kenyans. It has picked the Social Health Authority as the primary implementer of UHC.
The MoH estimates that the mandatory and enhanced contributions will cut out-of-pocket spending from about 24.3 percent to less than 10 percent and reduce government spending on hospital bill waivers by between 30 percent and 40 percent.
The government says by onboarding all Kenyans, health facilities will enjoy assured reimbursements for health services provided to clients who would not have otherwise paid.
It will, however, have to overcome challenges such as fraud, corruption, liquidity strain, high claims ratio and rampant default on contributions by members — which the NHIF has been grappling with.
The Court of Appeal last week directed the government to wait for the hearing and determination of the appeal challenging clauses which make registration and contribution a precondition for dealing with or accessing public services from the national and county governments or their entities.
The same fate befell the clause obligating every Kenyan to be uniquely identified for the provision of health services and also the one providing that a person shall only access healthcare services where their contributions to the fund are up to date.
