How health finance transition bodes new status, role for NHIF


The National Hospital Insurance Fund building in Nairobi.

Photo credit: Lucy Wanjiru | Nation Media Group

What you need to know:

  • Following the rebasing of the economy in 2014, Kenya was classified as a middle-income country.
  • This meant the country would have to take more financial obligations as donors slowed down their support for healthcare.

In 2014 the Planning ministry announced that Kenya’s gross domestic product (GDP) was 25 percent larger than previously thought following a recalculation using updated data.

The revision — also known as rebasing — saw the country’s GDP expand by about $53.3billion(634.7billion), making  it a middle-income nation since its national income (GNI) per capita of $1,160(Sh138,455.83), had surpassed the World Bank threshold of $1,036(Sh123,657.06) to qualify.

But with the transition, Kenya now faces a gradually changing health financing landscape with the government taking an increasing role, while contributions from donors and corporations shrink.

“As countries move from low to middle income, they experience big shifts in the composition of public and private spending on health. One reason for the change in financing is the eligibility criteria for concessional development assistance: Foreign aid starts to decrease after countries move into middle income” Ipchita Bharali, a policy associate at the Center for Policy Impact in Global Health, Duke University and Indermit Gill, a senior fellow in the Global Economy and Development programme at the Brookings Institution explained in a policy paper.

This means that the share of government financing of healthcare programmes has to increase substantially to plug the gaps left by donors while financing through private and out-of-pocket spending(OOP)—remains roughly unchanged during middle-income status.

The latest available data compiled by the World Bank shows that over the past 20 years, the government’s contribution to financing health care increased from 27 percent of total health expenditure in 2009/10 to about 52 percent in 2018/19.

During the same period, the role of households declined from 30 percent of total health expenditures in the financial year 2009/10 to 24 percent in 2018/19, while donor financing almost halved from 32 percent to 18 percent.

“While Covid-19 might lead to a temporary injection of additional donor money in the health sector in light of the greater needs, the steady downward trend in donor financing is expected to continue in the coming years, suggesting the need for the country to start planning for a sustainable donor transition,” the World Bank says in a policy paper.

Kenya is already boosting its public spending on healthcare at both the national and county level, coupled with reforms toward Universal Health Cover(UHC).

“Moving forward, Kenya will need to preserve spending on health during periods of tight fiscal situations, such as the current one, and continue increasing spending on health as the economy and available resources grow over the medium term,” the World Bank said.

“In absolute terms, total public spending on health more than doubled from Sh96 billion in the financial year 2014/15 to Sh 228 billion in the financial year 2019/20, surpassing for the first time the two percent of gross domestic product mark” it added.

The World Bank now proposes a bigger role for the National Hospital Insurance Fund(NHIF) in Kenya’s healthcare financing transition.

For instance, the multilateral lender has urged Kenya to enroll more private hospitals under the NHIF and cover medicines to curb OOP expenditures that are pushing more households into poverty each year.

The World Bank also wants Kenya to restructure its counterpart financing deal with the UN-backed Global Fund to cover more healthcare programmes than just those on fighting against malaria, tuberculosis, and HIV-Aids and also have all finances channeled to the NHIF which covers a wider range of healthcare programmes.

The multilateral lender said despite the State’s efforts to improve financial protection from health care use, OOP expenditures continue to make up a significant proportion of the total health spending and drive about 1 million Kenyans into poverty each year.

“Although Kenya has removed user fees for public facilities, public hospitals still operate under the cost-sharing policy, and all levels of private health- care facilities are still paid for through OOP payments,” the World Bank said in a new policy paper.

“To further reduce OOP expenditures in Kenya, it is critical to address the role of the private sector, such as through the inclusion of more health facilities under the NHIF arrangement and coverage of pharmaceuticals” it added.

The elderly and people affected by chronic conditions are the worst hit by the OOP expenditure that has continued to rise over the years despite increased budgets by the State for healthcare.

“This is a concerning trend, as paying at the point of care for services or drugs creates financial barriers and exposes households to catastrophic health spending,” the World Bank said.

“A large proportion of the sick population continues to lack health care due to the financial barriers, despite the implementation of financial protection policies, such as the Linda Mama, health insurance for the poor and elderly, free primary health care, and government efforts to increase prepayments through the NHIF” it added.

The lender said although the State recently announced more subsidised insurance for vulnerable groups, enrollment in the NHIF scheme has been slow, hence significant additional public resources will need to be injected to markedly increase the share of the population insured and provide needed subsidies.

“Moreover, the unavailability of drugs at public health facilities continues to be a driver of OOP. Therefore, efforts to expand health insurance enrollment need to be accompanied with efforts to provide essential drugs at no costs to the poorest” it said.

Concerning the Global Fund reforms, the World Bank wants deeper involvement of NHIF.

“The current position put forward by Global Fund demands that Kenya meets the 20 percent minimum co-financing threshold. The committed (funds) towards this co-financing is ring-fenced towards individual priority programme and can, therefore, only be used for HIV/Aids, TB or Malaria,” the Bank said in a policy proposal the Nation saw.

It added: “Moving forward it is recommended that the national government, MoH (Ministry of Health), and the National Treasury advocate for a re-structuring of counterpart financing mechanisms within the Global Fund such that the co-financing commitment be allowed to fund a more integrated healthcare funding mechanism e.g. NHIF rather than HIV/Aids, Malaria and TB only that will not only be sustainable but will also impact the overall healthcare system.”

The NHIF is currently piloting universal healthcare coverage in four of the 47 counties. The initiative seeks to ensure that all Kenyans can access health services where and when needed without financial strain.

Kenya has contributed Sh1.3 billion($11million) to the Global Fund to date. The country pledged Sh714 million ($6 million) for the Global Fund’s sixth replenishment covering 2020-2022.

Kenya is a donor to the Global Fund and an implementer of Global Fund-supported programmes. Through Global Fund programmes, the country has made progress in the fight against HIV, TB, and malaria.

The Fund’s latest data shows that new HIV infections declined from 1.18 per 1,000 population in 2015 to 0.72 in 2020.

HIV prevalence fell from 4.9 percent in 2018 to 4.5 percent in 2020, and the HIV incidence reduced from 0.27 percent in 2016 to 0.14 percent in 2020.

The incidence of TB fell by 11 percent between 2018 and 2020. Malaria prevalence among children under five years declined from eight percent in 2016 to six percent in 2020.


You're all set to enjoy unlimited Prime content.