Concern over high cost of health insurance funding

The new funding model for public health insurance could derail the State’s expenditure plans, two top global banks have cautioned.

Citi and Standard Group , the advisors on the redemption of Kenya’s debut Eurobond, said the requirement for Exchequer funding for the Social Health Insurance Fund will increase the government’s spending burden.

“Implementation of the universal health coverage laws might lead to increased cost of government and materially adversely affect Kenya’s economy,” the banks noted last week.

The Social Health Insurance Fund, which forms part of the recently enacted Social Health Insurance Act, introduced a new funding model that is reliant on financing approved by the National Assembly as well as individual contributions by Kenyans.

According to the Act, the Social Health Insurance Fund shall be partly funded from monies appropriated by the National Assembly for indigent and vulnerable persons.

Salaried workers are expected to contribute about Sh77 billion through the 2.75 percent deductions on gross pay while the government is set to provide an additional Sh45 billion per year.

Other sources of funding for the SHIF include gifts, grants, and innovative financing mechanisms or donations.

The Exchequer is, at the same time, expected to make allocations to the Primary Healthcare Fund, which aims to enable the purchase of primary healthcare services, as well as the Emergency, Chronic, and Critical Illness Fund, which primarily seeks to defray the costs of management of chronic illnesses after the depletion of the SHIF.

The creation of the three funds is part of health sector interventions that will see reforms to the existing National Health Insurance Fund (NHIF).

The government has, for instance, changed the contribution structure from an occupation scheme of persons in formal employment to a household contribution model to increase the health insurance membership.

“The government has committed to invest in the primary healthcare system through the establishment of stakeholder managed primary healthcare funds as strategic purchasers at each Level Four facility, establishment and operationalisation of emergency medical fund and establishment of a fund to bridge the financial gaps in the wake of diminishing donor funding in support of key programmes such as HIV/Aids and tuberculosis,” the lead managers observed.

The Social Health Authority is expected to take up the mandate of the NHIF in managing social health insurance.

The implementation of the new Act has, however, been the hampered by litigation at the High Court and the Court of Appeal, with the petitioners challenging its constitutionality.

Last month, the Court of Appeal suspended the High Court’s orders restraining the implementation and enforcement of the Social Health Insurance Act, 2023, the Primary Health Care Act, 2023, and the Digital Health Act clearing the way for the government to begin collecting employee contributions to the fund.

Certain provisions of the Social Health Insurance Act, however, remain suspended pending the determination of the appeal.

These include provisions that make registration and contribution to the SHIF a precondition for accessing all government services.

Additionally, the provision requiring people accessing healthcare services to have their contributions up to date and active has also been frozen.

Last week, Health Cabinet Secretary Susan Nakhumicha had said that Kenyan workers would begin contributing 2.75 percent of their gross salaries to the SHIF as from March 1.

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