The recent shift from National Health Insurance Fund to Social Health Authority has been met with confusion and frustration among Kenyans.
MPs have questioned the legality of the government's extension of the Sh6.7 billion comprehensive medical insurance cover for civil servants, saying it violates the Social Health Insurance Act (SHI) Act.
The MPs’ concerns are hinged on the October 9, 2024, letter by Public Service Principal Secretary, Amos Gathecha, announcing the extension of the cover to November 21, 2024, and later having it rolled out as a managed fund outside the SHI Act.
Yesterday, MPs Anthony Kibagendi (Kitutu Chache South) and Jessica Mbalu (Kibwezi East) warned that the extension of the cover is akin to reintroducing the repealed National Hospital Insurance Fund (NHIF) through the backdoor.
“The NHIF Act that allowed it to provide commercial insurance benefits to government employees was repealed. Which law are they using to engage in the provision of commercial insurance arrangements for civil servants?” posed Mr Kibagendi.
Mr Gathecha had not responded to inquiries sent his known mobile number last week by press time today. He did not also respond to our subsequent reminders.
“Following the lapse of the extension of the civil servants' medical insurance scheme on September 30, 2024, the State Department for Public Service in consultation with the Social Health Authority has agreed to extend the contract to November 2024,” PS Gathecha’s letter reads.
The letter was sent to all PSs, the Solicitor-General, the Auditor-General, the Director General of National Youth Service (NYS), the Council of Governors (CoG), and all County Secretaries.
“The extension will enable seamless transition and effective service delivery to the scheme beneficiaries. Please note that the appropriate mechanisms for continued medical provision upon the lapse of this extension period are being finalized,” the PS’ letter adds.
According to the PS, the Social Health Authority (SHA) “has undertaken to inform all contracted service providers- health facilities- to ensure that all beneficiaries of the scheme access the medical cover with immediate effect as required.”
The PS’ letter continues; “in addition, the State Department for Public Service has undertaken to ensure seamless transition upon the expiry of this extension.”
The provision of the comprehensive medical insurance cover scheme for civil servants (CMIS) was administered by the now defunct NHIF, through a consortium of medical insurance service providers to spread the risk.
The scheme covered national government employees in ministries and state departments, offices deemed seconded to the county governments, and staff of the National Youth Service (NYS).
Section 2 of the SHI Act defines a fund to include the Primary Healthcare Fund, Social Health Insurance Fund (SHIF), and the Emergency, Chronic and Critical Illness Fund.
The three funds are mandated to receive contributions from the exchequer through appropriations by the National Assembly, statutory contributions from members and gifts, grants, innovative financing, or donations.
The SHI Act does not also provide room for the creation of additional funds for a member who is a contributor of the mandatory contributions apart from the Primary, Social, and Emergency Chronic and Critical Illness Funds.
Ms Mbalu noted that creating another fund to cater to commercial insurance benefits for civil servants will require an amendment to the SHI Act “which has not happened.”
“Under which fund will the civil servants' commercial medical insurance operate within SHIF? Is it a case of putting the cart before the horse,” posed Ms Mbalu.
Ms Mbalu’s fears are that with no funding of its own, the extension and its promised seamless transition may lead to people’s contribution to SHIF being used to pay premiums and other claims.
“Otherwise from where will SHIF draw money for the provision of commercial medical insurance and be able to settle hospital bills promptly, owing to the current financial constraints in government? We are seeing a situation where SHIF will be forced to dip fingers in the people’s contribution Kitty?” posed Ms Mbalu.
The letter by the PS comes as more public servants’ commercial medical schemes are coming up for renewal.
The teachers’ cover under the Teachers Service Commission (TSC) is coming up for renewal on November 30, 2024, for a premium of Sh20.7 billion and on April 1, 2025, for the National Police Service at Sh8.66 billion.
The MPs’ fears are that Section 24 (2) of the SHIF Act lists contributors to the fund and that civil servants are already contributors.
“SHIF has gazetted schedules of benefit tariffs for beneficiaries. Under what schedule and tariffs will the civil servants' commercial insurance operate?” posed Ms Mbalu.
It is also unclear how SHIF will provide civil servants with benefits outside the law and how hospitals will differentiate between commercial and social health benefits.
City lawyer Mr Lempaa Suyianka says that the government is trying to achieve it by creating a new fund “that flies in the face of the SHI Act”, which has no provision for enhanced schemes.
“This new fund that SHA through the PS’ letter is trying to create, cannot fit within the gazetted benefit tariffs of the SHIF,” says Mr Suyianka.
Mr Suyianka says that “any contravention and blatant ignorance of the provisions of the act and creation of a premium fund for commercial insurance benefits is an open cheque to hospitals and is bound to be abused.”
“The PS’s letter is akin to painting a donkey in black and white colours and calling it a zebra,” noting that the provision of comprehensive medical insurance cover was a private arrangement between the government and NHIF through a consortium of medical insurance service providers.
“Trying to reintroduce NHIF that has been repealed by SHIF is against the law and must be resisted,” the city lawyer says.
Mr Kibagendi says that creating a new fund without amending the law and without any additional source of funding, “with the current economic hard times the country is facing” means that contributors’ money paid into SHIF will be targeted to settle claims for hospitals before government avails premiums for the managed fund.
“The fund management is beyond SHIF’s mandate and I am wondering how it will be introduced,” says Mr Kibagendi.
Mr Kibagendi’s fears are anchored on the fact that 2022/23 financial year, the government only provided Sh4 billion as a premium for the civil servants' medical scheme and NHIF topped up with Sh1.3 billion from statutory contributions yet the total claims amounted to Sh9.3 billion as per the NHIF’s report.
It therefore means NHIF may have taken the money from the statutory contributions, a scenario that is likely to manifest in the proposed arrangement by the PS, exposing SHIF contributors' funds to commercial insurance fund claims hence depleting its reserves.
Section 22 of the SHI Act provides that there shall be paid out of the Fund payments in respect of any expenses incurred in pursuance of the object and purpose for which the Fund is established.
“The expenditure incurred on the Fund shall be limited to annual budget estimates prepared by the Social Health Authority at the beginning of the financial year to which they relate,” the law states.
This means that any revision of the approved budget estimates by the Social Health Insurance Board shall be approved by the National Assembly in the supplementary budget estimates.
The MPs’ fears are that section 24 (2) of the SHIF Act lists contributors to the fund and that civil servants are already contributors.
“SHIF has gazetted schedules of benefit tariffs for beneficiaries. Under what schedule and tariffs will the civil servants' commercial insurance operate?” posed Ms Mbalu.
It is also unclear how SHIF will provide civil servants with benefits outside the law and how hospitals will differentiate between commercial and social health benefits.
