The National Hospital Insurance Fund (NHIF): A Critique!!!

A. Background:
The NHIF is a social health insurance scheme established by the government in 1966 as a department under the Ministry of Health. Currently the fund is affiliated to the Ministry of Medical Services (MOMs) headed by Prof. Anyang Nyong’o as the Minister and Ms. Mary Wairimu Ngari as the Permanent Secretary (PS).

The NHIF is established under the National Hospital Insurance Fund Act of 1998 (hereinafter referred to as “the Act”) and is managed by the (multi-sectoral) National Hospital Insurance Management Board (hereinafter referred to as “the Board”) established under section 4 of the Act. It should be noted that the Board has representation of the Central Organization Trade Union (COTU), Federation of Kenya Employers (FKE), Kenya Medical Association (KMA), and Non-governmental Organizations amongst others. The chairman and chief executive officer (C.E.O) of the NHIF are R. O. Muga and R.L. Kerich respectively.

The NHIF core function is to collect contributions from all Kenyans earning an income of over Kshs 1,000 (USD 12) and pay hospital benefits of the contributions to members and their declared dependants (spouse and children).

NHIF mission is “To provide accessible, affordable, sustainable and quality social health insurance through effective and efficient utilization of resources to the satisfaction of stakeholders”.

The mandate includes to: –
• Register and receive all contributions and other payments
• Set criteria for the declaration of hospitals and to accredit them
• Make payments out of the Fund to declared hospitals
• Regulate contributions payable to the Fund, the benefits and other payments made out of the Fund,
• Protect the interest of contributors and
• Advise the government on the national policy to be followed with regard to the National Health Insurance.

B. Context:
Currently, monthly contribution to NHIF stands at Kshs 320 for all employees earning above Kshs 15,000; and voluntary contributions stands at Kshs 160 for everyone else earning above Kshs 1,000 (USD 12).

The Board gazetted a new structure of contributions to the scheme based on individuals salary scale as opposed to a uniform system of contribution on July 2, 2010. According to the Board, the new structure is in line with the social principle under which the fund operates – that “the rich should support the poor, the healthy should support the sick and the young should support the old”.

Specifically, the Fund will now collect contributions of Kshs 150 from Kenyans earning below Kshs 5,999; and for those earning Kshs 100,000 and above will contribute Kshs 2,000. For voluntary contributions, the minimum rate has been set at the sum of Kshs 300 per month.

The Industrial court has temporarily suspended the coming into effect of the new rates pending consultations.

C. The Right to Affordable Health Care:
The right to affordable health care is a human right for everyone. The obligation is on the government to protect, respect and fulfill this right. One way through which the government fulfils the right to health is through the putting in place of a national health insurance scheme that will cover as many people as possible.

In Kenya, the national insurance scheme is known as the National Hospital Insurance Fund established under an Act of Parliament as a corporate entity capable of suing and being sued. There are also many other private health insurance schemes registered in Kenya. Despite this, the cost of health care has remained exorbitant and unaffordable to many poor Kenyans.

With the promulgation of the new constitution on 27th August 2010 where among other rights the right to health has been provided for, the government has to act fast to ensure the right to health for everyone.

D. Stakeholders Positions:

I. National Hospital Insurance Fund (NHIF)
1. The new structure is in line with the social principle under which the fund operates – that “the rich should support the poor, the healthy should support the sick and the young should support the old”; (Issues:- Kshs 300 per month for voluntary contributions is too high for an average Kenyan; who is the poor according to NHIF?)
2. The decision to increase NHIF rates was agreed on in 2008 since current premiums (at a maximum of sh 320 per month) is too low even when compared to peers in Africa who charge a minimum of three percent of gross salary; (Issues: – who made this decision? was everyone consulted? Was there a consensus reached?)
3. The new rates to take effect as from 1st September, 2010; (Issues: Does NHIF have enough capacity to provide the unlimited outpatient cover including for chronic diseases like HIV/AIDS and Diabetes?)
4. The Board has representation of all the health stakeholders including Central Organization Trade Union (COTU), Federation of Kenya Employers (FKE), Kenya Medical Association (KMA), Association of Kenya Insurers, and Non-governmental Organizations amongst others;
5. NHIF is membership only and therefore no free health insurance scheme for the poorest of the poor; (Issues: Who will ensure access to health for the poorest of the poor?)
6. Industrial court has no jurisdiction to hear and determine a dispute filed by the Central Organization of Trade Union that seeks to challenge the revised National Hospital Insurance Fund new rates;
7. Benefits will be on unlimited basis which include general consultation with doctors, unlimited prescribed laboratory test, drugs and medicines, unlimited approved X-rays, ultrasound and advance x-rays scanning (CT Scans), including chronic medical conditions of HIV/AIDS and Diabetes; (Issues: very good for access to affordable health care)
8. NHIF plans to migrate to a fool-proof system of identification using biometrics, from the current Magrstipe cards to combat fraud cases;
9. Private insurers should focus their market to middle and high income level.

II. The Ministry of Medical Services
1. New funds are meant to expand the fund and offer more health care benefits to a majority of Kenyans;
2. The national health insurer will now offer both inpatient and outpatient cover as opposed to the current outpatient services only;
3. current uproar is an instigation by private insurance companies who are charging high rates and fear losing business;
4. Government to expand and equip public hospitals to provide quality services. Currently, working in 63 districts and sub-district hospitals;
5. Funds remain a major setback since the ministry requires sh 540 billion to improve the hospital in the country;
6. The government has contacted International Finance Corporation (IFC) which is currently undertaking a management audit to ensure that enough capacity is built in the insurer.

III. The National Assembly
1. The expansion of medical cover to bring in more people is good;
2. Ensure the capacity of the national insurer is enhanced to ensure the funds are administered with integrity;
3. Consider having only one mandatory medical insurance for everyone as opposed to the current system where an employer pays twice;
4. Come up with a mechanism to ensure businessmen also contribute to the national insurer.

IV. Kenya HealthCare Federation (affiliated to Kenya Private Sector Alliance)
1. The decision was ill-advised and arrived at without consultations;
2. The new rates are way below those offered by private health insurance; (Issues: Affordability of health care is critical for the realization of right to health)
3. NHIF may not have the capacity to offer outpatient and additional medical services that it has promised under the new structure; (The role of public, private (and community) partnership?)
4. NHIF should release the pilot study it conducted in Nairobi and Mumias on outpatient services.

V. Central Organization of Trade Unions (COTU)
1. NHIF revised the new rates without consultations with the union and or its social partners;
2. The new rates are to be effected against the workers salaries against their will;
3. Employees are already over-taxed;
4. NHIF has no capacity to handle the increased amount of money and is prone to fraud.
5. COTU through a court case filed at the industrial court wants NHIF restrained from “interfering, enforcing or implementing” the new rates until the case is heard and determined.

VI. Federation of Kenya’s Employers (FKE)
1. The new rates should not be implemented until adequate consultations with employers and other stakeholders are done, to which NHIF agreed to;
2. The court to stay the implementation of the new rates pending adequate consultations.

VII. Kenya Alliance of Residents Association (KARA)
1. The sudden increase of premiums and ambush of missing grace period is suspect and unfair to the mandatory policy holders;
2. It assumes too many critical issues such as affordability, willingness and benefit of one’s continued payment of premiums to NHIF;
3. Kenyan workers should refuse to pay any increment;
4. Need for more consultations;
5. “Kenyans need better public health insurance. In its present form, NHIF needs to put up its capacity”.

III. Kenya Civil Servants Welfare Association
1. We will form our own insurance body, if the NHIF does not rescind its decision to increase rates;
2. Increments are unsustainable from civil servants salaries.

E. Conclusion:
1. The application of the new rates have been temporarily been halted pending consultations by stakeholders;
2. The new rates will improve the health care system by increasing the scope of cover in terms of beneficiaries and health services;
3. The new rates are more affordable than the private insurance companies rates thereby supporting affordability of health care, however, the poorest of the poor are still not covered under the scheme;
4. NHIF introduced the new rates without proper consultation and consensus by all stakeholders;
5. Presently, NHIF lacks operational and financial capacity to manage the new system as proposed;
6. There is lack of awareness and education by the public on the new proposed rates;
7. The voluntary contribution is unaffordable to poor Kenyans and those in the informal “jua kali” industry.

F. Recommendations:-
1. Consult and build consensus on the implementation of the new rates;
2. Release the audit report being undertaken on the capacity of NHIF outpatient services;
3. While the fund is strictly on membership basis, NHIF should include the 30% extremely poor persons in Kenya for benefits (this was proposed in the National Social Health Insurance Bill, 2004 which was rejected in 2005);
4. Build the operational and financial capacity of NHIF to be able to manage and utilize the new structure of contributions;
5. Create awareness and education around the new insurance scheme so as to increase understanding amongst the public;
6. Make voluntary contributions affordable to the general public i.e Kshs 300 per month is above most poor Kenyans and even those who are in the informal “jua kali” industry cannot afford it.


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