Why making NHIF mandatory is no cure for high medical bills

NHIF board will determine the rate unemployed youth will pay to the fund. [Elvis Ogina, Standard]

The jury is still out if changes to the National Hospital Insurance Fund (NHIF) Act will have any meaningful impact in bringing down the cost of healthcare in the country.

The State-sponsored NHIF (Amendment) Bill, which last month got MPs’ nod, will see all adults compelled to pay Sh500 monthly or Sh6,000 annually to the fund. This is under a remodelled Universal Health Coverage (UHC) scheme for outpatient and inpatient services, including maternity, dialysis, cancer treatment and surgery.

But while some health financing experts argue there might be little to no change in medical bills, the government is adamant the amendments to the NHIF Act could be the silver bullet in reforming the health sector.

“What this Bill will do is singlehandedly manage the cost of healthcare in Kenya because now you will have a payer, NHIF, together with all private medical insurance companies sit at the table and determine the cost of care,” said Health Chief Administrative Secretary Mercy Mwangangi in an interview with Spice FM.

Experts say while making it mandatory for all adults to contribute means the pool of principal members for the social insurer will increase, with NHIF collecting more than the Sh59 billion annually, how this will cut down the cost of healthcare is not clear.

Head of Actuarial Society of Kenya and Kenbright Actuaries Chief Executive Ezekiel Macharia said the Sh6,000 annual contribution per person is unlikely to have any meaningful impact in bringing down the cost of healthcare.  

“The issue now is you will have a lot of people with limited benefit levels,” explained Macharia. 

He, however, noted that while Sh6,000 is not a lot of money, it can relieve the cost of care if invested in government primary level hospitals.

And according to an analysis on the Bill by law firm Oraro and Company Advocates, there are no clear measures on how the government will enforce this mandatory clause, meaning there is no guarantee that the fund will raise the targeted funds.

The number of persons per household in the country averages four, according to the Kenya National Bureau of Statistics.

This means if this clause is effected to the letter, the number of beneficiaries under NHIF will shoot to 48 million, almost covering the entire population. 

According to changes introduced to the Bill before its passing in the House last month, the NHIF board will determine the rate unemployed youth will pay to the fund.

Under the new law, employers with workers earning less than Sh12,000 will now be compelled to top up their employees’ contributions, with workers who earn between Sh8,000 and Sh11,999 currently paying Sh400 monthly.

Another downside of the new law, according to Kenya Medical Association (KMA) President Were Onyino is that with the benefits becoming limited, the net effect is that patients will have to pay more for healthcare.

Dr Onyino said the reforms run the risk of turning NHIF from a social insurer into a typical insurance company.  

“What they are doing is determine how healthcare is going to be delivered, and that is not their role. NHIF’s role should be to collect funds for the purpose of insurance and to negotiate the best way to deliver healthcare with other stakeholders,” he said.

CAS Mwangangi described the changes of mandatory payment to the fund as the “foundation stone” to reforming the State health insurer.

She said the Bill provides that those who cannot pay will get subsidies from the government, with one million persons already enrolled for the programme.

Meanwhile, Kenbright Actuaries’ Macharia said the changes mimic how private health insurance works, where the healthy pay for the sick.

He said private insurance has an advantage as the cost per life could be Sh50,000, where the ratio of the sick to the healthy is one to 10.

This is compared to the Sh6,000 for NHIF, with the ratio of the sick to the healthy at one to 20 or 30.

He said affordability is a major issue for the State insurer.

“It will be the ones who can afford to pay for the those who cannot. Essentially, the coverage will be limited, but the target is the people who cannot afford it,” said Macharia.

“So we are talking about a tenth of what a normal person would get. That is why the Sh6,000 per life cover cannot take you to Aga Khan or Nairobi Hospital. This may work if the government can get its own facilities to try and see if it can reduce the cost of primary care,” he added.