Critics are wrong; changes to NHIF law will not increase medical costs

NHIF Chief Executive Officer Dr Peter Kamunyo. [Courtesy, NHIF}

The Proposed National Hospital Insurance Fund Act (Amendment) Bill, 2021 has elicited a lot of debate from stakeholders.

The warning by Association of Kenya Insurers (AKI) and APA Insurance that the proposed NHIF Act (Amendment) Bill, 2021 will increase medical costs and hurt the industry is not only inaccurate, but the opposite of the expected outcomes, which is to enhance access to health for all Kenyans and boost the health insurance industry.  

The proposals raised in the Bill, if passed, will have immense benefits to Kenyans as part of the government’s Big Four Agenda. When NHIF was established 55 years ago, several amendments were made to enable it to respond to public needs.

In 1972, the Act was amended to allow for voluntary contributions. In 1998, the Act was further amended to allow for the autonomy of NHIF. This amendment allowed for the subsequent changes that have taken place in NHIF.

Notably, the revision of contribution rates led to the enhancement of benefits to include outpatient services and other packages such as cancer care, surgical, road evacuation, maternity, radiology package, among many others.

The Bill proposes strategies that the government intends to implement in securing a sustainable fund to meet the needs of majority of Kenyans.

The Bill introduces three categories of contributions: Statutory for the formal sector; mandatory for the informal sector; and sponsored programmes for the vulnerable population who cannot afford basic necessities of life, including healthcare.

The assertion by AKI and APA Insurance that the proposed Bill may deny patients treatment is therefore misleading. From inception, the NHIF model was paying only a daily rebate for inpatient services. From that time, most private insurance policies indicated that they covered their members net of NHIF rebate.

When the fund introduced the enhanced benefits in 2015, the institution focused on taking care of the growing needs of its beneficiaries and did not define how the benefits were to be utilised.

The private insurers have since taken advantage of the gap, letting NHIF pay for all the newly introduced enhanced packages first.

The Bill proposes that NHIF will continue to pay the daily hospitalisation rebate and capitation for outpatient services first, regardless of whether the member is privately insured or not. For packages, private insurance will take up the costs, as they used to, and upon exhaustion NHIF will take over.

Currently, hardly any insurer pays for radiology expenses like MRIs or dialysis. NHIF takes up all these costs.

The proposal suggests a complimentary model where both NHIF as a social health insurer works with the private health insurers to ensure access to affordable healthcare services to all the people of Kenya.

To put this into context, private insurances collected Sh45 billion in premiums against two million lives (approximately 500,000 families) in the last year. This is an average premium of Sh90,000 per family per year.

The NHIF, on the other hand, collected Sh38 billion to cover 4.9 million active members at the premium of Sh6,000 per family. It is clear how NHIF supports the exposed 96 per cent of Kenyan households.

The Bill will address these issues to ensure all Kenyans, even those who cannot afford it, have access to quality health services and that we have a sustainable model to ensure all stakeholders, including private insurers and employers, work together to achieve universal health coverage and leave no one behind.

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