SHA scams and unpaid claims threaten UHC

 Health CS Aden Duale during his tour to section of Health facilities in Eldoret Uasin Gishu County on September 10, 2025. [Peter Ochieng, Standard]

Scandals and fraudulent claims have emerged as defining features in the running of Kenya’s much-touted new health financing scheme, threatening to derail actualisation of Universal Health Coverage (UHC).

The problems persist despite changes in laws and policies intended to restore transparency under the Social Health Authority (SHA), which replaced the scandal-ridden National Health Insurance Fund (NHIF).

In 2025 alone, 80 health facilities were suspended or shut down for submitting fraudulent SHA claims.

Millions of shillings were also flagged as suspicious, yet publicly confirmed court convictions remain rare, raising concerns of impunity that continues to thrive under the new scheme.

“We have patients who have testified and become whistle-blowers and are being used as conduits in SHA fraud. I want to ask Kenyans to be patient and be our watchdogs,” Health Cabinet Secretary  Aden Duale recently told the media.

Duale revealed that some patients are deliberately being used to siphon money from SHA, adding that several hospitals have been shut down in Wajir, Mandera and other parts of the country due to fraudulent activities.

The theft of taxpayers’ money is unfolding even as millions of Kenyans struggle to access quality healthcare, ironically under a scheme that was meant to guarantee care through the full actualisation of UHC.

The persistence of fraud is particularly troubling given Kenya Kwanza administration’s pledge to dismantle the corruption networks that crippled the defunct NHIF.

In August, the Directorate of Criminal Investigations (DCI) launched investigations into hospitals suspected of submitting fraudulent claims, listing at least 31 facilities for probe.

Preliminary findings revealed that some hospitals entered and uploaded false information and documents into the SHA system to claim payments for services that were either exaggerated or never provided.

In some cases, facilities did not physically exist or lacked the infrastructure and premises required by law.

Other claims were based on fictitious or ghost patients who never received treatment.

Despite these red flags, SHA processed payments based on the uploaded information and disbursed approximately Sh691,393,530 to the suspected facilities.

The investigations followed the handover of at least 1,188 files to the DCI by CS Duale for further action.

Further scrutiny uncovered a web of sophisticated abuse for example admission of patients with identical diagnoses at the same time, concurrent admission of the same patients across multiple facilities, submission of fictitious and up-coded claims, billing for Caesarean Sections (CS) for women who delivered through spontaneous vaginal deliveries (SVDs), and performance of identical procedures on the same individuals in different hospitals.

Additional forensic audits and the new digital claims system have exposed deeply troubling fraud patterns that directly drain resources meant for patients.

Duale noted among the most common schemes is up-coding billing for more expensive procedures than those actually performed alongside falsification of records, conversion of outpatient cases into inpatient admissions, and billing for non-existent patients.

But fraud is only one part of a deeper structural crisis.

Beatrice Kairu, a health economist and public policy expert, notes that Kenya’s transition from NHIF to SHA represents one of the most consequential health financing shifts since devolution.

“Marketed as the financial backbone of UHC, SHA was supposed to fix NHIF’s inefficiencies, expand coverage and restore public trust,” says Kairu. “One year on, the numbers tell a mixed and increasingly worrying story.”

On paper, SHA she says appears to be expanding rapidly, but individuals accessing care continue to raise concerns, with hospitals complaining of unpaid claims.

Ministry of Health data shows that 28 million Kenyans have registered with the scheme since its launch in October last year, with the government projecting this figure will rise to 30 million by the end of 2025.

CS Duale has repeatedly hailed the registration drive, noting that it represents more than half of the country’s population.

But insiders say enrolment targets have been pursued aggressively, while premium remittance has lagged dangerously behind.

Of the 28 million registered members, about four million are principal contributors in the formal sector, while roughly 11 million are in the informal sector.

Yet only 2.9 million formal-sector members are actively contributing. In the informal sector, just 1.4 million members are paying annual premiums.

“Retention in the informal sector is below 15 percent,” says a senior SHA official. “This points to a financing model that is not working, whether due to affordability issues, lack of trust, or flawed processes.”

The problem is worsened by failure to declare dependants, leaving families registered on paper but unable to access care in practice.

“17 million people were automatically transitioned from NHIF. The additional 10 million registrations were largely driven by incentives given to community health promoters, not voluntary uptake,” says Kairu.

The expert warns that while reaching 30 million registrations would be remarkable for a low- or middle-income country, UHC cannot be reduced to headcounts.

“UHC is not about how many people are registered. It is about who pays, how consistently they pay, and whether care is actually delivered,” she says.

She adds that public trust has been further strained by recent health financing decisions, including the Kenya-U.S. health deal, making the registration target increasingly unrealistic.

The challenge is even starker for indigents. Government estimates suggest that between 1.5 and two million Kenyans require full premium subsidies, at an annual cost of Sh6,000 to Sh8,000 per person.

That translates to between Sh9 billion and Sh16 billion annually — funding that remains unclear in the national budget.

“The uncomfortable truth is that SHA has expanded coverage faster than it has built financial discipline and institutional trust,” Kairu says.

Those weaknesses are now threatening the scheme’s survival.

Barely a year into implementation, insiders say SHA is collecting far less than projected while spending far more than it earns.

A senior official revealed that the authority is currently collecting about Sh6.7 billion per month, roughly Sh80 billion annually against monthly spending of about Sh8.7 billion, or Sh104.4 billion a year.

“We are basically spending more than we are collecting,” the official admits. “When the loss ratio gets too high, you encourage bills you are unable to settle.”

As a result, hospitals are feeling the strain.

The Rural Private Hospitals Association of Kenya (RUPHA) warns that unless collections improve urgently, SHA could collapse.

“Kenyans are told to register and get free services. It sounds good and may win elections, but if this continues, SHA could collapse in three to four months,” warns RUPHA chairperson Dr Brian Lishenga.

The government had projected annual collections of Sh160 billion under SHIF, Sh38 billion from salaried workers and Sh122 billion from the informal sector, with Sh70 billion earmarked for the Emergency, Chronic and Critical Illness (ECCI) Fund and Sh45 billion for the Public Healthcare Fund.

By comparison, NHIF collected Sh82.1 billion in 2022/23 and Sh80 billion in 2023/24.

Between October 2024 and July 2025, SHA collected just Sh45 billion barely half its annual target.

SHA operates three funds namely SHIF, ECCI and Primary Healthcare (PHC), while 2.75 percent contributions flow into SHIF, ECCI and PHC depend heavily on exchequer allocations. The total cost of fully financing UHC stands at Sh275 billion.

Lishenga argues the focus must shift from registration to remittance.

“We must stop pretending UHC is free. Without contributions, the system is not sustainable,” he says.

Although the Social Health Insurance Act 2023 caps premiums at 2.75 percent of income, the new scheme has no upper limit, unlike NHIF, which capped contributions at Sh1,700.

Investigations by The Standard show hospitals across the country are struggling under millions of shillings in unpaid SHA claims.

Some facilities are operating without credit, unable to buy medicines or pay staff, while others have shut down altogether.

In many hospitals, patients are now being forced to pay out of pocket.

By mid-2025, unpaid SHA claims stood at an estimated Sh90 billion. Only 53 percent had been reimbursed, leaving facilities owed Sh43 billion, excluding Sh30 billion in NHIF arrears.

“For many private and faith-based hospitals, SHA and NHIF receivables account for 20 to 40 percent of operating budgets,” Kairu notes.

Although CS Duale says Sh1.9 billion has been paid to hospitals over the past two years, critics say the amounts fall far short of what is owed.

Even the Sh104 billion digital system has offered limited relief. Hospitals report frequent downtimes and claims processing delays of up to 60 percent longer than under late-stage NHIF operations.

“UHC cannot be declared,” Kairu warns. “It must be paid for and trusted. Without clearing arrears, enforcing accountability for fraud, and aligning registration with real revenue, Kenya risks building a wide but shallow UHC system.”

 Amid low contributions, Health Cabinet Secretary Aden Duale has been touring counties to encourage Kenyans to register for the scheme.

Duale has urged non-salaried Kenyans to pay annual premiums through a lipa pole pole model.

But health financing expert John Nyangi warns warns the current SHA model prioritised mass registration over sustained contribution, leading to a risk-heavy pool dominated by sick contributors.

Nyangi explains that salaried employees make up 77 per cent of contributors, while informal sector members comprise just 23 per cent.

The average contribution from non-salaried members is slightly more than NHIF’s flat rate of Sh500, but still too low to sustain operations.

“We need flexible payment options, weekly or seasonal, similar to Rwanda’s Mutuelles de Santé, which uses decentralised, community-aligned contributions and achieves 85 per cent coverage,” says Nyangi. 

Juma recommends targeted subsidies, fully subsidising premiums for the poor and providing tiered support for low-income earners.

Prof XN Iraki, an economist at the University of Nairobi, obsrves that it is unfortunate that many Kenyans only pay for health insurance when they are sick and stop once they recover.

“Hard economic times are to blame. Most people would prefer to pay, but essentials like food take priority,” says Prof Iraki. “I have said repeatedly that ordinary Kenyans simply have no money to pay premiums. The state of the economy is the real problem.”

According to Prof. Iraki, the government should either lower premium payments or improve the economy so that citizens earn enough to afford them.

“Most people, even in the informal sector, would gladly pay premiums if they had the money. The challenge is not registration but affordability,” he notes, adding that SHA should also provide expected services.