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NHIF: Police and civil Servant covers

The National Hospital Insurance Fund (NHIF) has sought to clarify that it has not terminated the enhanced medical scheme for members.

A gazette notice by Treasury Cabinet Secretary Ukur Yatani on March 20 seemed to end the speculation that has followed media reports that the insurer has terminated medical cover for civil servants, police and prison officers.

“In exercise of the powers conferred by section 181 of the Insurance Act, the Cabinet Secretary for the National Treasury and Planning exempts the National Hospital Insurance Fund (the Fund) from the provisions of sections 19, 179(6), 197A and 197B of the Insurance Act for purposes of offering Enhanced Medical, Group Life and Last Expense Cover for Civil Servants and the National Police Service, for a period of one year,” read the notice.

Section 19 requires any entity providing insurance services in Kenya must be duly registered under the Insurance Act. NHIF will also not be required to pay a monthly contribution to Policy Holders’ Compensation Fund, which is a requirement of the Act. The fund will also be exempted from the Insurance Premium Levy, and Insurance Training Levy.

A statement from NHIF last week noted: “The civil servants medical scheme remains valid as per the existing contract. Other government agencies with valid contracts will continue accessing benefits as per the provisions of their contracts and the National Police and Prisons Service medical cover is still valid and members will continue accessing Scheme benefit.”

National Police Service has a Sh4 billion deal with NHIF while civil servants have a Sh5 billion deal with the fund.

This is not the first time the fund finds itself in a tight spot. A few weeks ago reports emerged that the fund was collapsing under the weight of unsustainable payouts.

Trends of the fund

But acting CEO Nicodemus Odongo pointed out that the fund was just acting to some of the loopholes identified from an audit ordered by the board with some of the issues highlighted being historical.

“The audit report that has been mentioned several times is that of an institution looking at itself to find out just where problems could be. It found that a number of anomalies are historical, dating back 2012," Odongo said.

He pointed out that there are concerns based on the trends of the fund, which the government wants to use to achieve Universal Health Coverage (UHC). He underlined that NHIF is not broke.

In 2015, with the gazetting of the new NHIF rates, the fund changed its benefits package from just paying for daily rebates to catering for various schemes. Initially, NHIF charged a flat rate of Sh150 from those in formal employment.

From 2016, a number of packages were put in place including the cancer package. This, Odongo says, has reduced the number of people going out of the country for treatment. He notes that increased benefits have meant the fund pays out more.

“Benefit utilisation is the amount of money being spent from the collection.

"This was going up from a reasonably higher rate from what was there before but remember contribution rates were still constant,” Odongo said on the enhanced benefits.

The report concluded that if no action is taken then payouts will definitely overtake contributions and fingers have been pointed at the informal sector.

National Scheme comprises statutory contributors deducted by employers and voluntary contributors who pay Sh500 per month. With about two out of five people living below poverty line, these voluntary contributors therefore could come in and out anytime.

“Some in this category default but when they seek treatment, for instance, need surgery, they come back and pay Sh1,000 and wait for two months and in this way NHIF is required to pay Sh500,000 for surgery and then they bolt out again once this has been paid,” he said.

In most cases, the fund has realised that those in the informal sector pay Sh6,000 but spend an average of Sh23,000 per year. In pooling the statutory and voluntary contributors, it has become clear that the latter are heavily subsidised.

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