2.7 percent NHIF deduction meant to attain equity, says board chair Michael Kamau

NHIF Board chairperson Eng. Michael Kamau. [File, Standard]

The National Hospital Insurance Fund (NHIF) Board chairperson Michael Kamau has come out to set the record straight on the government's proposed new rates.

Kamau, while defending the decision to increase NHIF contributions, said that the proposed 2.7 percent of insurance payments are meant to provide a sense of equity.

He averred said that there has never been equity in how people contributed to the insurance fund regardless of the difference in the amount of salaries earned by individuals.

"The only way you can create equity is to bring in a percentage. There was no equity, anybody earning Sh100,000 and above was paying Sh1,700. So when we worked all the averages, we averaged it to 2.5 percent of all the total receipts," Kamau said in an interview with Citizen TV.

"The young pay for the old. Those who can pay more, pay more to support those who can pay less. It won't matter if we only have the rich people being able to pay private insurance and their health is taken care of and then the rest of us are sick. We are all going to die."

The new NHIF board chairperson added that according to the NHIF database, a number of contributors are paying Sh1,700 which works out to a 1.12 percent average of their salaries.

Kamau's remarks reiterate President William Ruto's proposed amendments to the insurance contribution formula which suggested an increase to 2.7 percent.

In the proposed reforms, self-employed persons and those in the informal sector are to pay Sh300 as opposed to the previous Sh500.

Additionally, those earning a gross salary of between Sh50,00 and Sh100,000 will contribute Sh1,350, while employed persons earning Sh100,000 and above will contribute Sh2,700 towards the fund, compared to the previous flat rate of Sh1,700.

"A contributor in salaried employment shall pay a standard contribution at a rate of 2.75 percent of the gross monthly income derived from employment in the preceding month, while a contributor in self-employment shall pay a special contribution to the fund at a rate of 2.75 percent of the declared or assessed gross monthly income," the proposal reads in part.

Kamau also said that the government shall pay for unemployed citizens who are considered vulnerable.

NHIF has recently come to the limelight over fraud and corruption allegations where some hospitals in Nairobi and Meru counties were closed for defrauding the health fund.

The NHIF chair said that the insurance body is in the process of an overhaul, and promised to do away with corruption by improving the technology system that is easily manipulated and bringing in new management.

Kamau also claimed that most of the frauds are through false claims from hospitals that demand payment.