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NHIF outpatient cover raises stakes in insurance sector

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NHIF Headquarters in Nairobi. /Fredrick Onyango

NHIF Headquarters in Nairobi. /Fredrick Onyango 

By STEVE MBOGO

Posted  Tuesday, December 1  2009 at  00:00

The launch of outpatient medical insurance cover by National Hospital Insurance Fund is set to pave the way for stiff competition in Kenya’s middle class-leaning medical insurance industry.

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Low income earners will be the biggest beneficiaries of the new scheme that is set to drastically reduce their out-of-pocket spend on medicines.

Medical insurance companies said although they expect intense competition because of the competitively-priced product from the NHIF, it will also help ease the utilisation burden of their covers because all privately insured persons must have NHIF cover.

“We take it as reserve cover and pay claims over and above the cost paid by the NHIF,” said Peter Nduati, the CEO of Resolution Health East Africa.

This means the burden of outpatient care will be eased considerably as the fund previously only provided rebates for bed and specific cost of surgery.

But medical insurers could also be the losers if the new product becomes the preferred choice of some of their current clients, especially those employing a huge pool of low income workers.

The industry however insisted that the income group targeted by NHIF is different from that targeted by the mainstream insurance industry and that the fact that the outpatient cover is not comprehensive will ensure that the middle class seeks out products that offer more.

“There is the possibility of some employers shifting to this cover but overall, it will act as a compliment to our services and ease the utilisation burden of our products,” said Lydia Kibaara-Nzioki, the head of medical business at the Jubilee Insurance Company.

NHIF on Monday launched a six-month pilot project on the outpatient cover targeting Mumias and parts of Nairobi.

NHIF communications officers Stephen Wangaji said the cost structure of the outpatient cover will be similar to that of the inpatient cover where clients pay between Sh30 to Sh320 depending on the nature of employment and monthly earnings.

The scanty information available indicates that hospitals providing the outpatient cover will be given caps on how much a patient can use for every purchase to prevent abuse of the cover.

Among insurance companies currently providing medical cover, outpatient services account for 60 per cent of the medical cover utilisation.

The NHIF cover will be a boon to partnering hospitals and doctors who will be assured of steady flow of business even when patients do not have money to purchase medicine.

The successful roll out of the outpatient product will result in a major reawakening of the medical insurance business in Kenya, which has for long given low income people a wide berth.

Indeed, some medical insurance companies even decline to offer individual medical covers, opting exclusively for corporate business.

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