NHIF walks into private insurance market with low priced premiums

Public health insurer, NHIF has hit the medical insurance market with a new line of medium priced policies that offer contributors unlimited inpatient and outpatient covers.

Also read NHIF reforms may slow private insurers’ growth

The new products, which will be available to buyers outside the statutory contributions are nearly half the cost of private insurance premiums despite being pricier than normal NHIF covers, pointing to a possible shake up of the medical insurance market.   

The National Hospital Insurance Fund (NHIF) expects to collect an additional Sh1 billion in premiums annually from the new product line that is open to all citizens.

In the low end of the voluntary product line is a package that offers a family full year unlimited inpatient and outpatient cover at a cost of between Sh4,000 and Sh6,000 but restricts its use to the most common diseases such as malaria and diarrhoea.

There is also a premium package that will offer families unlimited inpatient and outpatient covers, access to specialised treatment involving use of MRI and CT scans as well as treatment of complicated illnesses such as HIV/Aids at a cost of Sh12,000 per year.

“We are pursuing economies of scale and a low-cost model in partnership with our network of health service providers,” said Fadhili Chacha, the NHIF Manager in charge of Corporate Strategy & Planning.

There is no limit to the number of children a family can include in the covers to be available in the market from mid March.

NHIF says buyers of the policies will first access treatment from primary healthcare providers and will only go to costly facilities for referrals to control the burden of claims.

The twin packages are targeted at the upper segment of the bottom class and lower segment of the middle class and are part of the government’s effort to meet its constitutional obligation of providing citizens with universal healthcare.

Kenyan households have recently suffered a double digit increase in the cost of medicare that has restricted access to many households.

Top hospitals such as Nairobi and the Aga Khan increased their charges by up to 15 per cent last month, adding more financial pressure on families at a time when purchasing power has been eroded by high inflation.

The new covers from NHIF, which cost half the market prices, are expected to intensify competition in the medical insurance market.
Comprehensive medical insurance cover from private insurers costs an average of Sh20,000 per family per year. However, the benefits are limited to Sh100,000 for outpatient and Sh2 million for inpatient services.

In addition, private insurers typically cap the number of children covered per family at about six.

It is however estimated that households taking comprehensive medical insurance under corporate plans could save up to a third of the above rates.