NHIF contributors to be locked out of high cost hospitals

State health insurer NHIF will bar members from accessing high-cost private hospitals after raising monthly premiums to Sh1,700 for the highest contributors, it has emerged. 

The National Hospital Insurance Fund (NHIF), which is expected to gazette the increased rates any time, says it will limit the outpatient, inpatient and maternity services to all public hospitals and low-cost private hospitals.

Currently NHIF pays rebates on daily bed charges of between Sh400 and Sh2,400 a day, with most high cost facilities getting Sh1,800.

All formally employed workers are obligated to contribute to NHIF through a monthly deduction on their payslips, even for those that have their employer-sponsored health insurance schemes.

Workers and employers have been strongly opposed to the proposed steep increase in monthly premiums since it was first mooted in 2010, questioning NHIF’s corrupt past and its capacity to administer the huge scheme. 

“Contributors will not access healthcare services in the high-cost private hospitals,” said NHIF chief executive Simon ole Kirgotty in an interview.

Top private hospitals such as Nairobi, the Aga Khan, MP Shah, Mater and Karen are the obvious choices for most Kenyan workers who have health insurance cover.

The limitation means the majority will continue to depend on their employer-sponsored schemes, adding to labour costs without the benefit of a healthier workforce.

NHIF is set to raise monthly contributions by up to 431 per cent from the current flat rate of Sh320 per member.

READ: Cotu approves rise in NHIF premiums to Sh1,700 monthly

Workers earning Sh5,999 and below will pay Sh150, the lowest monthly contribution as per the latest proposed figures seen by the Business Daily.

The graduated premium structure will see those paid Sh100,000 and above remit the highest monthly deduction of Sh1,700.

The lowest monthly contribution is currently set at Sh30 for those earning between Sh1,000 and Sh1,499 while the highest premium is Sh320 for those earning Sh15,000 or more.

The self-employed who have been paying Sh160 per month will start paying Sh500 when the new rates are published.

NHIF says the extra cash will be used to finance in and out-patient cover, ending the current model where it mainly pays only bed charges for admitted members.

The statutory fund argues that it has locked out the major private hospitals on the basis of their relatively higher charges.

Exclusion of the top hospitals is seen as a move by the fund to manage claims as it takes the comprehensive medical insurance scheme to the mass market.

NHIF’s cover for civil servants and the disciplined forces, however, does not exclude the high-cost facilities where the members can get benefits that are capped at the fund’s discretion.

The proposed NHIF monthly premiums are, however, relatively lower compared to those charged by private insurers.

The State insurer promises contributors a wide array of inpatient and outpatient services including consultation, hospital accommodation, drugs, X-ray, maternity, and management of chronic illnesses like cancer and diabetes.

Mr Kirgotty said those paying the highest premiums will have their benefits capped at Sh1.2 million per year while those paying the least will have a limit of Sh30,000.

Private medical insurers are charging average premiums of Sh60,000 per year or Sh5,000 per month for a family of four that can receive benefits of up to Sh1 million.

READ: Cotu withdraws lawsuit against new NHIF rates

The private underwriters rely heavily on private hospitals to offer inpatient and outpatient services to their clients drawn largely from the middle class who are wary of public hospitals that have run-down facilities, lowly motivated doctors and are prone to congestion and strikes.

The top private hospitals have, however, been accused of overcharging insurers, several of whom have booked major losses in their medical books which they have attributed to fraud.

Mr Kirgotty said NHIF will use residence as the main criteria for allocating hospitals to contributors in the expanded medical scheme.

This is expected to leave those working in major towns like Nairobi and Mombasa with relatively more options compared to contributors residing in the rural areas.

The big towns enjoy a concentration of top hospitals including public referral institutions while rural areas rely heavily on government-owned primary healthcare facilities.

This is the closest NHIF has come to rolling out the controversial covers that have been suspended for five years after various labour unions went to court to block them.

The fund says it has reached an agreement with the unions who are expected to have withdrawn the cases by last week, allowing the new rates to be gazetted.

NHIF has amended the proposed rates severally, partly due to negotiations with the labour unions seeking a balance between enhanced benefits and increased premiums.

The fund, for instance, had previously set the highest monthly premiums at Sh2,000 for those earning Sh100,000 or more.

Employers and unions had raised fears that the higher contributions will erode earnings of workers — especially those at the bottom of the income ladder — and lead to demands for pay increments.

The expanded mandate is expected to test NHIF’s ability to deliver the promised benefits efficiently while ensuring prudent administration of the extra billions of shillings to be collected as the higher rates are implemented.

The fund has lost billions of shillings in multiple scams perpetrated by its top management in the past, casting doubt as to its ability to manage a larger pool of funds prudently.

NHIF says the current rate of Sh320 has limited it to offering in-patient cover, locking out the bulk of the population from comprehensive medical care that remains the preserve of the rich and middle class households. The premiums were last reviewed in 1988.

Only a quarter of Kenyans have medical cover and the increased contributions are expected to significantly boost that ratio over the next five years.

NHIF says higher member contributions are also necessary to meet the high cost of medical services that have increased five-fold since 1990, with the steady rise in doctors’ fees, cost of food, medicine and equipment.