NHIF headquarters in Nairobi. The public health insurer is set to charge the controversial new fees in April. File
What you need to know:
Move follows last month’s court decision to dismiss Cotu’s objection to the new rates.
Industrial Court judge Nzioki Wa Makau threw out Cotu’s opposition to the new levies in a judgement delivered on January 25, 2013.
The levying of higher NHIF fees is part of the government’s plan to offer universal access to health services.
Formal sector employees will start paying the controversial NHIF fees on April 1, opening a new chapter in the history of health insurance in Kenya.
Simon ole Kirgotty, the managing trustee of the public health insurer, said NHIF will start charging the new fees following last month’s dismissal of the Central Organisation of Trade Unions’ (Cotu) suit opposing the move.
Cotu had sought the court’s intervention on the matter citing lack of consultation and mismanagement of the Sh9 billion that NHIF collects from formal sector workers annually.
“Nothing prevented us from introducing the new rates beginning this month but we have chosen to delay that until April 1 leaving us time to consult with stakeholders,” said Mr ole Kirgotty.
“We are maintaining the same rates as proposed in 2010,” he said.
NHIF’s new membership regime will see monthly contributions rise by up to 525 per cent, more than tripling the fund’s annual revenue.
The new fees will put more than Sh20 billion in the hands of NHIF management even as the agency’s latest financial statement shows that it spent a third of last year’s pool of funds on salaries and administrative costs.
Opponents of the new fees, led by Cotu, have argued that NHIF lacks capacity to manage such an amount of money and demanded far-reaching reforms before the new fees are introduced.
Under the new regime, formal sector workers earning a gross salary of Sh100,000 and above will make a monthly contribution of Sh2,000 up from the current Sh320 to finance an expanded programme that covers both outpatient and in-patient services for its members.
Those earning between Sh50,000 and Sh100,000 will contribute Sh1,500 per month while the lowest paid formal sector workers on a salary of less than Sh5,999 will contribute Sh150.
The scheme has a separate band for the self-employed, who will pay Sh500 per month for similar range of services from the fund.
Mr Kirgotty said that NHIF has been talking to the Federation of Kenya Employers (FKE) in the wake of the judgment and that it won its approval on condition that employers are not forced to contribute above the current rates.
“Employers’ main concern was that they would be required to match their workers’ contribution. We have clarified that the rates are only applicable to employees,” he said.
Mr Kirgotty added that NHIF is talking to Cotu officials who have fiercely opposed the new rates but now appear to have lost all legal avenues to maintain the status quo.
Leaving employers out of the new scheme offers formal sector employees the assurance that they will not lose the private medical insurance schemes they have been enjoying besides making the statutory contribution to NHIF.
Terminating the private medical schemes would also be a big blow to private insurers who stand to lose the Sh12 billion they earn annually from employer-funded health insurance.
Private insurers say they are betting on superior services to retain high-value clients in middle and upper class households.
“We anticipate that the NHIF scheme will appeal to the mass market. The wealthy and the middle class will certainly choose to retain premium insurance that is the forte of private insurers,” said Nelson Kuria, the CEO of CIC Insurance.
Mr Kuria said the NHIF’s comprehensive cover would spur innovation by forcing the private sector players to differentiate their services from the government-backed scheme.
Economists expect the fund’s progressive rates to spark fresh agitation for wage increments to shield their income from erosion.
Kenya’s lowest-paid workers will be the hardest hit by the new charges even as they enjoy expanded medical services.
The levying of higher NHIF fees is part of the government’s plan to offer universal access to health services as stipulated in the Constitution.
The public health insurer says higher member contributions will enable it to offer comprehensive health services, including covers for outpatient and chronic illnesses such as diabetes, high blood pressure and HIV/Aids that most private health insurers do not cover.
Paid-up members will also have their medication, consultation fees, family planning services, X-Ray and ultra sound diagnosis paid for by the fund. The scheme is also expected to cover the elderly and place no limit to the size of a nucleus family that can benefit from a subscription.
The fund plans to offer standard medical covers regardless of income bands, meaning that those earning more than Sh100,000 will have a lighter burden despite accessing similar services as the low-income earners.
It also means that workers in the middle income bands with less than Sh100,000 monthly salary will subsidise the lower income earners, raising questions of equity in the scheme.
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.
The premiums were last reviewed in 1988. Formal sector workers currently contribute between Sh30 and Sh320 to the NHIF based on gross salary.
The proposed NHIF covers will, however, see the bulk of workers pay Sh12,000 per year or less, making it significantly cheaper compared to the annual insurance premiums charged by private insurers that cost an average of Sh20,000 per year.
Private insurers typically cap the number of children covered per family at six and limits outpatient benefits to Sh100,000 and Sh2 million for inpatient services.
