High cost of healthcare pushes insurers to launch cheaper covers

The use of the smart card technology eliminates paper work which is cumbersome and associated with additional cost for printing and filling the application forms.

Due to the rising cost of medical services, employers are also introducing co-payment programmes where employees partly pay for their medical covers.

According to Ms Lydia Kibaara-Nzioki, the head of medical business at Jubilee Insurance Company, Kenya’s largest medical insurer, the incidence of co-payment has been driven by the rising cost of medical services, arguing that holders of corporate schemes want the cost of their premiums to remain the same or increase moderately.

Reduced premiums

“Employers have been asking for co-payments as a cost-cutting measure since it leads to reduced premiums,” she said.

“Five years ago it (co-payments) was virtually non-existent. But now it is the fastest-growing segment in private insurance,” she said.

For employers the co-payment scheme not only lowers the cost of medical services, but also manages overall cost of business.

“The increase in the cost of medical services raises the overall cost of employment which in turn affects the ability to engage more workers as companies look at means to contain their operating costs given that total employment cost is above 50 per cent for most businesses” said Ms Jacqline Mugo, the chief executive officer for the Federation of Kenya Employers (FKE).

According to Mr Sammy Makove, the chief executive officer of the Insurance Regulatory Authority (IRA), the national household healthcare budget is below five per cent limiting access to quality and affordable health services.

According to the released 2009 census result out of the 38 million Kenyans only an estimated 700,000 Kenyans have medical insurance cover largely provided by employers.

Most of the many with no insurance covers depend on government health outlets for basic treatment.

This has adversely strained State-run health outlets such as clinics, dispensaries and hospitals to meet the growing needs of Kenyans.

Despite the rapid growth of private medical insurance services over the years, insurers have been targeting the middle and upper classes who can afford.

The rising consultation fee, payment of laboratory tests and drugs has left many who cannot afford die of manageable diseases.

But the entry of insurers in the low-end markets offers renewed hope for the poor.