TB, asthma and flu take heavy toll on household budgets

Kenyan households are using the largest portion of their health spending in the treatment of respiratory diseases, pointing to a new front in the ongoing search for solutions to the country’s rising healthcare challenges.  

The latest industry statistics show that treatment of respiratory diseases has, in turn, become the greatest driver of out-of-pocket expenses for households and health insurance spending expected to persist in the next decade.

Resolution Insurance, which is Kenya’s fifth-largest medical underwriter with 10 per cent of the industry’s Sh21 billion total premiums, says in a report that treatment of respiratory ailments such as tuberculosis, flu and asthma accounted for Sh317.8 million or 19 per cent of the Sh1.6 billion it spent on medical bills last year.

The insurer says respiratory diseases have become a particularly difficult problem to tackle because most are contagious in an environment where there is little knowledge of preventive care.

“The contagious nature of these ailments and inadequate public health education on personal and community responsibility all add up to the rising medical challenge,” said Peter Nduati, the company’s chief executive.

The report shows that respiratory illnesses also account for the largest share of the overall disease burden for people aged between one and 61 years.

Children suffer the most from respiratory diseases, the report says, in line with a trend where the bulk of medical services are consumed by the youngsters.

Respiratory illnesses accounted for 54 per cent of the top five diseases recorded among children aged 10 years and below.

Respiratory diseases, for instance, account for more than 80 per cent of all the conditions treated by Nairobi-based Gertrude’s Children’s Hospital, says its CEO Godwin Odundo.

READ: Respiratory diseases pose huge burden to insurance firms

Globally, increased use of vaccines such as those offering protection against pneumonia is seen as the most cost-effective way of curbing the illnesses.

Health economists say respiratory diseases have not only contributed to the overall disease burden but has also become the biggest drivers of medical inflation to which insurers have responded with annual double-digit increase in premiums, eating into corporate and household budgets.

Those without medical insurance — standing at about 75 per cent — are the hardest hit as they pay more out of their pocket with each visit to a medical facility.

Mr Nduati says respiratory illnesses are the number one and two sources of outpatient and in-patient medical claims respectively, underlining their financial impact.

The data was collected in a survey of disease trends among the company’s 60,000 customers in the 12 months to December 2013.

Digestive system ailments such as ulcers, appendicitis, constipation and diarrhoea ranked second, consuming Sh173.9 million or 11 per cent of Resolution’s total claims in the medical insurance business.

The health insurance spending data shows that people aged between 20 and 50 years suffer the most from these types of illnesses whose treatment range from simple drugs prescription to expensive surgeries. Parasitic diseases led by malaria were ranked third in the claims list, taking Sh158.4 million or 10 per cent of the total payout.

Such diseases are most prevalent among people aged below 20 years, and malaria remains the most lethal of them all with a 5.8 per cent share of total deaths.

Billions of shillings have been invested in the fight against malaria and promotion of preventive measures such as use of insecticide-treated nets.

Diseases of the urinary system such as cystitis and renal failure were the fourth-biggest source of claims at Sh139 million or 10 per cent of the payout.

People aged between 20 and 40 years suffer the most from these illnesses that rank among the most expensive to treat.

The cost of maternal healthcare was fifth at Sh133.1 million or nine per cent of the claims and was the top source of in-patient expenses.

More recently, the report says, the high cost of maternal services has been driven by more women seeking better services in hospitals.

“Maternity costs have gone up due to awareness and accessibility of health services resulting to increased admission related to maternity,” the report says.

Top private hospitals currently charge between Sh40,000 and Sh200,000 for child delivery depending on whether the birth is normal or by Caesarean section.

The government last year introduced free maternity services in all public hospitals in what is expected to ease the burden on poor households that have found it difficult to pay even the low fees previously charged by State-funded facilities.

The new policy is, however, being implemented against the backdrop of acute shortage of trained medical personnel and ill-equipped facilities that are lacking in basics such as beds.

The pressure on existing health facilities has caused a rapid deterioration of service quality in State-run hospitals whose full impact is yet to be felt.

Poor maternal healthcare in public facilities is expected to fuel demand for the services in private hospitals especially among middle-income households who made a similar move to private schools with the introduction of the free primary education (FPE) programme.

It remains to be seen what impact such a switch will have on private hospital charges and medical insurance premiums. Resolution Insurance says only a change to healthier lifestyles and disease prevention behaviour could arrest the continued rise in the cost of medical care.

Major private hospitals increased their charges by up to 10 per cent early this year, citing higher operating costs and inflation of the cost of medical equipment in the wake of the new value added tax (VAT) law.

The VAT Act 2013 removed exemptions on the items, effectively increasing their prices by 16 per cent.

Aga Khan, MP Shah and Avenue Hospital (Nairobi) were the latest to increase charges, joining Nairobi Hospital, Gertrude’s Hospital, Guru Nanak and Karen Hospital whose prices went up between August and November last year.

Some of the hospitals raised their charges twice last year, saying they had been hit by rising costs of labour, drugs, and utilities.

This trend is set to pile pressure on corporate and household budgets at a time when three-quarters of the population has no access to quality healthcare due to low incomes.

Medical insurers say the cost of covering an employee with four family members is between Sh20,000 and Sh60,000 per year depending on the set ceiling and benefits.