The National Hospital Insurance Fund (NHIF) recently concluded stakeholder engagements on a raft of proposed regulations that will anchor the compulsory membership of all Kenyan adults.
In an interview with the Business Daily, CEO Peter Kamunyo discusses the reasons behind the regulations, the scheme’s latest performance and the future of the scheme in the context of universal healthcare coverage.
How do you rate the NHIF's financial performance for the year ended June 2022?
We have got to the highest number in terms of the premiums collected, principal members also grew to 15.4 million as at June 30, 2022 and the retention is the highest since 2018 at 43 percent. We also doubled our surplus to Sh800.97 million.
What led to the improved performance in the period under review?
Key drivers of the increase in numbers is the sponsorship where under the universal healthcare coverage, the government started supporting at least one million indigents last year. We also engaged the informal sector more and got more members on-board.
It is also critical to note that active members from the informal sector have since the outbreak of Covid-19 been increasing because people realised the critical role of having an active cover for their health.
But you are yet to cure the perennial problem of defaults.
We still have a big challenge in terms of many voluntary contributors defaulting. Basically, they only enroll when they have a need. That is why out of the 15.4 million members, the active were about eight million.
Our retention rate was 43 percent as at June 30, 2022, and this was an improvement from last year when it was 32 percent.
Luckily the NHIF Act was amended and this is curing the problem of adverse selection besides saving the scheme from being potentially unsustainable by having all adults compelled to join.
We are noticing an increasing frequency of communicable diseases. Look at our expenditure and the heavy part is on communicable diseases. They are becoming a worrying burden and most are chronic, so we need to find ways of containing the costs for example dialysis and number of cancers.
The proposed NHIF regulations sought to change the amount that workers earning Sh100,000 pay from a fixed rate of Sh1,700 to 1.7 percent of the pay. Why was the proposal dropped?
The current contribution scheme is graduated for everyone earning below Sh100,000. We proposed the 1.7 percent rate which we believe is fair and equitable and we still stand by that. But Parliament removed it, not us. If we had a choice, the 1.7 percent would remain but we are going to push for it.
Up to the last minute we were shocked when we saw the paper that came from Senate because that was basic change that was going to ensure equity.
We proposed changes to the penalties to make it easy for people who fall off due to erratic income to be on-boarded. It is all about encouraging everyone to be in and to stay in.
You rolled out new contracts in July and one of the key changes was the standardisation of the NHIF reimbursement rates to healthcare providers (public and private). Why did you decide to standardise the rates?
We standardised the rates so that we create competition on consistency and quality and this will definitely drive quality of care.
Before the new contracts, there were institutions that were being reimbursed more and others a lot less. So now there are those institutions whose rates came down and those whose rates went up across all Kenya Healthcare Federation (KHF) rates.
The government has since last year been revamping public hospitals, what has been the impact on service delivery and payouts?
We are noticing a trend where private hospitals that are investing in providing consistent and reliable services are reporting an increase in their utilisation. In some counties, public hospitals have overtaken private ones in terms of reimbursement and we need to encourage this.
It is the revamping public hospitals that has a direct impact on utilisation of their services and logically increase in reimbursement rates.
Kenyatta National Hospital has over the past two years been the biggest beneficiary of reimbursements (in the 2020-21 financial year and the year that ended June 30, 2022). In Nakuru, the number one reimbursed hospital is the Nakuru Provincial General Hospital.
What would you say are the biggest lessons that you learnt from the Covid-19 pandemic?
One of the big lessons is that we need to prepare for the unexpected. We need very strong public health systems that work efficiently. Then for risks that cannot be insured like pandemics, we need to have a source of funding to be able to support as a public good.
It is about time that the NHIF started getting some Exchequer funding to be able to support that and also other programmes like preventive health and catastrophic national occurrences.
Some years back, the government launched NHIF membership for secondary school students. What became of the project?
The programme is still ongoing and we now have about 3.5 million members across the public secondary schools from an estimated 2.4 million last year.
It has been beneficial to the learners who get benefits similar to those of civil servants (enhanced cover). It has ensured their learning is not interrupted.
What other policy changes is the NHIF looking at in the context of universal healthcare coverage?
One of the big ones is reviewing the PFM Act to ring-fence our reimbursements for public facilities. This will be a big thing and will increase performance of the hospitals. Private hospitals operate on a similar framework because they use much of our reimbursements to revamp their facilities.
We had a conversation with the governors and we are looking at similar discussions with the new governors. We have taken care of the memberships and so now we need to look at how to improve what the members get.
NHIF is purely funded by contributions from members and it is time we start thinking of having funding from the tax collections to support preventive healthcare and also cushion us in pandemics. This will boost.
These are conversations that we have been having but need to scale it with the new Parliament. After all, insurance is a business of trust and we need to build the trust of our members on quality and our healthcare providers that we will pay them on time.