Citi and Standard Group warn Kenya on SHIF funding costs  

Dr Timothy Olweny

Social Health Authority Chairman Dr Timothy Olweny.

Photo credit: Nation Media Group

The funding model for the new universal healthcare could strain the State’s expenditure plans, two top global banks have cautioned.

Citi and Standard Group, the advisors on the redemption of Kenya’s debut Eurobond, said the requirement for exchequer funding to the social health insurance fund will increase the burden of expenditures for the government.

“Implementation of the universal health coverage laws might lead to increased cost of government and materially adversely affect Kenya’s economy,” the banks noted last week.

The Social Health Insurance Fund which forms part of the recently enacted Social Health Insurance Act introduced a new funding model that is reliant on funding approved by the National Assembly in addition to individual contributions by Kenyans.

According to the Act, the Social Health Insurance Fund shall be partly funded from monies appropriated by the National Assembly for indigent and vulnerable persons.

Salaried workers are expected to make contributions rounding off to Sh77 billion through the 2.75 percent deductions on gross salaries while the government is set to provide an addition of Sh45 billion per year according to an impact system from the Ministry of Health.

Other sources of money for the funds include gifts, grants, and innovative financing mechanisms or donations.

The exchequer is at the same time expected to make allocations to the Primary Healthcare Fund which purchases to enable the purchase of primary healthcare services from health services and the Emergency, Chronic, and Critical Illness Fund which primarily seeks to defray the costs of management of chronic illnesses after the depletion of the social health insurance fund.

The creation of the three funds is part of health sector interventions that will see reforms to the pre-existing National Health Insurance Fund.

The government has for instance changed the contribution structure from an occupation scheme of persons in formal employment to a household contribution model to increase the health insurance membership.

“The government has committed to invest in the primary healthcare system through the establishment of stakeholder managed primary healthcare funds as strategic purchasers at each level four facility, establishment and operationalisation of emergency medical fund and establish a fund to bridge the financial gaps in the wake of diminishing donor funding in support of key programs such as HIV/AIDS and tuberculosis,” the lead managers observed.

The Social Health Authority is expected to take up the mandate of NHIF in managing social health insurance.

The implementation of the new Act has however been the subject of litigation at both the High Court and the Court of Appeal with the petitioners challenging the Act’s constitutionality.

Last month, the Court of Appeal suspended the High Court orders restraining the implementation and enforcement of the Social Health Insurance Act, 2023, the Primary Health Care Act, 2023, and the Digital Health Act clearing the way for the government to begin collecting employee contributions to the fund.

Certain provisions of the Social Health Insurance Act however remain suspended pending the determination of the appeal including provisions that make the registration and contribution a precondition for dealing with or accessing public services.

Additionally, the provision requiring persons accessing healthcare services to have contributions up to date and active has also been frozen.

Last week, Health Cabinet Secretary Susan Nakhumicha said Kenyan workers would begin paying 2.75 percent of their gross salaries to the Social Health Insurance Fund (SHIF) from March 1.

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