What are the proposed National Health Insurance Fund Regulations, 2023 about?
The draft regulations are meant to facilitate implementation of the changes that were introduced last year to the NHIF Act, including ensuring all Kenyans aged 18 and above contribute to the NHIF.
The regulations also set how much to be paid to the NHIF, how one can enrol and how hospitals can be enlisted as service providers.
The NHIF Act (1998) was amended and passed in Parliament on December 21, 2021 and assented into law on January 10, 2022.
The NHIF held public participation on the draft regulations published in 2022 and says it has taken into account the feedback received and consolidated that into the latest draft that, if passed, will actualise the amended Act.
What are the major changes being introduced by the proposed NHIF regulations?
The State wants to drop the old contribution system where salaried workers were contributing between Sh150 and Sh1,700 depending on their monthly pay while those in the formal sector were paying a flat rate of Sh500.
A salaried person will now be required to contribute a standard rate of 2.75 percent of the gross monthly salary towards the NHIF cover.
A self-employed person will be expected to make a special contribution of 2.75 percent of the declared or assessed gross monthly income, subject to a minimum of Sh300.
The government is committing to make a Sh13,300 monthly contribution to the NHIF on behalf of people identified as indigent or vulnerable.
How different is the latest draft from the one that was subjected to public participation in 2022?
The 2022 draft had proposed to retain the current contributions of between Sh150 and Sh1,600 by salaried people earning up to Sh99,999.
There was to be a flat rate of 1.7 percent deduction on salaries of Sh100,000 and above as opposed to the current flat rate of Sh1,700. Informal sector contributors were to continue paying Sh500.
Does this mean the current rates are now going to be phased out?
Yes. If the proposed regulations are adopted as they are, the current contribution formula is going to be phased out.
Is public input on the draft regulations allowed?
The public has up to May 11 to tender views on the proposed regulations. The views can be emailed or physically delivered to NHIF. The fund is also lining up physical and virtual sessions.
Are the proposed contributions lower or higher than the current ones?
Some of the contributors are going to enjoy reduced contributions while others, especially the high-income earners, will pay more if the proposed formula is adopted.
This is because the maximum contribution of Sh1,700 is going to be scrapped.
People in the informal sector who have been paying Sh500 per month are likely to enjoy a 40 percent reduction in contribution.
While the regulations mention “declared or assessed” gross monthly income, it may be difficult for the NHIF to monitor income of the self-employed people and cause them to pay more than the lower limit of Sh300.
For the salaried people earning up to Sh30,000 a month, there is going to be a drop of between three percent and 45 percent in contributions.
However, those earning above Sh30,000 to Sh100,000 will see a rise in contributions by between one percent and 77 percent. Those earning above Sh100,000 will see even steeper deductions.
Salaried workers earning Sh100,000 will start paying Sh2,750, up from the current 1,700, representing a 62 percent rise. Those taking home half a million shillings will see their deductions rise eight times to Sh13,750
Is the NHIF going to match the increased contributions with enhanced benefits to the members?
The draft regulations are not clear on whether the increased contributions will result in enhanced benefits such as more ailments getting insured or reimbursements being increased so that top hospitals that have currently kept off the NHIF can be roped in.
However, there is a reprieve for NHIF members suffering from chronic illnesses such as cancer, cardiovascular diseases, diabetes, respiratory disease and mental health condition.
The proposed regulations provide that members suffering from chronic illnesses will be allowed to access treatment at public hospitals for as long their NHIF contribution is up to date.
This will be of help given that the NHIF currently pays a maximum Sh600,000 for the treatment of cancer in a year.
What about the waiting period between paying premiums and getting the NHIF cover?
Currently, one is allowed to access NHIF cover after paying Sh1,500 and waiting for three months . The proposed regulations cut this to two months.
Why does the State want NHIF to have more money?
The government has been rolling out the universal health coverage (UHC) programme in which it is seeking to provide quality and affordable healthcare for all Kenyans. It has picked NHIF as the primary implementer of UHC.
NHIF is currently grappling with liquidity challenges especially the claims ratio is high and many members are defaulting on premium payments.
The changes are meant to give a lifeline to the NHIF which in the financial year ended June 2022 collected premiums worth Sh78.84 billion against the targeted Sh90.57 billion even as claims shot up.
What is the current state of NHIF?
Data for the financial year ended June 2022 shows that membership grew to 15.4 million in the year ended June 2022 from 13.94 million on continued push for Kenyans to enroll in the scheme.
However, just 1.6 million of the 8.1 million registered informal sector members were making the Sh500 monthly contributions in the year to June 2022. This cost it about Sh39 billion in premiums.
The fund had in a separate disclosure showed total dormant members—from formal and informal sector—hit 8.8 million from 5.03 million the year before, making the insurer miss its Sh90.57 billion targeted premium collections for the review period.
Kenbright Actuarial report on NHIF showed unpaid hospital bills increased from Sh10 billion in December 2021 to Sh15 billion in June last year partly on the cash crunch caused by policy lapses.
