Economy

Kenyans to pay 2.75 pc of monthly earnings to fund healthcare 

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Dr Timothy Olweny was last week picked by President William Ruto to chair the board of the new Social Health Authority. FILE PHOTO | NMG

Every household in Kenya will contribute 2.75 percent of its monthly income to fund the new social healthcare fund if the proposed regulations are passed.

The State has published the draft Social Health Insurance (General) Regulations, 2023 that are support to the implementation of the Social Health Insurance Act, 2023 which was gazetted last week to phase out the 57-year-old National Health Insurance Fund (NHIF).

“A household whose income is derived from salaried employment shall pay a monthly statutory deduction contribution to the Social Health Insurance Fund at a rate of 2.75 percent of the gross salary or wage of the household by the ninth day of each month,” reads the draft by Health CS Susan Nakhumicha.

The 2.75 percent has not been capped at a maximum of Sh5,000 as had been promised earlier by several government officials including Ms Nakhumicha, a development that will see deductions from top earners rise sharply.

The draft regulations will undergo public participation before the shift from the current deductions of Sh150 to Sh1,700 for salaried workers and Sh500 for self-employed can be effected.

If the draft is effected in its current form, then the current maximum of Sh1,700 will be scrapped and expose high-income earners to higher deductions towards funding healthcare insurance.

People in the informal sector who have been paying Sh500 per month will enjoy a 40 percent reduction in the contribution to Sh300, going by draft.

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 be paying Sh2,750, up from the current 1,700, representing a 62 percent rise. Those drawing half a million shillings gross pay will see their deductions rise eight times to Sh13,750 unless a cap is introduced.

The Social Health Insurance Act 2023 will see NHIF disbanded and a Social Heath Authority created in its place to manage three funds— primary healthcare fund, healthcare fund and emergency, chronic and critical illness fund.

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 the Social Health Authority as the primary implementer of UHC.

The Authority will however have to overcome the challenges such as fraud, corruption, liquidity strain, high claims ratio and rampant default on contributions by members— all which NHIF is grappling with.

As at end of June last year, NHIF had 15.4 million members but just about half were actively making contributions as about 8.8 million were marked as dormant.

The new Act has now tied access to government services on one being an active contributor towards social healthcare. It has also put a two percent penalty on any defaulted contributions.

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