New NHIF premiums capped at Sh5,000 for top earners

The National Hospital Insurance Fund building in Nairobi. 

Photo credit: File | Nation Media Group

Workers earning Sh181,818 and above have been spared from paying higher contributions to the yet-to-be-formed Social Health Insurance Fund after the State opted to cap the premiums at Sh5,000.

An earlier proposal in the Social Health Insurance Bill, 2023 to have graduated contributions pegged at 2.75 percent of gross monthly pay would have seen high-income earners pay upwards of Sh22,000 a month.

Health Cabinet Secretary Susan Nakhumicha and National Health Insurance Fund (NHIF) acting CEO Samson Kuhora separately said the premiums will be reviewed, with the minimum contribution for formal workers capped at Sh300.

“From the views, the upper and lower caps on premiums need to be applied in our setting. That is what informed the 2.75 percent of gross earnings up to the cap of Sh5,000 per month,” Mr Kuhora said.

“About 1.8 percent of the estimated formal sector earners will be affected.”

An analysis by Business Daily shows that had contributions been pegged as a percentage of gross pay, workers getting Sh350,000 could have been compelled to pay Sh9,625 and Sh13,750 for those paid Sh500,000.

Workers getting Sh800,000 could have paid Sh22,000 as premiums to the compulsory national health insurance.

Currently, monthly contributions to NHIF for formal workers are graduated depending on one’s pay and range between Sh150 and Sh1,700 while those for informal sector workers are Sh500.

The State expects the enhanced contributions to give its plan to roll out universal health coverage (UHC) a lifeline, with higher charges on top earners being used to subsidise low-income households.

Compulsory membership in the social healthcare scheme will increase the financial burden on it to pay medical claims for millions of Kenyans, prompting the shift in how premiums are calculated.

The NHIF collected premiums worth Sh78.84 billion in the year to June 2022 against the targeted Sh90.57 billion and has defaulted on paying hospitals for services offered.

In May this year, private hospitals started turning away patients seeking treatment on the NHIF cover over unpaid claims of at least Sh12 billion that had accumulated from last year, lifting the lid on the scheme’s dire financial state.

The Bill is undergoing public scrutiny before tabling in Parliament where it is expected to be passed, setting the stage for the roll-out of UHC.

UHC will now be modelled on three separate funds—one for preventive and primary health care, another for primary referrals and a third fund for foot treatment of chronic diseases.

Membership to the new national health scheme for all Kenyans aged 18 years and above will be compulsory under the yet-to-be-published regulation.

Kenyans without proof of up-to-date contributions will be denied State services, bringing social health care membership to the same league as Kenya Revenue Authority (KRA) Personal Identification Numbers (PINs).

The Bill is one of the four that the new administration has lined up to amend the NHIF Act as President William Ruto picks up from his predecessor, Uhuru Kenyatta in the race to ensure the roll-out of universal healthcare.

The others are Primary Healthcare Bill, 2023, Digital Health Bill, 2023 and the Facility Improvement Financing Bill, 2023, which are currently undergoing public scrutiny.

The NHIF Act (1998) was amended and passed in Parliament on December 21, 2021 and assented into law on January 10, 2022.

The amended Act made NHIF membership compulsory for all Kenyans above 18 years but the contribution rates were to be set through regulations which were opened to public scrutiny from May this year.

The national and county governments are expected to pay premiums for households that are classified as vulnerable.

Kenya piloted UHC in four counties from 2018 in readiness for a nationwide rollout.

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