NHIF seeks light fees burden for low-income earners
NHIF Building in Nairobi's Upper Hill. The national health insurer has written to the Health ministry seeking permission to renegotiate the fixed contribution structure. FILE
What you need to know:
The national health insurer seeks ministry’s permission to renegotiate the controversial bands-based fees that have stalled for the past three years.
The agency has proposed that the contributors pay in two per cent of their gross salary up to a maximum of Sh2,000 a month.
Revising the rates is seen as part of NHIF’s charm offensive to woo labour unions and employers who have blocked introduction of the enhanced fees.
Low-income earners’ contribution to the National Hospital Insurance Fund (NHIF) could drop significantly if workers’ representatives accept proposed amendments to the enhanced fees at the centre of opposition to the new scheme.
NHIF has written to the Ministry of Health seeking permission to renegotiate the fixed contribution structure based on income bands in favour of a new one based on a predetermined fraction of each contributor’s monthly income.
The agency has proposed that the contributors pay in two per cent of their gross salary up to a maximum of Sh2,000 a month — effectively halving monthly contributions for those earning less than Sh100,000 compared to the income bands-based fees.
Revising the rates is seen as part of NHIF’s charm offensive to woo labour unions and employers who have blocked introduction of the enhanced fees for more than three years since they were gazetted.
“We have written to the Health ministry proposing to charge two per cent of contributors’ salaries up to a maximum of Sh2,000 monthly,” said Simon ole Kirgotty, NHIF’s chief executive.
NHIF has opened talks with the Central Organisation of Trade Unions (Cotu) and the Federation of Kenya Employers (FKE) to have them withdraw the court cases that have stopped the fund from charging the new rates.
The two organisations have cited NHIF’s mismanagement of funds and lack of consultations before publication of the news rates as reason for their opposition.
Cotu’s Secretary- General Francis Atwoli on Wednesday said the union was willing to consider revised fees but insisted that NHIF should be reformed before any new charges could be effected.
“We are open to discussing a revision of the rates but the NHIF must be reformed first before workers are asked to pay more,” Mr Atwoli said, adding that the fund must be cleared of scandals that have robbed contributors of billions of shillings.
It remains to be seen whether the Health ministry will approve NHIF’s fresh proposal that would effectively shift the burden of higher contributions to those earning over Sh16,000.
An analysis of the new contribution structure shows that those earning Sh16,000 will keep contributing at the current flat rate of Sh320 per month, leaving those earning less than Sh16,000 with a much lighter burden.
Those earning a gross monthly salary of Sh12,000 will pay in Sh240 or 52 per cent less compared to the Sh500 they were to pay under the stalled scheme. The fee will also be 7.6 per cent lower than the Sh260 that is currently deducted from the same pay cheque.
Above Sh16,000, contributions will rise beyond the current statutory limit of Sh320 but still below the new rates that have yet to be effected.
Those on a salary of Sh50,000 will, for instance, pay in Sh1,000 to the NHIF or two-thirds of the initially proposed fee of Sh1,500.
Workers earning Sh100,000 and above have been left in a neutral position to pay in a flat fee of Sh2,000 per month in either contribution plan.
The percentage-based deductions is seen as spreading the burden more evenly compared to the earlier one where workers with an income spread of up to Sh40,000 were to pay in the same amount.
The income band grouping would see those earning between Sh50,000 and Sh99,999 pay Sh1,500, underlining the relative extra burden placed on those at the lower end of that band.
Conversely, deductions as a percentage of salary maintains the same relative burden across the income range until the Sh100,000 mark after which the flat fee of Sh2,000 applies.
The fresh contribution plan is the latest push by the NHIF to increase its revenue base that has remained unchanged since 1988.
Formal sector workers currently contribute a minimum of Sh30 (on salaries of Sh1,000 to Sh1,4999) under a plan that allows the fees to rise according to income bands up to the threshold of Sh14,999 after which a flat of Sh320 applies.
Mr Kirgotty said higher contributions will help NHIF expand access to quality and comprehensive healthcare that has been the preserve of rich and middle class households.
Only a quarter of Kenya’s population has medical insurance, mostly provided by employers.
NHIF says more contributions will enable it to offer covers for outpatient and chronic illnesses such as diabetes, high blood pressure and HIV/Aids that some private health insurers do not cover.
Members will also have their medication, consultation fees, family planning services, X-Ray and ultra sound diagnosis paid by the fund.
The scheme is also expected to cover the elderly and place no limit to the size of a nucleus family that can benefit from a subscription.
The fund plans to offer standard medical covers regardless of income bands, meaning that those in the lower income will have a lighter burden despite accessing similar services as the high-income earners.
Mr Kirgotty said that besides offering cover to members, NHIF is also considering expanding to serve special government programmes like the free maternity services introduced by President Uhuru Kenyatta’s government.
“We are looking at covering vulnerable groups such as the poor and also managing services like free maternity in public hospitals,” he said.
“This will call for more funding by the government to supplement member contributions.”
NHIF has been accused of mismanaging the Sh9 billion it collects from workers annually. On Wednesday, NHIF’s former CEO Richard Kerich and four other executives were charged in court for allegedly conspiring to defraud the fund of Sh116 million.
The Ethics and Anti-Corruption Commission (EACC) said the accused committed NHIF to a contract with Meridian Medical Centre to provide healthcare to civil servants and disciplined forces while knowing they had no capacity to provide such services in full.
Major scandals that have eroded public confidence in NHIF include a white-elephant referral hospital plot conceived 11 years ago and for which it has paid more than Sh1.5 billion in form of consultancy fees.
The fund is exposed to more losses as it tries to figure out whether to drop or continue with the proposed development of the Sh22.6 billion medical facility amid mixed signals from the Treasury and the Health ministry.
Consultants engaged in the project are seeking a further Sh4.7 billion from NHIF for the phantom project, even before a brick is laid.
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