Economy

NHIF to raise contributions every 2 years in law change

nhif

An NHIF branded ambulance. The State-backed insurer has been grappling with the rise in claims paid and the marginal increase in annual contributions. FILE PHOTO | NMG

Monthly contributions to the National Hospital Insurance Fund (NHIF) will be reviewed every two years in proposed changes to the law aimed at increasing the insurer’s funding pool to match the rise in treatment costs.

Senators have proposed the automatic reviews of contributions in the NHIF (Amendment) Bill 2021 that is set for debate and approval by MPs this month.

The proposal if adopted will boost efforts by the State-backed insurer to raise more cash in the face of the increasing costs of treatment for chronic diseases and claims that have piled pressure on its cash reserves. The NHIF has not reviewed monthly contributions for the past six years.

“The [NHIF] board shall every two years carry out a review of the applicable tariffs payable to the fund and payable out of the fund to empanelled contracted healthcare providers,” reads the amendment to the Bill.

NHIF last reviewed its rates in April 2015 and increased monthly contributions for formal workers from Sh350 to a graduated scale of up to Sh1,700 based on pay.

The State-backed insurer has been grappling with the rise in claims paid and the marginal increase in annual contributions.

The NHIF’s loss ratio — claims paid and expenses as a portion of premiums earned — dropped to 91 percent in the year ended June, down from the previous financial year’s 93 percent.

Claims have more than doubled in the past five years from Sh19.7 billion in the year to June 2016 piling pressure on NHIF’s cash pool. The insurer paid out Sh54.6 billion or 88.7 percent as claims to hospitals in the year ended June.

The rise in claims paid has forced the NHIF to announce plans to cut benefits in a cost-cutting move that if approved will see the State insurer save up to Sh3 billion annually.