Ideas & Debate
Policy capture of the NHIF is a stumbling block to health reformsThursday August 26 2021
Recent developments, where within one week, parliament shot down the National Hospital Insurance Fund (NHIF) amendment bill, and the NHIF announced a plan to expand the benefit package it offers to civil servants under an enhanced scheme, are a bitter reminder that the NHIF suffers from policy capture.
Policy capture occurs when public policies are consistently made at the behest of strong interest groups and at the expense of the public interest.
Policy capture protects the short-term gains of specific interest groups and undermines long-term gains that would benefit the larger society.
These interest groups are often the privileged and well off in society, and take advantage of access to resources, organising capacity, and political connections to perpetrate policy capture.
We should be worried about capture of our public institutions and policy processes because it entrenches and aggravates gross inequalities, undermines the quality and effectiveness of public services and policies, and erodes public trust and government legitimacy.
It is apparent that decisions about the NHIF are captured by strong, powerful, and well-organised interest groups, key among them being the private sector and bureaucratic elites in the public sector.
Private sector interest groups include employer associations such as the Federation for Kenyan Employers (FKE), formal employee trade unions such as the Central Organization of Trade Unions (COTU), private insurer, and private hospital associations.
Bureaucratic elites include public servants whose interests are well represented by senior ranking state officers. The capture of the NHIF by these interest groups continues to undermine the noble government goal of Universal Health Coverage (UHC).
UHC is grounded on the principles of equity in health financing and access. In an equitable health system, individuals access healthcare services according to their needs but pay for them according to their ability to pay.
In an inequitable health system, individuals access services according to their ability to pay – i.e. elites in society have access to greater healthcare services, compared to the less advantaged.
Given that the NHIF has been designated as the vehicle to achieve UHC in Kenya, it is imperative that it is structured and operated in ways that promote equity in financing and access to healthcare for all Kenyans.
However, the recent events cast doubt about the equity orientation of Kenya’s health financing policy and is symptomatic of policy capture.
The first manifestation of policy capture is parliament’s rejection of the NHIF amendment bill.
The failure of proposed NHIF amendments is a win for private sector interest groups who came out strongly and loudly in opposition of the proposal for employers to match employee contributions to the NHIF.
Further, the private sector was also opposed to the proposal that private health insurers incur the first charge of medical bills before the NHIF. Any other reason advanced by these interest group is likely a smoke screen.
Employer matching would have mobilised additional resources for the NHIF that should have been channelled to scale coverage among the informal sector and poor. This would have been a shot in the arm given the prevailing reality of a government with strained resources and narrow fiscal space for health.
The funds would have boosted the country’s UHC goal. Employer matching of social health insurance premiums is a common practice in other countries, including our neighbour Tanzania.
The proposal that private health insurers incur the first charge of medical bills before the NHIF would have cured the current inequitable practice where the NHIF incurs the first charge of medical bills, with the private cover paying the balance.
This current practice amounts to robbing the poor to pay for the healthcare services of the rich.
Private sector interest groups have argued that the requirements for employers to match employee contributions to the NHIF will increase their cost of business. While this is mathematically true, it is hardly material.
NHIF premiums translate to approximately 4percent of employment costs while private health premiums are multiple times higher than that.
If employers are willing to pay private health insurance for their employees, why would they be unwilling to match the much lower NHIF payments?
It is likely that their true reason for opposing the bill has little to do with employer costs, and more to do with the vested private sector interest to protect private health insurers against a reformed NHIF with stronger financial firepower.
Opposition to the requirement to first-charge private health insurers is also protective of private health insurers. Private health insurance covers a paltry 1percent of Kenya’s population, which also happen to be the well off in society.
Parliament has essentially rejected policy proposals that would have benefited the majority of Kenyans, in favour of the top 1% of the Kenyan society. This is emblematic of policy capture.
The second manifestation of policy capture is NHIF’s persistence in offering enhanced schemes, with the civil servant’s scheme as its flagship enhanced scheme.
The NHIF has a cover for the general public known as the supa cover, a cover for managed groups (Linda mama free maternity services, the Edu Afya scheme for high school students, and a cover for the vulnerable), and enhanced schemes.
Enhanced schemes offer broader benefits compared to the schemes for the common man, and are offered to organized, often public sector employer groups such as civil servants, state corporations, and county government employees.