Households to pay for NHIF in planned changes to fund

The government is changing the contribution model to the National Hospital Insurance Fund (NHIF) from individual to household-based, the National Treasury has said.

This is part of making universal health coverage a reality, says Treasury.

Treasury says the planned new model will restructure NHIF into a social insurance scheme and in turn ease medical burden on Kenyans by focusing on households rather than individuals

Treasury says in the draft 2023 Budget Policy Statement (BPS) that in its current state, NHIF had locked out many Kenyans who are forced to pay cash whenever they seek health services.

Many households, it says, had been forced to sell assets like land whenever one of their members is taken ill, driving many to extreme poverty.

"As part of the health sector interventions, the government will reform NHIF as a necessary imperative," says Treasury in the BPS published Wednesday.

It says that while NHIF had made progress in enrolling more members, it remained an occupational scheme for salaried people and not the social insurance scheme the government had envisioned it to be.

"The government will thus change the contribution structure from an individual contributory scheme to a household contribution model," says the document.

A recent Treasury report on the local health sector noted that as many as 8.8 million NHIF members have not been making monthly contributions mainly due to economic difficulties.

This would mean that they revert to paying for medical expenses out of pocket.

NHIF membership stands at 15.4 million but those the Treasury report identified as active stood at 6.7 million, according to the report.

Treasury notes that Kenyans spend Sh150 billion in out-of-pocket expenditure on health services.

"Access to quality and affordable healthcare is critical for socio-economic development. It is estimated that Kenyan families spend a total of Sh150 billion in out-of-pocket expenditures on health services a year," Treasury says.

Preventive strategies

"For this reason, the government will continue to implement the Universal Health Care plan that will lift this burden from the shoulders of Kenyans and their businesses," it adds.

The strategy will involve revitalisation of primary healthcare by laying more emphasis on preventive and promotive strategies.

"Many critical health illnesses, including cancer, heart complications, kidney failure and hypertension, can be detected and addressed at this level without the need for a hospital visit or admission," it says.

Salaried NHIF members contribute between Sh150 and sh1,700 per month, depending on how much they earn. NHIF also has voluntary contributors who pay Sh500 per month.

There have, however, been recent proposals to increase the monthly contribution for members earning more than Sh100,000. NHIF has proposed that this cadre of Kenyans pay 1.7 per cent of their gross earnings from the current fixed Sh1,700 per month.

President William Ruto recently effected changes at NHIF board, appointing former Transport Cabinet Secretary Michael Kamau to chair NHIF board for a term of three years, effective December 23, 2022.

In the BPS, Treasury says the government would promote investment in the health sector to expand the existing infrastructure to improve availability of medical supplies, especially in public health facilities.

This will include the promotion of local manufacture of pharmaceutical products.

"Pharmaceuticals and consumable medical supplies account for an estimated 20 per cent of total health expenditures with more than 70 per cent of pharmaceutical products being imported," says Treasury.

It adds: "Domestic pharmaceutical manufacturers have the capacity to manufacture bigger share competitively, but are hampered by the high cost of production and punitive tax regime."

The government will also work towards entrenching Kenya as regional pharmaceutical manufacturing hub by reviewing the tax regime and cost of doing business in the country, according to Treasury.

This will also include "leveraging Universal Health Care and human per capita to identify and scale up domestic manufacturing of pharmaceutical products and other essential supplies that can be competitive".