NHIF reforms should not impair private health insurance firms

Good health is an essential ingredient for economic growth. A nation cannot develop unless its citizens are healthy.  Consequently, the government is making sustained efforts to ensure access to quality healthcare for all.

Alongside setting up infrastructure and equipping medical facilities, attention has also been directed towards affordable healthcare and effective health insurance. By having medical insurance, individuals and their dependants, are assured of medical attention when unwell. It is essential to build a healthy nation and provide a sense of comfort and peace of mind. Insurance shields families from economic shocks that come with serious and prolonged illness.

Over the years, effort has been applied towards expanding health insurance coverage. We have the government run National Health Insurance Fund (NHIF) and private medical insurers. The Insurance Regulatory Authority (IRA) estimates the medical insurance class accounted for 34.4 per cent of the industry’s gross premium income for general insurance during the fourth quarter of 2020.

The low penetration is attributed to the fact that healthcare has two main providers; public and private hospitals. Private hospitals offer quality services but cost can be expensive, hence a genuine need for good medical insurance. To deliver universal healthcare coverage, as envisioned under the Big Four Agenda, the government has initiated reforms for NHIF.  An amendment Bill before Parliament, which, unfortunately risks doing more harm than good.

The need to reform NHIF to make it more effective is indisputable.  However, it should be done in a manner that does not reverse gains made. The National Hospital Insurance Fund (Amendment) Bill, aims to insert a new Section; 15A to make it mandatory for any person aged above 18 to register as a member. The fund has also changed its benefits and rules so abruptly and frequently that it disadvantages its clients.  An example is NHIF’s decision to stop benefits during the Covid-19 pandemic. Most health insurers continued to pay for these claims. For instance, APA Insurance paid all Covid-19 claims. 

Currently, NHIF pays only a limited amount for the hospital bed and some procedures.  It is treated as the primary cover, taking care of most costs in public and mission hospitals. The proposed amendments intend to change the model to one where insurers pay for costs first until exhaustion of the cover before NHIF kicks in. This will lead to an unequitable situation where patients can be denied treatment.

To finance this, the amendments propose that employers match their employees’ contributions. This additional cost on employers is likely to have a cascading effect on employees, because employers may be forced to cut back on the private medical insurance covers taken out for staff. This is dangerous for the future of healthcare.

Currently most private hospitals, which have some of the best facilities, get 80 per cent of their income from the insurance sector. If employers cut back insurance covers then we will see less financing of treatment and a bigger burden on the individual. For NHIF to be impactful, it should be structured in a way that prioritises providing basic coverage at affordable facilities (public and mission hospitals) before expanding to costlier providers. The fund should define the basic package accessible to all with clearly defined benefits, price points, and accessible services.

The basic low-cost package for public and mission hospitals would be separate from the private hospital one, which would attract additional premiums to manage costs and reduce fraud and wastage, particularly with technology.

This would ensure hospitals improve their services as they will benefit from income from private medical insurers and the NHIF.

The private sector has taken on the burden of not only investing in healthcare, but also financing it.  The private health covers have superior benefits which NHIF cannot provide and need not provide.

Finally, for APA Health Insurance and other medical insurance providers to continue making their contribution, there is need for more inclusive dialogue and partnership with the government.