Mismanagement has eroded public confidence in NHIF

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THE NATIONAL HEALTH INSURANCE FUND (NHIF) was established by an Act of Parliament in 1966 as a department under the Ministry of Health.

It was initially set up to offer health insurance coverage to the formal sector employees only. In 1972, the Act was amended to incorporate voluntary membership but this was only implemented in 2005. In 1990, the Act was repealed to allow contribution on a progressive basis and in 1998 the NHIF was transformed into a state corporation, delinking it from the Ministry of Health. Although the NHIF Act No 9 of 1998 provides for both in- and out-patient cover, up to now the benefits are only for in-patients.

In-patient care for the NHIF-insured initially only catered for bed charges. NHIF members still had to pay for treatment, diagnosis and pharmaceuticals, thus the benefit was barely substantial. From 2006, NHIF introduced the ‘walk in-walk out’ system in public and faith-based health facilities. All in-patients who are NHIF-insured are not to pay a shilling for services in NHIF-approved facilities. However, this is not always implemented as people are still unaware of the changes. Some hospitals will therefore take payments from the patients but still ask for full re-imbursement from NHIF.

Membership into NHIF is currently mandatory for formal sector workers (both public and private) and voluntary for those working in the informal sector. Contribution rates have remained stagnant for the first 44 years of NHIF existence at Sh30 for the lowest income group to Sh320 for individuals earning over Sh15,000 a month. Contributions for workers in the informal sector is a flat rate of Sh160 per month. This is despite the fact that the informal sector is a mix of struggling, average and wealthy enterprises and the contributions ought to reflect these differences.

Since 2012, there has been a push to increase the monthly payments in tandem with the rising costs of medical care and also to cover out-patient services. This has been met with a lot of resistance from the formal sector workers who feel that they were not consulted before the changes were made.

Although the move to a National Social Health Insurance fund may require that payments are raised, there is a reason why workers do not trust NHIF to handle their money.

A 2012 report by the International Budget Partnership, authored by Jason Lakin and Vivian Magero, raises many questions on the financial management and accountability of NHIF. One case in point is the putting up of the NHIF multi-storey parking. This was contracted for Sh900 million in 2002 but completed in 2008 at a total cost of Sh3.3 billion. Later, an additional 626 million was added to the cost. In the end, the bill was Sh4 billion, more money than that which was spent on beneficiary claims for 2010.

The selection of Clinix and Meridian as health care providers by NHIF last year also raised eyebrows. The whole process was wanting in transparency as these providers were found to lack the necessary infrastructure to provide service. Although they were later removed from the list, the dent in public trust remained.

By June 2010, NHIF was providing services to 2.8 million members and their families, which totalled 6.6 million people covered. To expand coverage to non-paying Kenyans, NHIF will require government subsidy.
A more transparent way of spending workers’ money will have to be designed to earn the trust of Kenyans to make the fund work.