Why we need health insurance schemes targeted at pensioners

By EDWARD OMETE

Patients wait to be attended to at the Nyeri General Hospital. The NHIF has released a list of 1,128 hospitals to serve its members. PHOTO | FILE 

In Summary

• A market analysis across the providers reveals the high cost levied for pensioner’s medical insurance. In some companies this is up to three times what is paid by a younger contributor.

After 35 years as a career civil servant, my father steps out of his office for the last day this week to start life as a pensioner. Amongst other things on his head is the adjustment he will have to make now that he is no longer salaried.

Like most of his pensioner colleagues, especially in the private sector, he has been enjoying employer-provided private medical insurance. This was quite generous, allowing access to a facility of choice and covering a wide range of conditions and family members.

All of a sudden this is no more and he will have to figure out a way of supporting his healthcare needs.

Our discussion on the issue shows the few hurdles on the way. One, he is just a few years shy of the 65 years that most medical insurers use as a cut-off point for many of their products. The few that will allow him to join will do so at an exorbitant fee.

With an inverted income-expenditure graph, many pensioners have to do a lot of financial juggling to make the math add up. The health insurance aspect in particular is often dropped from their budgets as self-sustenance takes priority.

A market analysis across the providers reveals the high cost levied for pensioner’s medical insurance. In some companies this is up to three times what is paid by a younger contributor.

Herein lies one of the disadvantages of private medical insurance schemes. They will take your premiums as a young worker but leave you high and dry when you retire. Their premiums are graduated, taking age into consideration, but often do not take into consideration your previous contributions.

In their support, however, most people have multiple insurers over their lifetime. This makes it difficult to have any sort of “reward” or discount for loyal clients. Employer schemes have annual tenders for insurance services.

One way to circumvent the issue is to allow employees to choose their insurance company of choice and the employer to just remit the premiums.

A few insurers are waking up to such ideas. AON-Minet recently introduced a product that seeks to combine pension with healthcare. Such schemes allow loyal and regular contributors a reduced cost in old age, though higher because they are parallel.

An analysis across the various providers easily judges the National Hospital Insurance Fund (NHIF) as the best for old age. The state health insurer does not discriminate on the premiums based on age. In fact they reduce as one ages or loses employment.

However, its major weakness is the compensation value and benefits eligible to retirees. It is also an opportunity for those dealing with pensioners matters. In my father’s case he would not have minded paying a slightly higher premium to cater for his old age medical bills.

Pension schemes have, however, traditionally delinked themselves from such lines of thought. With estimated funds in pension schemes coming to a trillion shillings or thereabouts, they should now start to look at the pensioners welfare beyond the monthly stipend.

What needs to be done is for medical insurers, pension schemes and the National Social Security Fund (NSSF) to work with the NHIF to develop a pensioners’ medical scheme, with slightly higher contributions in their youth.

Alternatively, NHIF could develop a joint product with NSSF.