How private insurers can bridge UHC access gap

By SAURABH SHARMA More by this Author

In recent years, Kenya has made significant progress in reducing the burden of healthcare costs on its population. According to the World Bank, the proportion of total health

expenditure, paid out-of-pocket by households has halved since 2000 to 24 percent. However, it remains above the global average of 18 percent, highlighting the existing gap.

For instance, a recent study found that approximately one million Kenyans are pushed into poverty annually due to out-of-pocket health expenses. The Covid-19 pandemic exacerbated this gap further by disproportionately affecting low-income Kenyans.

To address this gap, Ministry of Health’s (MoH) 2030 Health Financing Strategy envisions to “ensure adequacy, efficiency and fairness in financing of health services in a manner that guarantees all Kenyans access to the essential high quality services that they require”.

According to the World Health Organisation (WHO), financing of health expenses is essential to achieve the Universal Health Care (UHC) goal, which seeks to ensure all people have access to the health services they need, when and where they need them, without financial hardship.

It is for this reason that the National Hospital Insurance Fund (NHIF) was set up to play a prominent role in this strategy, by mobilising and managing mandatory pooled health revenues.

The recent NHIF reforms were implemented to strengthen this mandate by making contributions mandatory for all Kenyans and by increasing the contributions made by the formally employed sector. These reforms will enhance NHIF’s available resources to provide universal healthcare.

The considerable progress made by NHIF in enabling unprecedented access to healthcare among its members should be recognised and celebrated. However, the challenges should not be ignored as well.

An expert panel recently identified several organisational weaknesses that affect NHIF’s operations and service delivery. For instance, a recent Kenya Medical Research Institute study found that up to 52 percent of maternity care beneficiaries had to pay out-of-pocket in spite of a promise of free care under NHIF.

To plug the existing gap in ensuring UHC access for Kenyans, the private health insurance sector can collaborate with the government to address some of these challenges. The aforementioned health financing strategy articulates this role clearly.

MoH also sets out a target to increase the proportion of population enrolled under voluntary health insurance schemes from 5 percent to 30 percent by 2030. Broadly, private insurance is a market-driven mechanism that allows for choice among its members. More specifically, three practical suggestions can be made for the private insurance sector in complementing NHIF.

First will be complementing the NHIF coverage, especially for high-cost services. It is estimated that NHIF spends a lot of money, on specialised treatments. For example in 2018/2019, the fund spent 47 percent of all medical expenses, for such treatments, which included flying some patients abroad for medical attention.

As NHIF is primarily designed to provide an essential health package to all (especially low income Kenyans), such expenses are draining its funds. This is where private insurers can step in by offering voluntary complimentary coverage for specialised cases (such as critical illness covers) so that NHIF’s burden can be reduced and focus shifted to providing essential health services to a larger population.

Secondly, private health insurers can collaborate with NHIF, to make it more attractive for the informal sector. In 2021, 5.7 million members or 54 percent of NHIF members stopped their voluntary contributions. These members did so, because they found NHIF to be unattractive, until an impending health expense arises, a phenomenon known as anti-selection.

To mitigate this challenge, NHIF and the private insurance sector can collaborate to design member segment specific covers such as loss of income for self-entrepreneurs or accident insurance for transport sector to make it more attractive for these members.

The third role can be for the private insurance sector to employ technology and innovation to improve NHIF’s benefit management. During the pandemic a majority of the large insurers adopted telemedicine to enable continued access, when patients were too afraid to visit hospitals. Insurers have also relied on sophisticated data analytics to manage their medical costs.

These innovations can be transferred to NHIF by a mutual agreement where insurers are appointed to manage outpatient funds (a common arrangement in the private sector) with clear performance indicators on quality and cost of care.

While the private insurance sector can help in unlocking the UHC goals, it is not without its own challenges. The most common one being that private insurance can increase health inequity by focusing only on those with an ability to pay. Similarly, the private sector faces challenges such as high administrative costs and fraud leading to high cost of insurance.

Collaboration between the public and private sector in the health financing space will be a major win for Kenyans. It will address the respective challenges faced by both sectors and Kenyans with access to quality & affordable care will be the eventual winners.