Six reasons why the NHIF is unfit to manage new insurance scheme

Public healthcare and public pensions have become the most trying areas for governments around the world.

In Kenya, the recent increases in contributions by members of the National Hospital Insurance Fund have been touted by government as a step towards universal healthcare.

The changes represent a 325 per cent increase in contributions for some and have been met by a wave of criticism from the general public, Cotu and private healthcare institutions.

Cotu filed a case in court challenging the implementation of the increase in mandatory contributions arguing that it had not been consulted. The dismissal of Cotu’s objections now paves the way for implementation of the new price regimes.

I hold no brief for Mr Francis Atwoli but I’ll advance six arguments against the new scheme. Firstly, the NHIF is a deeply flawed and inefficient parastatal.

At present, it operates on almost 20 per cent of the total contributions, a full 16 per cent of the total contributions going towards administration and staff costs.

Compare this with KRA, which operates at 1.7 per cent of collections, with a mere 1.5 per cent going towards administration and staff costs.

The NHIF has assured us that 80 per cent of our contributions will go to cover. I propose that it should have been restructured before this change was introduced. A 20 per cent operating cost is far too high.

Secondly, the NHIF’s celerity in introducing its new scheme precluded negotiations and consultations with private hospitals.

At present, 45 per cent of the healthcare in Kenya is provided by private hospitals. The top private hospitals have declined to sign up to the expanded scheme.

This would not be a problem if the top-tier medical services in Kenya were provided by public hospitals.

The reality, however, is that for the multi-million shilling costs — bone marrow transplant for example — it is the private hospitals that provide the most accessible services, so if the top private hospitals are not on board, the increases are futile.

Thirdly, the cover being provided by NHIF is far too low. A motorist pays roughly 8 per cent and gets 100 per cent cover. Compare that to NHIF’s cover. The parastatal wants us to contribute a shilling and get 80 cents of cover. Why would any rational consumer agree to that?

Well, the scheme is compulsory and is enforced by law so you have no choice. Still, the fact that it covers less than the contributed sum doesn’t bode well.

Forgetting aggregation of risk for a moment, individually, we are all better off keeping our money under our mattresses than contributing to the NHIF.

My fourth reason for opposing NHIF’s new regime is that it ignores the fundamentals of supply and demand.

Even if the scheme were to increase cost access without an increase in the public healthcare facilities available, the scheme is doomed to failure.

The supply crisis will be aggravated by the reticence of private hospitals to sign up to the new scheme.