The government has stopped paying medical allowance to civil servants and teachers.
Under the new arrangement, the monthly allowance teachers and civil servants have been earning will now be channelled to the National Hospital Insurance Fund (NHIF) as premiums.
Teachers and civil servants can now go to hospitals and clinics of their choice for outpatient services.
Clearly, we have created a behemoth of a medical insurance scheme.
In terms of the population under cover and the size of the premium, there is simply no comparison in this region.
NHIF will be receiving Sh15 billion in premiums in a year, making it by far the largest player in the medical insurance sector.
Whether the experiment will work remains to be seen. Here is a brief explanation of how the system is supposed to work.
The most important innovation in the scheme is what is referred to in the lingo of health insurance as capitation.
It works like this; first, NHIF and the hospitals will negotiate and agree on fixed fees and charges for outpatient services.
The NHIF will then release cheques in advance to the hospitals and clinics.
Civil servants, teachers, and their dependants will choose where they want to go for outpatient services.
What is the logic behind capitation? Since the hospitals will be paid the “capitated” amounts in advance, NHIF will not have to bear the risk of being overwhelmed by claims.
It is simple, really. You negotiate the rates and pay the medical service provider in advance. The provider then bears the risk.
The big question is: since these hospitals and clinics will be receiving their cheques in advance, who will ensure that they provide quality services?
What assurance is there that they will stock the required drugs in sufficient quantities?
What guarantee is there that a civil servant or teacher seeking outpatient services will not be turned away because of lack of essential drugs?
Granted, NHIF has a quality assurance department. However, the scope of the new task is clearly beyond its capacity.
The proponents of the scheme argue that quality will not be a problem because the capitation fees will be paid quarterly and patients have the leeway to choose other hospitals.
This argument is not entirely convincing. There are just too many loose ends in as far as guarantee of quality of services is concerned.
I expect to see a proliferation of commercial clinics popping up all over the place to take advantage of the demand for the medical services that the new multi-billion-shilling business is going to unleash.
We must not forget the mess that NHIF found itself in a few years ago when hospitals sprung up all over the country to take advantage of the improved rebates it paid hospitals for inpatient care — many decided to expand and create space for beds.
Being on the list of NHIF-accredited hospitals became an extremely lucrative affair.
The new scheme is going to be even more difficult to manage, especially because of the billions of shillings involved.
As the NHIF gradually becomes a multi-billion shilling affair, we will need to rethink its corporate governance.
The board and management must be made to be more directly accountable to the fund’s membership.
There are too many government appointees sitting on the NHIF board and the institution has reached a point where it should now be governed by a board where only people with specific skills can be appointed.
It needs strong board committees in areas such as finance, audit, quality assurance and investment.
Some of the government appointees should be replaced by representatives of key contributor groups such as civil servants and teachers. The government must be made to own up to the fact that it does not own the NHIF.
Handling billions of shillings of contributor funds must come with more and regular operational and financial disclosure.
Currently, NHIF operates as if it is only accountable to the government and Parliament. Accountability should be more directly to members and contributors.
That is how we will eventually release this critical institution from the paralysing grip of State control.